Agenda item

To scrutinise the information before the Cabinet recommends the 2023/24 budget to the full Council

 

DECISION:

 

·         To accept the report and note the content

·         To accept the financial propriety of the proposals and the relevant risks

·         To present observations from the discussion on the options to the Cabinet for their consideration when discussing the 2023/24 Budget in its meeting on 14/2/23

 

a)    A report was presented by the Cabinet Member for Finance, noting that the Council had received a draft grant increase of 7.0%, equivalent to a value of £14.6m in external funding (7.9% was the average for Wales) for 2023/24, which was a significant improvement on the indicative settlement published in December 2022. Despite this year's reasonable settlement, it was reported that a number of factors would create additional spending pressures on Council services in 2023/24, with the need to increase spending by £27.8m to meet the pressures on the services' budgets. As well as addressing a higher rate of inflation than had been seen for many years, there was an opportunity to deal with broader spending pressures, including addressing ongoing costs deriving from the Covid-19 crisis, and abolishing or deferring savings schemes that were impractical to realise in 2023/24.

 

It was reported that the Committee's role was to scrutinise the information and ensure that the Cabinet and Council were clear of the facts presented to them so that the decision was based on robust information.

 

The Head of Finance Department was invited in his role as statutory finance officer to express his view and provide details on the robustness of the estimates that were the basis to the budget, along with the potential risks and mitigation steps.

 

He highlighted that the Cabinet's decision would be sought at its meeting on 14/02/23 to recommend to the Full Council (02/03/23) to establish a budget of £317,880,310 for 2023/24 to be funded via a Government Grant of £227,842,930 and £90,037,380 of income from Council Tax (with a 4.95% increase on the rates of individual dwellings) and establish a capital programme of £67,780,150 in 2023/24.

 

It was explained that Additional Expenditure Requirements had been considered in the budget and attention was drawn to those fields;

 

·         Salary Inflation of £14.2m – the budget set aside an estimated increase of 4% in the 2023/24 pay agreement for the whole workforce, after an increase to reflect the situation that the final pay agreement for 2022/23 had been higher than what had been earmarked in the budget for it.

·         Other Inflation of £11.1m - a sum that includes a provision for a broad range of changes in the rate of inflation of specific fields (Independent Residential Care Homes, Non-residential Care, Energy, Fuel, other price increases).

·         Levies to relevant bodies are increasing.

·         Demography - net reduction in the number of pupils and an increase in looked after children.

·         Pressure on Services of £5.75m - it was recommended that bids worth £2.75m for additional permanent resources submitted by Council departments to meet inevitable pressures on their services were approved. In addition to the permanent bids, it was recommended to approve the addition to the Homelessness budget of £3m which is being funded from the Council Tax Premium, in accordance with the full Council's decision on 1 December 2022. It was noted that the submitted bids had been thoroughly challenged by the Leadership Team, prior to their recommendation for approval by the Cabinet.

 

Reference was made to other considerations where the impact of an increase in interest earned on returns when investing the Council's balances and cash flow was noted, as well as a reduction in employer pension contributions as a result of the triennial valuation. It was also highlighted that using a more prudent method of clearing Capital Funding Requirement debt in fewer years would also offer a saving of £2.4m - this comes as a result of reviewing the Revenue Minimum Provision policy.

 

In the context of savings schemes, it was noted that Cyngor Gwynedd had realised over £33.5m in savings schemes since 2015/16. It was highlighted that savings to the value of £950,250 which had already been programmed to reduce the Budget deficit for 2023/24 had slipped due to the substantial impacts of Covid-19. These savings would be achieved during 2023/24, with the attainment to be reviewed annually.

 

After receiving information about the settlement from the Welsh Government, a financial deficit of £12.4m over two years was identified, with £6.4m in savings already identified for 2023/24. The intention was to commission further work to establish the second phase of savings and cuts (approximately £1.6m - £2.2m) before setting the 2024/25 budget.

 

The Head of Finance was of the opinion that the budget for 2023/24 was robust, sufficient and achievable..

 

b)    The officer was thanked for the report.

 

c)    During the ensuing discussion, the following observations were made by members:

·         Agreed with the view in terms of not using balances

·         That there was a need to anticipate the recent proposal to increase teachers' salaries

·         That there was a need to press on the Government to issue a grant in order to enable change

·         That the report offered sufficient and robust details

·         That the funding of new bids was to be welcomed

·         That the reduction in pension contributions was to be welcomed, as well as the additional interest on balances

·         That it would be difficult to find 'one-offs' for 2024/25

·         Thanked Arlingclose again this year for a good presentation (on 3 February)

 

In response to a question as to why Cyngor Gwynedd as some other Councils did not use its balances, it was noted that although Cyngor Gwynedd had healthy balances, that the majority were earmarked for plans to realise the Council's Plan and to cope with necessary spending, e.g. inflation increases. It was reiterated that if using balances became the norm, then instability would soon follow.

 

In response to a question regarding the money that had been earmarked to establish the North Wales Corporate Joint Committee (CJC), it was noted that the establishment of CJC had been 'dumped' on Local Authorities and therefore we would have to cope with the situation. As the arrangements developed, it was noted that some functions may reduce in response to potential opportunities and situations. It was reiterated that Cyngor Gwynedd provided Finance and Support services for the CJC and that officers were encouraging and convincing them to keep costs down when establishing the system.

 

In response to a question with regard to using the premium money from some classes of second homes and long-term empty properties to close the financial deficit in the homelessness field rather than using reserves, given that the aim of the premium was to implement the Council's Housing Action Plan and keep local people in their communities, it was noted that the premium funding that had already been collected would be used as a one-off in order to deal with the overspending in the homelessness field, and that this would not affect the implementation of the Housing Plan.  It was reiterated that discussions were taking place with the Housing and Property Department in order to reduce the overspend projected in 2022/23. He added that the premium funding would certainly not be used for any other field and that it would not be for general use. From 2023/24 onwards, until there would be a change in the Premium policy, a specific sum would be earmarked from the Premium in order to deal with the increasing costs of homelessness.

             

            RESOLVED

 

·         To accept the report and note the content

·         To accept the financial propriety of the proposals and the relevant risks

·         To present observations from the discussion on the options to the Cabinet for its consideration when discussing the 2023/24 Budget in its meeting on 14/2/23