Agenda item

To note the position and the relevant risks regarding the budgets of the Council and its departments and comment as necessary.

DECISION:

•      To accept the report

•      To note the relevant risks

•      To support the recommendation for the Cabinet (13 June 2023) to approve the amounts to be carried forward; to approve all recommendations and financial virements

The Cabinet Member for Finance noted that the report would be submitted to the Cabinet on 13 June 2023 and that the Committee needed to scrutinise it and offer observations on the position prior to this.

The Assistant Head of Finance - Sustainability and Developments set out the context of the report. It was noted that the report elaborated on the Council's expenditure in 2022/23, the out-turn position of the underspend or overspend of individual departments, and the reasons for this. Reference was made to a summary of the final financial position of all the departments, which highlighted the amounts to be carried forward at the end of the year, together with the principal matters and areas where there had been significant differences. It was highlighted that,

·         at the end of the year, an overspend position was reported by seven departments as a result of a number of factors such as a failure to realise savings, salary inflation above budget level and increasing energy prices. Reference was made to the five departments with the highest overspends

-       Adults, Health and Well-being Department: Overspend of £3.9 million, with £921 thousand as a result of difficulties realising savings.  There had been an increased use of agency staff in various fields, pressures on supported accommodation and direct payment packages were issues in Older People's Services and in Learning Disabilities that had also contributed to the overspends.

-       Education Department: Overspend of £1.2 million. The impact of the additional inflation cost of assistants and administrative staff of £690 thousand and the effect of higher electricity prices of £614 thousand. Given that schools had already benefited from almost a £1 million in energy savings deriving from Covid and the associated lockdown periods, school balances were used to fund the additional pressures of £1.304 million.

-       Economy Department / Byw’n Iach. In 2021/22, Byw'n Iach received £1.4 million of financial assistance from the Welsh Government. No such support was available in 2022/23, but the impact of Covid continued to affect the ability to generate income. As a result, the Council extended the assurance period for the financial support for the company until the end of 2022/23.

-       Highways and Municipal Department; Overspend of £2.5 million with the field of waste collection and recycling continuing to overspend. Reference was made to one-off funding and increasing pressure on the Highways services budget by the end of the year and the difficulties in realising savings worth £608 thousand, of which £335 thousand was in the field of waste.

-       Housing and Property Department: The impact of the Homelessness Act led to significant financial pressures and although the Department had received £1.5m from the Council's post-Covid arrangements fund, there was an overspend of £2.5 million. It was expected that this overspend would be funded from the Council Tax Premium Fund.

·         There were several reasons for one-off underspends on several Corporate headings.

·         The increase in interest rates had led to an additional £1.3 million, and fewer households had claimed the council tax reduction compared to previous years.

·         Prudent projections when setting the 2022/23 budget and a change to taxation legislation had contributed to the additional tax outputs, with houses transferring from non-domestic rates to council tax.

·         The schools' balances had reduced by £4.8m, namely from £16.7m in 2021/22 to £11.9m in 2022/23. In recent years, a significant increase had been seen in school balances as a result of Covid and substantial grant receipts, but they had now reduced with projections of further reductions by the end of 2023/24 and returning to usual levels.

·         There had been review of the adequacy of the Council's specific funds when closing the accounts and it had been possible to harvest £3.918 million of resources.

Thanks were expressed for the report - it was noted that the receipt of regular reports on the overspend position over the financial year had been beneficial given the final position.

During the ensuing discussion, the following observations were made by Members:

·         The dependence on grants would create a situation of unstable funding.

·         Schools were unable to set a negative budget - the situation of uncertain grant allocations created a risk to the school funding system; led to decisions on redundancies due to surplus - was a deficient and risky system.

·         There was an increase in the average age of Gwynedd's residents that would lead to an increase in service use and would therefore increase future budgetary risks.

In response to an observation that the sums and positions would be different next year 2023/24 (interest rate adaptations, Council tax reductions, etc.), the Head of the Finance Department noted, in setting the budget for 2023/24, that all efforts had been made to realistically estimate each situation. In response to a supplementary observation that unless corporate spending was reduced there would be a risk to those overspending departments, it was noted that some corporate headings this year had saved the situation although this approach could not continue - the expectation was that expenditure would be in line with the available budget.

In response to an observation that there was historic overspending in the field of Adults, and that under-funding was a risk given that the requirements of individuals was central, and there was an increase in expectations, it was noted that a number of departments were overspending although significant progress had been observed in the  Adults, Health and Well-being Department since the review in November and at the end of the year. It was noted that it was intended to review some savings schemes - those that had not been realised historically and investigate the reasons why. It was added that the lack of provision in the budget was being reviewed, and although it was accepted that there had been more unavoidable expenditure in 2022/23, it was impossible to cope with situation of an overspend of £4m in one department.  The Cabinet Member reiterated that the Adults Department’s budget was reasonable, and although it was accepted that there was an overspend, the failure to realise the savings proposed by the department itself was unacceptable.

In response to an observation that an external body should be requested to examine the possibility of implementing savings, it was noted that the Council used the Ffordd Gwynedd system to focus on citizens' needs. It was added that other regulatory bodies in the field of Care were keeping an overview of the situation.

In response to an observation regarding the financial deficits of schools at the end of 2022/23 and that schools were independent of Council control, it was noted that schools could not be forced to use their balances - a sum was allocated by the Finance Department and the school's governing body was responsible for the expenditure.

RESOLVED

·         To accept the report

·         To note the relevant risks

·         To support the recommendation for the Cabinet (13 June 2023) to approve the amounts to be carried forward; to approve all recommendations and financial virements