Agenda item

1)    To accept the report on the end of November 2023 review of the Revenue Budget and consider the latest financial situation regarding the budgets of each department / service.

2)    To note that significant overspend is anticipated in the Adults, Health and Well-being Department, the Children and Supporting Families Department, and the Highways, Engineering and YGC Department this year.

3)    Approve the transfer of £4,241k of underspend on corporate budgets to the Council's Financial Strategy Reserve.

 

The report was submitted by Cllr Ioan Thomas. ⁠

 

DECISION

 

1)    To accept the report of the end of November 2023 review of the Revenue Budget and to consider the latest financial situation regarding the budgets of each department / service.

2)    To note that significant overspend was anticipated in the Adults, Health and Well-being Department, the Children and Supporting Families Department, and the Highways, Engineering and YGC Department this year.

3)    Approve the transfer of £4,241k of underspend on corporate budgets to the Council's Financial Strategy Reserve.

 

DISCUSSION

 

The report was submitted, and it was noted that the review detailed the latest review of the Council's revenue budget for 2023/24, and the forecasts towards the end of the financial year. It was explained that the review suggested that all the ten departments would overspend by the end of the year. It was added that there would be a substantial overspend by the Adults, Health and Well-being Department, the Children and Supporting Families Department and the Highways, Engineering and YGC Department.

 

It was noted that the department anticipated a financial gap of £8.1m compared to the £9.1m noted in the August review. It was explained that the position was better by a million because of the use of one-off funds to assist the situation within departments.

 

The following main issues were highlighted:

Adults, Health, and Well-being Department - It was noted that the latest forecasts suggested £5.4 million overspend, which was a combination of several factors including several new and costly cases, higher staffing costs and sickness levels and high rates of non-contact hours.  It was conveyed that the work commissioned by the Chief Executive was now underway to obtain a better understanding of matters and create a clear response programme.

 

Children and Supporting Families Department - it was explained that the financial situation had worsened substantially since the end of August review, and this was due to an increase in the costs of out-of-county packages. It was noted that the Department anticipated an overspend of £1.3m. 

 

Education Department - It was noted that there was increasing pressure on the
transport budget with an anticipated overspend of £1.15m. It was explained that there was a strategic review to try and manage the increase and to try and reduce the overspend. 

 

Byw'n Iach - it was expressed that Covid had had an impact on Cwmni Byw'n Iach and it was noted that the financial support would continue this year and the required amount for this year had been decreased to £360k.

 

Highways, Engineering and YGC Department - an overspend of £780k was anticipated by the department, it was noted that this was because of a reduction in the commissioned work that had had a negative impact on the income of highway services. It was noted that income losses in ground maintenance and public toilets were also a factor.

 

Environment Department - it was noted that there was an annual trend of overspending in the waste collection and recycling fields, it was explained that additional routes had led to overspend in employment and fleet costs.

 

Housing and Property Department - It was explained that the trend of significant pressure on the homelessness temporary accommodation services continued to be very intense; and this year, £3m of Council tax premium as well as £1.2m one-off corporate Covid provision, had been allocated to address the additional costs.

 

Corporate - It was noted that there was a prudent assumption when setting the 2023/24 budget, with a decline in the numbers claiming council tax reduction had led to an underspend. ⁠⁠It was noted that the impact of the current treasury management policy meant that it was possible to avoid external borrowing. It was explained that underspend on other budgets assisted to alleviate the additional pressure in terms of the national increase in the salaries of employees, which was confirmed in November.

 

It was noted that the situation meant that it was necessary to use the Council's reserves to fund the financial gap of £8.1m. It was stated that it was premature to transfer money from reserves until the financial situation had been finalised. It was recommended that the current procedure would be to use £3.8m from the Post-Covid Recovery Arrangements Fund with the rest to be budgeted from the Council's Financial Strategy Fund.

 

It was explained that the item had been discussed at the previous Governance and Audit Committee and it was noted that the following observations had been raised.  Several members had noted that there were regular references to conducting reviews within departments.  Concern had been highlighted by members that there was a lack of a timetable to report back from the reviews and therefore there was a risk that there would be slippage.  ⁠A desire had been expressed for the Cabinet to push for a timetable where it was appropriate. Questions about grants had been highlighted, and whether the national grant arrangements had meant that the Council relied on the money and consequently spent revenue money in areas that were not necessarily the Council's priority area.  It was clarified that the grant arrangements meant that the Government was micro-managing, but that there were plans to bring more grants into the settlement which would give more flexibility to prioritise.

The sustainability of the situation was questioned, noting that this level of overspending could not continue. It was emphasised that revenue bids for the 2024/25 budget addressed overspend and were essential.  It was explained that the bids had been subject to detailed challenges to ensure that they would deal with actual cases of budget shortfalls and not a failure to manage a budget.

 

Observations arising from the discussion

·         The Chief Executive added that the report pointed to overspending but stressed that the evidence highlighted that the budget was too low and the expenditure was not futile.  It was explained that the review on overspending in the Adults, Health and Well-being Department had reached a conclusion and it had been reported before Christmas that they had identified five to six areas of overspending that would be supported through the bids system. It was added that the Council had sought assistance from the Local Government Association to look at the overspending costs in Social Care in case the Council had missed something.  It was noted that a review was underway to look at School Transport and that steps would be in place for the next financial year. Regarding the Waste review, it was expressed that they had reported on the work and that the actions had seen the overspend halve this year, therefore this was going in the right direction.

·         It was reiterated that a report in April would give forecasts for the mid-term, and currently they were very bleak, where it was very likely that detailed work would be needed to see what may be achieved within that budget. It was stressed that the future looked much worse than the present and this was the national message.

·         It was explained that the Council had delivered nearly £40m of savings since 2016, which was almost 10% of the Council's budget. 

·         It was highlighted that the report noted that the number of second homes subject to a premium had reduced since last year along with a reduction in houses converting and subject to business tax.  It was asked if there were any visible patterns and if this would continue to fall. It was noted that there was a gradual decline in housing subject to the premium and the trend had reversed in terms of properties transferring to business tax, with more properties reverting to residential properties. However, it was noted that there had been an increase in the number of houses receiving single person discounts, which was subject to an ongoing review.