Agenda item

To scrutinise the information before the Cabinet recommends the 2024/25 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 report to the Cabinet for their consideration when discussing the 2023/24 Budget at its meeting on 20/2/24.

 

Submitted – a report by the Cabinet Member for Finance, noting that the Council had received a Government grant increase of 2.0% (the Wales average was 3.1%) for 2024/25, which equated to a £4.1m increase in external funding. He reported that several factors would create additional spending pressures on the Council's services in 2024/25, with the need to increase spending by £22.4m to meet the pressures on the services' budgets.  ⁠As well as addressing the demand on services and the high level of inflation, there would be a need to consider a combination of Council Tax increase and a new programme of savings and cuts. With a recommendation of a 9.54% increase in Council Tax, an extra £2m of savings would be required to set a balanced budget, with projections suggesting that there would be further pressures in aiming to set a balanced budget for 2025/26.

 

It was reported that the Committee's role was to scrutinise the information and ensure that the Cabinet and Council were clear on 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 present the information, 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 (meeting on 20/02/24) would recommend to the Full Council (07/03/24) to establish a budget of £330,590,040 for 2024/25 to be funded through a Government Grant of £232,092,110 and £98,497,930 of Council Tax income (which was a 9.54% increase on the tax of individual dwellings) and establish a capital programme of £85,224,800 in 2024/25.

 

He explained that Additional Expenditure Requirements had been considered in the budget, and those areas were highlighted;

 

·         Salary Inflation of £15.1m – the budget set aside an estimated increase of 5% in the 2024/25 pay agreement for the whole workforce from April 2024, and for teachers from September 2024.

·         Employer's Contribution towards Teachers' Pensions – a cost of £2.36m – the budget had been set on the presumption that the cost would be fully funded by the Government.

·         Other Inflation of £6.8m – a sum that included provision for a broad range of changes dependent on the rate of inflation in specific areas (Independent Residential Care Homes, Non-residential Care, Energy, Fuel, Other price increases).

·         Levies to relevant bodies will increase by £342k.

·         Electricity Inflation Provision of £3m.

·         Demography – a net reduction in pupil numbers and an increase in looked after children.

·         Pressures on Services – recommend approving bids totalling £5.1m for additional permanent resources submitted by Council departments to meet unavoidable pressures on their services. It was noted that the bids submitted had been thoroughly challenged by the Leadership Team, prior to recommending their approval by the Cabinet.

 

Reference was made to other considerations where the impact of an increase in interest receipts on returns in investing balances with the Council's cash flow was noted, along with releasing the (£1.4m) provision that was in place for expenditure arising from the Covid crisis, and a cost increase of £758k due to budgeting for a reduction in the Social Care Workforce grant received from the Government.

 

In the context of the savings schemes, it was noted that Cyngor Gwynedd had realised over £39.1m in savings schemes since 2015/16. The officer referred to existing planned savings schemes for 2024/25 per department that had already been approved (£3,113,400) to reduce the funding gap together with new savings schemes of £4.78m which would be submitted to the Cabinet on 20-02-24. It was suggested that a decision on further savings/cuts worth £2m be delayed, and the deficit bridged by using other funds.  Reference was made to the Permanent Revenue Bids (totalling £5,052,820) by some departments which addressed additional pressures on their services.

 

It was added that the remainder of the gap would need to be greeted through the Council Tax. It was acknowledged that the choice between maintaining services and offering a reasonable level of taxation was difficult. The Cabinet would recommend to the Full Council to increase the tax 9.54% in order to relieve the pressure on services in setting a balanced budget, at a similar level to most other authorities in north Wales.

 

Reference was made to the required work that was undertaken to report on the robustness of the estimates on which the budget had been based, and having highlighted the risks and the mitigation steps the Head of Finance was of the opinion that the budget for 2024/25 was robust, sufficient and achievable.

 

The members expressed their gratitude for the presentation.

 

Observations arising from the ensuing discussion:

·         That treasury management was in good hands

·         The objectives had been considered in a realistic manner

·         Proper consideration had been given to the bids system

·         Gwynedd compared very well with other councils

·         Satisfied with the Council's arrangements in setting the budget.

 

In response to a question regarding a permanent revenue bid for improvements to the Council's telephone system (£239k) and whether this was a one-off bid, the Head of Finance confirmed that this was a one-off bid and was part of the Digital Plan, with the amount covering technical costs, staffing and licensing.

 

In response to a question regarding Energy inflation (Electricity and Gas - £1.6m) and whether this was because of a commitment in a contract, the Head of Finance noted that although the contract was ending, they were required to report on the progress.

 

In response to a comment regarding the risk with delivering the savings, it was noted that realistic schemes must be ensured, therefore the element of risk existed and although they were unaware of any element of surprise, financial sums must be allocated in order to set the budget. In response to a supplementary question regarding concern about delaying £2m of savings this year and whether this would be a pattern that would continue in future years, it was noted that there were areas of underspend amongst corporate headings that would be transferred to the Strategic Fund; with £7m being transferred this year, there would be money available to plug the shortfall.

 

It was suggested that some of the objectives were achievable, and although dependent on people's needs and nature, that the saving within the schemes was deliverable, although some of the objectives were statutory. Therefore, there was a need to ensure that there were detailed schemes for the proposals.

 

In response to a comment that some Authorities used money from the second homes premium to fund statutory services (and not housing services alone as Gwynedd had decided) and to keep the Council Tax down, and whether this had been considered when setting the budget for 2024/25, the Head of Finance stated that the premium affected the tax base and therefore he did not believe it appropriate to set the Premium level at the same time as setting the budget. In order to comply with legislative requirements, the officer was of the opinion that a Premium must be set for the following year before the end of December He added that Gwynedd were committed to a long-term plan of using the second homes premium to fund the Housing Plan's operational fund and homelessness matters; any change would have an impact on these schemes.

 

RESOLVED:

 

·         To accept the report and note the content

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

·         To submit observations from the discussion to the Cabinet for its consideration when discussing and approving the 2024/25 Budget at its meeting on 20/2/24