Agenda item

To note the situation and the relevant risks regarding the budgets of the Council and its departments, consider the decisions for the Cabinet and comment as necessary.

DECISION:

 

·       To accept the report and note the situation and relevant risks in the context of the Council's budgets and its departments

·       To agree with the recommendation to the Cabinet:

·        Transfer £1,868k of underspend on corporate budgets to the Council's
Financial Strategy Reserve.

 

 

Note:

Work that has been commissioned by the Chief Executive to gain a better understanding of exceptional overspending by the Adults Health and Well-being Department: a request for the Cabinet to challenge the timescale of this work - assurance needed that this work is in place to set a budget.

Submitted – a report by the Cabinet Member for Finance, detailing the latest review of the Council's revenue budget for 2024/25, and the projections towards the end of the financial year. The Committee was asked to scrutinise the information and offer comments before submitting the report for the Cabinet's approval on 15 October 2024.

 

The Cabinet Member set out the context to the report, noting the following:-

·       The situation was not unique to Gwynedd.

·       Although Gwynedd's reserves had historically been strong, they were emptying quickly

·       This was a case of underfunding, and not a lack of financial management

·       Every effort was being made to reduce the impact on the residents of Gwynedd

 

He added that the Finance Officers merely reported on the situation, and that the Departments themselves were responsible for their budgets.

 

He referred to a breakdown of the final position of all the departments and reported that, following the end of August review, the projections suggested that there would be an overspend of £7.6 million and that six of the departments will have overspent by the end of the year. Significant overspends were anticipated for the Adults, Health and Well-being Department, the Children and Families Department, the Highways, Engineering and YGC Department and the Environment Department.

 

The main issues:

-        Adults, Health and Well-being Department – the Department received a permanent additional budget allocation of over £3.2 million this year to meet pressures in various areas; the latest forecasts suggested there will be a £2.7 million overspend by the end of the year (compared to £3.9 million in 2023/24). The overspend was the result of a combination of several factors which included increased pressure on the home care provision, the other main issues included direct payments which was overspending by £1.3 million in the older people's service, and supported accommodation in the learning disability service. The Chief Executive had commissioned work last year to look at the department's finances.

-        Children and Families Department – the department's financial situation had deteriorated significantly since the 2023/24 position when an overspend of £2.6 million had been reported; now increased to £3.2 million; primarily as a result of an increase in the costs of out-of-county placements. The department had seen the complexity of packages increasing, and recent increasing use of unregistered placements. As a result of the exceptional overspending by the Children and Families Department, the Chief Executive had commissioned work to explain the details in the area of Childcare, so as to obtain a better understanding of the issues and a clear programme of response. The work would be led by the Statutory Director of Social Services.

-        Education Department – Following a £1.5 million overspend in the 2023/24 financial year on school transport, the field received an additional budget allocation this year of £896k on a permanent basis and a further £896k for just one year, to address the pressure on the school buses and taxis following the re-tendering of contracts, therefore a balanced financial position was reported.

-        Byw'n Iach – over the past few years, as the income levels of the Byw'n Iach Company had been impacted, the company received annual financial support from the Council above the contractual payment of the delivery agreement, to enable them to maintain their services. The financial support continued this year, and the required amount was £101k.

-        Highways, Engineering and YGC Department – an overspend of £649k was forecast; the work being commissioned by external agencies had reduced, which had a negative impact on the income of highways services. In municipal there was a combination of factors, including additional pressure on the budgets of street cleaning staff and staff who clean public toilets, while income losses were issues for grounds maintenance and public toilets.

-        Environment Department – a £1,083k overspend was forecast, with the annual trend of overspending in the field of waste collection and recycling continuing, and accounting for £664k of the overspend. Employment costs and levels of sickness and overtime were problematic in the field, but the matter was being addressed and therefore seemed to be reducing. Lack of parking income was also evident this year as well as a number of savings schemes slipping.

-        Housing and Property – significant pressure on the emergency accommodation service remained, with spending in the field projected to be in the region of £6.4 million this year (compared with 6.8 million last year). The overspend of £227k came after accounting for an additional budget of £3m which was allocated from the Council tax premium and also a one-off additional budget of £1.2 million allocated as a part of the bids procedure for 2024/25 to assist with the extra pressures.

-        Corporate – prudent projections when setting the 2024/25 budget with an additional tax income and a reduction in the numbers who had claimed the council tax reduction compared with previous years.

 

It was reported that a Medium-Term Financial Plan report had been submitted to the Governance and Audit Committee and the Cabinet in May 2024, which outlined the savings and cuts system to respond to the financial position. ⁠The report included recommending freezing the spending during the year, should it become apparent that substantial overspend was likely. Considering the latest overspending projections, such a measure was considered appropriate, therefore a combination of arrangements for freezing spending and use of the Council's reserves would be required to fund the projected financial deficit for 2024/25.

 

The members gave thanks for the report.

 

Observations arising from the ensuing discussion:

·       The overspending was a concern.

·       Work commissioned by the Chief Executive – although reporting that work had been commissioned, no information had been received – it was vital that the findings of the work were presented to the committee.

·       The use of reserves was a cause of concern. If this money was to be used, we must ensure that the money was used in the appropriate places – responding to the need.

·       Accept the recommendations, and the statement that Gwynedd was not unique.

·       Review of the financial position in the Adults Department – the information was useful for setting a budget – what was the timetable of this work? The Cabinet need to challenge when the work would be available – need assurance that the work was in place.

·       An element of hope that income was coming in – the reality was having to prepare for a situation where the income would reduce – the overspending had to stop.

 

In response to the above observations, the Cabinet Member noted that he shared the concern around using the reserves and highlighted the importance of making fundamental changes. He stated that the Council had commissioned CIPFA to conduct a study of how Gwynedd compared with other Authorities, looking at processes and consider doing things differently.

 

In response to a question regarding the costs of using out-of-county placements by the Children and Families Department, and although they welcomed the development of Small Group Homes within the County, that the process was slow and was unlikely to make a huge difference to the overspend, it was noted that the hope was to focus on the most extreme cases first in order to reduce the cost. Although accepting that the process was taking time, and that staff would need to be appointed for these settings, the development would ultimately provide benefits.

 

RESOLVED:

 

·       To accept the report and note the situation and relevant risks in the context of the Council's budgets and its departments.

·       To agree with the recommendation to the Cabinet:

-        To transfer £1,868k of underspend on corporate budgets to the Council's Financial Strategy Reserve.

 

Note:

⁠Work that had been commissioned by the Chief Executive to gain a better understanding of exceptional overspending by the Adults Health and Well-being Department: a request for the Cabinet to challenge the timescale of this work – assurance needed that this work was in place to set a budget.