Agenda item

To scrutinise the information before the Cabinet recommends the 2025/26 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 submit observations from the discussion on the report to the Cabinet for their consideration when discussing and approving the 2025/26 Budget at its meeting on 11/02/25

·       To thank the Finance Department for their thorough work in preparing the Budget.

 

Note:

The over expenditure situation was concerning - there was a need to ensure less use was made of the reserves. 

 

Submitted - a report by the Cabinet Member for Finance, noting that the Council had received a Government grant increase of 3.1% for 2025/26, which equated to an increase worth £7.5m in external funding. It was reported that many factors would create additional spending pressures on the Council's services in 2025/26, with the need to increase spending by £24.2m 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 a Council Tax increase and a new programme of savings and cuts. With a recommendation of an 8.66% increase in Council Tax, more savings and cuts 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 2026/27.

 

It was highlighted 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 present the information, express his views and provide details on the robustness of the estimates that formed the basis to the budget, along with the potential risks and mitigation measures.

 

He highlighted that the Cabinet (meeting on 11/02/25) would recommend to the Full Council (06/03/25) that a budget of £355,243,800 should be established for 2025/26 to be funded by a £246,818,190 Government Grant and £108,425,610 of Council Tax income (which was an increase of 8.66% to an individual residence's tax), and establishing a capital programme of £53,736,190 in 2025/26.

 

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

·         Salary Inflation of £8.6m - the budget earmarked a pay agreement for 2025/26 of 3.5% for the whole workforce and teachers

·         Adjustment to the threshold and rate of national insurance paid by the employer.

·         A budget of £4.6m had been set on the grounds that the cost would be funded in part by the Government, i.e., a value of £3.5 million

·         Increase in Levies to relevant bodies - £506k

·         Demography - reduction in pupil numbers at the schools - £643k

·         Pressures on Services - recommend approving bids totalling £7.7m 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.

·         Further considerations - £2.2m (adjustments to various budgets across the Council, which included the impact of a reduction in interest receipts of £2.3m in returns when investing the Council's balances and cash flow.

 

Reference was made to the 2024/25 Overspend Projections in the Adults, Health and Well-being Department and Children and Families Department, noting the proposal to fund the overspend through the use of reserves (worth £8,294m). ⁠

 

In the context of the savings schemes, reference was made to new savings and cuts schemes to reduce the funding gap of £519k which would be presented to the Cabinet 11-02-25 (although £100k could be removed from the 2025/26 budget. 

 

It was reported that the remainder of the deficit would have to be met through the Council Tax, and consequently, the Cabinet would recommend to the Full Council that it raises the tax by 8.66% in order to meet the pressures on services when setting a balanced budget.

 

Reference was made to the required work that had been undertaken to report on the robustness of the estimates on which the budget had been based, and having considered all risks and the mitigation measures, the Head of Finance was of the opinion that the budget for 2025/26 was robust, sufficient and achievable.

 

The members expressed their gratitude for the presentation.

 

Observations arising from the ensuing discussion:

·         That the tax level was high - difficult for Gwynedd ratepayers, considering that the circumstances in the coming years seemed to be getting worse. There was a need to avoid raising Council tax again.

·         Welcomed the fact that the budget was balanced, but the situation needed to be monitored, considering that house prices in Gwynedd were high, and salaries were low.

·         Expressed thanks for the thorough work of preparing the budget.

·         That using £8.8m from reserves seemed substantial - highlighted concerns that the overspending continued. The Departments needed to try and work within their budgets.

·         There was a need to ensure that reserves were available for emergencies.

·         If more money was received from the Welsh Government, was there an intention to use it to strengthen the reserves, instead of using bids?

 

In response to a question regarding paying inflation on salaries, the Head of Finance noted that salary increases were set nationally and it was difficult to anticipate that increase. It was reiterated that an amount, and not a percentage, had been implemented in the past, and although it was difficult to set a percentage, the Council was not in a position to refuse to implement the increase.

 

In response to the comments, the Leader of the Council noted that Gwynedd had support from other rural counties, such as Monmouthshire and Powys, and were pressing on the WLGA to set a minimum for the settlement. It was also acknowledged that there was increasing financial pressure on Gwynedd residents and that the choice between maintaining services and offering a reasonable level of taxation was a difficult one.

 

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 on the report to the Cabinet for their consideration when discussing and approving the 2025/26 Budget at its meeting on 11/02/25

·         To thank the Finance Department for their thorough work in preparing the Budget.

 

Note:

The overspend situation was concerning - there was a need to ensure that less use was made of the reserves.