Agenda item

To receive an update from Dewi Morgan (Head of Finance) on the 2025/26 Budget.  

The report was presented by the Head of Finance.

It was explained that the budget for 2025/26 had been submitted in draft form to Elected Members in a series of informal seminars. It was also noted that the draft budget had been scrutinised by the Governance and Audit Committee on 6 February and had been considered by the Cabinet on 11 February. It was added that a formal decision would be made on the budget after the Full Council considered the matter at its meeting on 6 March.

It was confirmed that the Council had received a Government grant increase of 3.1% for 2025/26. It was noted that this was higher than the proportion anticipated to be received by the Council, although this increase did not match the increase in inflation rates over recent years. It was emphasised that the Council was lobbying the Government to set minimum grant levels annually for all local authorities.

The cost of maintaining the Council's services was projected to be £24.2million higher in 2025/26 compared to the current financial year, including expenditure of £7.7million to counter pressure on service budgets above inflation, resulting from overspending due to a lack of budget to meet real demand for services.

It was reported that pressures on services and inflation had led to a recommendation of an 8.66% increase in Council Tax, as well as the introduction of a programme of savings and cuts in order to set a balanced budget for 2025/26. It was acknowledged that the Council was aware that this was a significant increase which would affect Gwynedd's households.

It was emphasised that Cyngor Gwynedd's Cabinet had approved savings of £5.2million for the 2024/25 budget, of which £2,860,300 was profiled for 2025/26. It was further explained that new savings would be introduced within the Council. Members were guided through a summary of these savings for all Council departments. Attention was drawn to savings of £151,960 within the Education Department, emphasising that there was no cuts or savings plan for the School Service within the 2025/26 financial year. However, a reminder was given that demographics would negatively impact school budgets over the coming year.

Various elements of the schools’ budget were detailed, noting:

•           It has been confirmed that there would be a normal increase in the Gwynedd schools’ quantum in 2025/26, as the Council's policies noted the need to fund inflation, pay increases and demography, unlike some other local authorities. However, it was clarified that demographics were a negative element in the 2025/26 budget due to a reduction in pupil numbers.

•           It was explained that school budgets would increase by £3.1 million in 2025/26 to meet increases in inflation as well as inflationary increases in teacher salaries and pensions. It was noted that there would be an increase in the salary levels of teachers and support staff which would be confirmed within the financial year.

•           It was explained that there had been a 5% increase in employer contributions on teachers' pensions since April 2024.

•           It was reported that there would be a £1.9million increase in the cost of employer national insurance in 2025/26. It was explained that this was a result of the UK Government's announcement to increase the employer rate from 13.8% to 15.0%. It was noted that the National Insurance threshold had been reduced from £9,100 to £5,000, placing additional pressure on the Council due to the need to pay employer national insurance for all individuals who received a salary of £5,000 or more annually. It was noted that the Government had indicated that they would fund this increase in employer national insurance rates within the public sector, noting that further confirmation would reach the Council in a few months.

•           It had been projected that school budgets as a whole would be reduced by £643,000 as a result of demographics. This was detailed as a reduction of £415,000 for the Primary sector and a reduction of £228,000 for the Secondary sector. It was emphasised that secondary school budgets would vary to reflect pupil numbers.

•           It was noted that there were no grounds to think that the Welsh Government's specific grant allocations in the area of education would be adjusted from those allocated in 2024/25.

It was concluded that the school budget would be higher in 2025/26 compared to the current financial year.

Matters arising from the discussion:

It was pointed out that around 400 children were home-schooled in Gwynedd and Anglesey and it was asked whether money is being provided to support their education. In response, the Head of the Education Department confirmed that a specific grant was received by both Counties and then allocated for the provision of this support. It was explained that the support had been structured across Gwynedd and Anglesey, noting that at least one teacher was employed to visit the families to ensure they understood the commitment as they considered the decision to educate their children at home. It was confirmed that there was no legal requirement to conduct further visits with the families following this initial meeting. It was pointed out that parents who declared an interest in home-educating their children may have to register to do so if the new Government arrangements were approved, with the possibility that this could result in some families deciding to educate their children through the schools. It was added that maintaining any register of families with pupils being home-educated resulted in a financial cost to the Council to ensure that it was up to date.

A question was asked why school pupil numbers in September were used when considering demographics. It was felt this could have a negative impact on individual school budgets. It was noted that January's PLASC would provide a different picture of true school numbers, leading to a fairer budget. It was further explained that the Welsh Government had adapted school funding formulas and recommended that within those adjustments 'PLASC statistics' strategies should be used for school funding. In response to the comments, the Schools Group Accountant confirmed that the authority used pupil numbers for a number of different factors over any given financial year and that the information was therefore balanced for the following financial year. It was considered that using January's pupil numbers would be too late to plan for the budget. The Head of the Education Department further noted that pupil numbers were currently falling in all sectors and that adjusting the date on which school numbers were collected would not change that. However, officers would consider this change, in the hope that pupil numbers in education would increase again in future years.