Agenda item

To consider and accept the report

DECISION:

·       To accept and approve the report on the review of the GwE budget until the end of January 2025.

·       Following discussions at a meeting of the Transitional Board, an end-of-year position report along with a full analysis on final 2024/25 spending be presented to the Joint Committee at the May meeting.

Submitted - a report by the Head of Finance for Cyngor Gwynedd, updating members on the latest financial review of GwE's revenue budget for the 2024/25 financial year and the projections towards the end of the financial year. ⁠ The Assistant Head of Finance – Accounting and Pensions (Cyngor Gwynedd), explained that the report was based on information at the end of January 2025 with the picture in terms of redundancy costs and pension release costs clearer. ⁠ ⁠

 

It was explained that the redundancy costs and pension costs were based on the highest possible ones, thus giving the Joint Committee the worst-case scenario, so that the maximum potential funding gap could be seen.  It was reiterated that the hope was that the figures would not be as high and that it would be possible to offer jobs to staff who were outside the TUPE system, i.e. those who were transferring to the Local Authorities (although no promise of that could be given).

 

Reference was made to a breakdown of the final position with the projections, following the end of January 2025 review, suggesting that the financial position for 2024/25 would be an overspend of £919k by the end of the financial year.⁠⁠ ⁠⁠ ⁠

 

The main issues were highlighted:

 

·        Employees – by now, after taking into account redundancy and pension costs, an overspend of £1.1 million was forecast on this heading.  It was explained that GwE's budget for the current year was established based on the number of staff back in February 2024.  It was highlighted that savings had been realised after some GwE staff members left their jobs, along with the receipt of a grant which had been used to fund jobs.  It was noted that the figures also incorporated the Joint Committee's decision on 1 August 2024, including a restructuring of the Senior Management Team. 

 

It was reiterated, after receiving the latest information, that the financial review included an estimated current maximum redundancy cost of around £1.7m for staff who would not transfer to the authorities. A Welsh Government contribution of £738k (£123k received per authority) was expected towards the cost.

 

Reference was made to the Accounting regulations which required pension costs to be accounted for in the financial year in which a letter had been issued to staff.  With the intention of issuing a letter to GwE staff at the beginning of March, a financial commitment had to be secured with those costs having an impact in the current financial year.

 

·        Rent – an overspend of almost £90k. £10k of this was in line with the historical trend as a larger space had been rented in Caernarfon, which had been above budget levels.  In addition to this, in winding up GwE, it was highlighted that costs of terminating office leases needed to be addressed, mainly for the Mold office.

·        Transport – the picture remained consistent with previous reviews with an underspend of £34k on the transport heading, as travel costs had fallen as a result of new ways of working in recent years. 

·        Supplies and Services – an underspend of almost £19k was anticipated here as no contribution would be made to the information technology renewal fund.

 

It was clarified that, in the context of the financial situation, it needed to be taken into account that the reserves of £221k were being fully used to reduce the overspend. 

 

Attention was drawn to the Newly Qualified Teachers Fund which had accumulated, and now stood at £455k. ⁠ It was noted that this funding had been earmarked for a specific purpose, and that an application had already been made to the Welsh Government to enquire whether this fund could be used as a contribution towards the costs incurred.  However, until there was confirmation, it could not be used to reduce costs at this point. 

 

Summing up the situation, it was anticipated that there was a maximum funding gap of £919k and that this gap would need to be closed.  It was added that a letter had been sent to the Welsh Government requesting additional funding, but if the application was not successful, the individual Councils would have to fund it.

 

Thanks were expressed for the report and the staff were thanked for completing the work within a difficult time.

 

During the subsequent discussion, members submitted the following observations:

·        Concern about building overspend – rent (including services). This was a significant overspend given digital/virtual usage. Was it possible to discuss/negotiate the terms of closure of the Colwyn Bay and Mold offices?

·        That every penny needed to be scrutinised.

·        That assurance of a high level of understanding was required.

·        That assurance of expenditure was needed – a suggestion that the full analysis of final expenditure for 2024/25 be discussed/challenged in the Transitional Board with feedback to the next meeting of the Board.

 

In response to a question about the use of the Newly Qualified Teachers (NQT) Fund and whether this fund could be used to reduce overspending rather than see the money returned to the Welsh Government, it was noted that the money from this fund had accumulated over the Covid years and that the terms of use of the fund stipulated a specific use.  However, it was highlighted that a letter had been sent to the Welsh Government requesting permission to use the fund against the overspend.  It was reiterated that a letter had been received in response to a request from Cyngor Gwynedd for additional funding to fill the funding gap asking for a meeting with the Welsh Government's Deputy Director of Education to discuss the situation, and that the use of the NQT Fund was likely to be included in the discussion at that meeting.

 

It was proposed and seconded to approve the report.

 

         RESOLVED:

 

·        To accept and approve the report on the review of GwE's budget up to the end of January 2025. 

·        Following discussions at the meeting of the Transitional Board, that an end-of-year position report, together with a full analysis of final expenditure for 2024/25, be submitted to the Joint Committee at the May meeting.