Agenda item

To report to the Scrutiny Committee on the performance of the Finance Department.

DECISION To accept the report and note the observations.

 

The report was presented by the Cabinet Member for Finance, highlighting the red and amber indicators. It was noted that one measure within the Income Service remained in the red category, namely the balance of the value of variable debts over six months old at the end of October 2025, and the figure was identified as just under £3.2m. It was elaborated that this was an increase of £1.377m since the end of the previous month and that £1.2m of that increase derived from debts from the Health Board and another local authority. It was noted that the other local authority's debt resulted from an administrative error within the Council when an incorrect order number was given on an invoice. It was confirmed that this issue had been resolved and the debt had been paid.

It was noted that the Health Board's debt continued to be a challenge and the adult service was in discussions with the Health Board in the hope that the debt would be reduced. Attention was drawn to the tax collection service's performance meter 'Current Year Council Tax Collection Rate' which reported in amber and noted that the service had faced significant problems due to the number of staff on long-term sickness. It was elaborated that the situation was improving and the service appeared to have turned a corner and was getting back on track. Concern was expressed that the council and non-domestic tax collection rates were lower in Gwynedd than historically and compared to other authorities in Wales, but doubts were expressed as to whether the way the statistics were reported reflected the full picture. It was noted that, from the internal information, the basic rate of collection of council tax was fairly normal, but it was noted that the shortcomings mainly related to the collection of the council tax premium on long-term empty properties and second homes. It was emphasised that this could change the overall figures. The intention to look at the issue over the coming weeks and months was noted to give a more balanced picture of the situation.

It was noted that, in terms of the Digital Plan, work was progressing well, but particular concern was noted about the risks related to software licensing costs, particularly given the expected increased use of artificial intelligence. A wider expectation within the information technology sector was noted that prices could rise after consumption stabilised, and it was noted that this was an issue that the service would keep a close eye on in the future.

The Head of Finance stated that he was satisfied with the overall performance of the department, although there were a few challenges in some services. It was stressed that plans were in place to address those challenges with the hope that better outcomes would soon follow.

During the discussion, the following observations were made:

A question was asked about the Health Board's debt. It was questioned whether the problem stemmed from conflicts over invoicing or debt agreements, or whether it reflected poor processes or payment delays. In response, it was noted:-

-        That the problem had existed for years.

-        That there was an element of delay related to systems, but also that most debts relate to the Adult Service.

-        Disagreement regularly arose about who should pay what portion of an individual's care.

-        That there were rules and contracts to determine the contributions of the Council and the Health Board, but that discussions on these contributions accounted for much of the debt.

-        Officers within the Finance Department and the Adults Service were working to maintain the relationship and to put pressure on the Health Board.

-        Experience across the six authorities in North Wales had shown that the Health Board, at times, paid the authority that put pressure to bear on that day, leaving the rest waiting.

-        Discussions at the level of chief executives and directors of social services were taking place to ensure that the six authorities work more closely together to put constant pressure on the Health Board.

It was asked whether there was any real hope that the debt would reduce given that it was worse than in previous years, or whether it would lead to the eventual writing-off of debts. In response, it was noted: -

-        That some debts were close to the threshold where they could come under statutory arrangements for writing-off due to their age, and that was why the service was trying to keep the debts alive to avoid that situation.

-        This could be frustrating as the negotiations could appear close to a resolution and then the situation could slip back.

-        There was a significant risk of having to write-off some of the Health Board's debt, but even without the Health Board debt, the total debts were still higher than desired.

-        That a team of Ffordd Gwynedd support officers and one other officer were working on improving the arrangements and effectiveness of debt collection.

-        There was hope that the debt would decrease as these measures came into effect.

Questions were asked about the use of artificial intelligence and whether an action plan and protocol were in place for its use within the Council, noting the possibility of using the technology to provide services more cheaply and efficiently. It was questioned whether the Council was already using artificial intelligence for tasks such as producing complex reports, and the desire for clear control over its use and a plan to embed it in the future was noted. In response, it was noted:-

-        That artificial intelligence was becoming more stable within the Digital Plan and that a specific project had been triggered in recent months.

-        That the project sought to create case studies on the use of artificial intelligence within the Council's services, with the intention of developing those cases initially and then carrying out more detailed work to ensure safe use and use that made business sense.

-        That the work was being carried out in collaboration with a third-party company and that up to six case studies were expected to be developed.

-        Limited use of artificial intelligence was already taking place, with a small number of officers using Microsoft Copilot.

-        The service had been cautious in the beginning due to doubts about the software's ability with Welsh, but it was noted that this had now improved significantly.

-        Technical officers had created a few solutions to read and categorise emails to prioritise work faster.

-        That research and testing was ongoing but that use had not yet been widely extended, indicating the intention to move forward gradually.

-        That the case study project was intentional to create a business case and to identify potential savings opportunities over time.

-        That additional funding had been earmarked to move forward with this work before applying further for funding to expand this.

It was asked about a slippage in some projects within the Digital Plan and questioned whether any project was of greater concern than others, including an example where the project failed to recruit to showcase the Council as a digital employer. In response, it was noted:-

-        The Digital Transformation Trainee post was advertised twice to seek the appointment of an officer at postgraduate level, but it was noted that the necessary experience was not available in the market at the time.

-        That the degree apprenticeship programme continued and the service was now on the seventh apprentice, and that it was intended to go out again the following year to try and secure the specific resource that had previously failed.

-        The project that would cause the most concern should it slip was the human resource and salary management system, noting that it was essential to be able to pay staff and members.

-        That the current system expired at the end of December 2026 and detailed preparation and planning work had already been done.

-        That letters are sent to potential providers and that there is then a period of silence before confirming an appointment.

-        That it was expected for this to be confirmed before Christmas with the intention of starting installation work immediately in the new year.

-        The companies considered were experienced companies who had worked with a number of councils, and confidence was expressed in the quality of the options seen.

The completion rate of internal audit work within the 2025-26 work plan was questioned, noting that 47 pieces of work were within the plan, with 16 completed by 31 October (34%). It was asked whether this was in line with what was expected for the period. In response, it was noted that the profile of the scheme was different as much of the work was linked to community councils by agreement. It was noted that the early months of the financial year tended to focus on that work before then focusing on the work of Cyngor Gwynedd. It was therefore noted that the rate did not follow a straight line throughout the year. Confidence was expressed that the scheme would be completed. It was stressed that the Governance and Audit Committee would be monitoring the work.

A question was asked about a milestone stating that the Chief Executive, directors and Head of Finance should meet quarterly to manage the effects of national fiscal cuts, noting that this had not happened in the first half of the year. It was asked whether there was a risk to the Council as a result. In response, it was noted that it was not thought that there was a significant risk, and it was noted that reports on the situation continued to be submitted. It was elaborated that a report had gone to Cabinet and the Governance and Audit Committee in October, and that further reports would go to both committees in January. It was noted that the delivery of the savings plans over the past few years had been high in percentage terms, although it had not always reached 100%. It was stressed that the practical work was continuing in the background, although the desire was to hold more formal meetings.

A question was asked about the recent news regarding the Council's funding, whether an estimate could be given of how it would change the financial outlook. In response, it was noted that the situation needed to be reconsidered following the recent announcements and that each department had been asked to consider what savings would be possible. It was noted that the understanding was that implementing the changes in April 2027 could be more realistic than April 2026, due to the time needed to deliver the plans. It was noted that it was intended to hold workshops in the new year to work pro-actively with Members. It was emphasised that the budget-setting process would go to the Governance and Audit Committee on 5 February, to the Cabinet on 10 February, and to the Council in early March. It was noted that in terms of the level of increase in council tax, more work needed to be done before a final figure could be given, but the possibility of being around 5% without having to make significant cuts was noted. It was noted that, prior to the recent statements, there was a possibility that around 12% would need to be looked at without making cuts, but that the picture had now improved.

There was concern that many farmers were struggling to meet the 182-day threshold for self-catering properties to qualify for non-domestic rates. It was acknowledged that various people had appealed against this, and it was questioned how successful these appeals were and whether this was going to be more of an issue in the coming years. In response, it was noted: -

-        That the threshold had changed recently, noting that the previous system allowed a change to the non-domestic rates system after letting for 70 days a year.

-        That the Welsh Government had increased the threshold to 182 days, meaning that a letting would be for about half a year to be within the non-domestic rates system; otherwise, the property would revert to council tax arrangements.

-        That the first appeals were continuing and the decision as to which list applied would be made through the District Valuer's Office and therefore it was not a Council decision.

-        A report would be submitted to the Governance and Audit Committee in January on possible additional exceptions.

-        A reference to a policy under provision 13A approved by Cabinet in November, noting that this allowed the Council to look at possible additional exemptions that the Council may choose to introduce, having regard to the risks.

-        That the work was being addressed by the finance and the legal service.

RESOLVED

 

To accept the report and note the observations.