Agenda item

To scrutinise the information before the Cabinet recommends the 2026/27 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 to the Cabinet for its consideration when discussing and approving the 2026/27 Budget at its meeting on 10/02/26

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

 

·       The overspending situation was worrying

·       There was concern that the reserve was dwindling – a harvesting exercise would be welcomed

·       Development/improvement plans for Residential Homes in Gwynedd – request for the findings of the Housing LIN Cymru inquiry to be submitted to the Committee

 

Note:

-        List of capital bids – the plan to extend Ysgol y Faenol car park. A request from the Local Member for further details regarding the reasons for the time slippage (original date 2021) and the costs associated with the slippage

-        A suggestion to present Council tax information in monetary value (£) rather than a percentage (%) only

-        The Finance Officer's statement – that the budget 'inevitably includes an element of risk from assumptions' ... are there plans in place if there is a reduction in housing premium collections, but an increase in demand for building houses?

 

A report was submitted by the Cabinet Member for Finance, noting that the Council had received a Government grant increase of 4.1% for 2026/27, which equated to an increase worth £10.4m in external funding. It was reported that many factors would create additional spending pressures on the Council's services in 2026/27, with the need to increase spending by £23.3m to meet the pressures on the services' budgets. With pressures in demand for services as well as high inflation, it was noted that there would be a recommendation to increase Council Tax by 5.32% to meet the objective this year, with projections suggesting there would be further pressures when aiming to set a balanced budget for 2027/28.

 

It was highlighted that the Committee's role was to ensure that the Cabinet and Council were clear about the facts presented to them so that the decision they made was based on sound information.

 

The Head of Finance Department was invited in his role as statutory finance officer to present the information, express his view and provide details on the robustness of the estimates that formed the basis of the budget, along with the potential risks and mitigation steps.

 

He highlighted that the Cabinet (meeting on 10/02/26) would recommend that the Full Council (05/03/26) establish a budget of £379,866,050 for 2026/27 to be funded through a Government Grant of £264,009,390 and £115,856,660 in Council Tax income (which was a 5.32% increase) and establish a capital programme of £40,179,430 in 2026/27.

 

It was explained that Additional Expenditure Requirements had been considered in the budget and attention was drawn to those fields:

·        Salary Inflation of £8.3m - an estimated pay agreement increase for 2026/27 of 4% for teachers and 3.4% for the rest of the workforce

·        Supplier Inflation of £6,075,390

·        Increase in Levies to relevant bodies - £528,810

·        Pressures on Services – to recommend approving bids worth £9,910,580 for additional permanent revenue resources submitted by Council departments to meet unavoidable pressures on their services, and £840,010 worth of capital bids

·        Reversing the Employer National Insurance Grant 2025/26 - £3,632,950

 

In the context of savings schemes, reference was made to £320,500 worth of savings schemes which derived from previous savings programmes and had already been approved by the Council to reduce the financial deficit.

 

It was reported that the remainder of the deficit would have to be met through Council Tax, and consequently, the Cabinet would recommend to the Full Council to raise the tax by 5.32% in order to meet the pressures on services when setting a balanced budget.

 

Reference was made to the required work that was undertaken to report on the robustness of the estimates on which the budget had been based, and having considered all risks and mitigation steps, the Head of Finance was of the opinion that the Council's Budget for 2026/27 was robust, sufficient and achievable.

 

The members thanked the officer for the presentation and the staff for their work. It was encouraging to see that the situation was better than what had been estimated as a result of the Welsh Government grant increase.

Observations arising from the ensuing discussion:

·        The overspend of departments continued to be a matter of concern

·        There was a need to support the County's care provision - using external provision was costly. The Council needed to put internal provision plans in place that would lead to future savings

·        List of capital bids - the plan to extend Ysgol y Faenol car park. A request from the Local Member for further details regarding the reasons for the delay (original date 2021) and the costs associated with the slippage

·        The Finance Officer's statement – that the budget 'inevitably includes an element of risk from assumptions' ...were there plans in place in the event of a reduction in housing premium collections, but an increase in demand for building houses?

·        A suggestion to present Council tax information in monetary value (£) rather than as a percentage (%) only

 

In response to a question regarding the pension reduction and why a decision had been made to take the £3 million saving in one year instead of £1 million over three years, it was noted that the choice was a 1% reduction every year or to take the £3 million saving in full. It was considered that this was the best option with the possibility that it would be more than £3 million as the final figures had not been released.

 

In response to a question relating to the additional funding that Cyngor Gwynedd had received from the Welsh Government and whether it had improved the Council's position in the Authority allocation table, and what difference the funding would have on Gwynedd, it was noted that the allocation method had not changed, and therefore Cyngor Gwynedd remained in position 20 out of 22. It was reiterated that the total rate of the Welsh Government's financial settlement increase to Welsh Authorities was 4.5%, whilst Cyngor Gwynedd received a 4.1% floor. However, the additional funding was beneficial to rural areas, the budgets of departments that were under pressure and to release pressure from having to implement savings for 2026/27.

 

In response to an observation that Cyngor Gwynedd charged less council tax than nearby Councils and that nearby Councils paid better salaries to staff and whether this, therefore, made Cyngor Gwynedd an expensive authority to run, it was noted that the root of the matter was historical and went back to 1996, when Cyngor Gwynedd was restructured under the Local Government (Wales) Act 1994. At the time, a complex formula / baseline was set for expenditure with many components intertwining individual factors such as population, the nature of population, age, and landscape to name a few.

 

In the context of the number of Councillors in the County, as well as the number of Lay Members, and why their total salaries did not appear on the budget, it was noted that the sum had been included in the budget, but not in the forward report. It was reiterated that the number of Councillors per Authority was determined by an external body.

 

In the context of finance allocation to support and develop the economy in Gwynedd and plans to attract work to the County, it was noted that there was a budget to fund the Economy Department's core team, but other financial sources and capital plans were available for expenditure. It was reiterated that the North Wales Corporate Joint Committee also led on the Growth Deal.

 

In the context of risk and how the risk was calculated when setting the budget, it was noted that the risk situation was flexible and was being regularly monitored, but should there be a small reduction in calculating risk, there would be a potential small saving in years to come.

 

Concern was highlighted that the reserves fund was reducing and the percentage at the end of this financial year represented approximately 1.3% of the Council's gross revenue expenditure. It was emphasised that the sum in the fund had not fallen, but it had reduced as a percentage of the Council's spending over recent years because no money had been added to it either. It was reiterated that the Council was reviewing the Financial Strategy and intended to implement a harvesting exercise.

 

In response to a question about the intention to develop / improve Residential Homes provisions in Gwynedd and whether plans were underway to ensure that the buildings were fit for purpose, it was noted that the Council had commissioned Housing LIN Cymru to look into the situation of the County’s population needs and a report of the findings would be expected in approximately six weeks.

 

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 to the Cabinet’s consideration when discussing and approving the 2026/27 Budget at its meeting on 10/02/26

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

 

·        The overspending situation is worrying

·        Concern that the reserve is dwindling – a harvesting exercise is welcomed

·        Development/improvement plans for Residential Homes in Gwynedd - request for the findings of the Housing LIN Cymru inquiry to be submitted to the Committee

 

Note:

-        List of capital bids - the plan to extend Ysgol y Faenol car park. A request from the Local Member for further details regarding the reasons for the delay (original date 2021) and the costs associated with the slippage

-        A suggestion to present Council tax information in monetary value (£) rather than as a percentage (%) only

-        The Finance Officer's statement – that the budget 'inevitably includes an element of risk from assumptions' ...were there plans in place in the event of a reduction in housing premium collections, but an increase in demand for building houses?