Agenda item

To submit the report of the Cabinet Member for Finance.

1. To set a budget of £379,701,110 for 2026/27, to be funded by £264,009,390 of Government Grant and £115,691,720 of Council Tax income (which is a base increase of 4.75% plus a further 0.42% to meet the levy from the Fire Authority, which gives a total of 5.17%).

 

2. A capital programme of £40,179,430 in 2026/27 should be established, to be funded from the sources set out in Appendix 4 of the report.

The report was presented, stating that a number of questions arose about how council tax was spent. Information was presented which highlighted the main areas, such as that 80% of the funding went towards Education and Care. It was highlighted that 8,000 hours per week were given to domiciliary care each week, with 1500 individuals receiving a Telecare service. It was noted that 12,000 people had received support through the Housing Action plan since 2020. They highlighted that 93% of children had been able to stay at home with their families through the Trobwynt intervention, and that two Small Homes were now in operation, with a further two homes on the way. It was expressed that good work was being done and that the successes achieved by Council staff needed to be highlighted.

 

The budget was presented stating that it was necessary to begin with the financial forecasts from the current financial year in order to fully understand the situation. It was highlighted that there was a £5.3m overspend, where departmental budgets were not sufficient to meet the demand for service. It was explained that the main demand was in care, with a deficit of £3m in the Adults department and £1.8m in the Children's Department. It was added that the overspend had been funded through the use of reserves. It was expressed that due to the deal made in Cardiff at the end of last year, the settlement was much better than predicted at 4.1% – an additional £10.4m.

 

It was explained that as part of the budget-setting process the department had made a number of assumptions such as a pay rise of 4% for teachers and 3.4% for the rest of the Council's workforce. Along with natural inflation, it was noted that there was a need to invest in services, and there were ambitious plans for the coming year such as investment in care and education services.

 

It was estimated that an additional £23.3m would need to be spent in the next financial year to sustain our services, with the greatest pressure coming from salary inflation, general inflation and the increase in the demand for services. It was noted that this created a spending requirement for 2026/27 of £380m. It was explained that the settlement from the Welsh Government was £264m which left a gap of £116m. In terms of savings, it was highlighted that £664,000 worth of savings had already been approved, with a quarter of a million of these being available to cover the funding gap. As a result, in order to set a balanced budget this will mean raising the Council Tax by 5.17%.

 

It was explained that the tax base increased to just under 58k of dwellings due to an increase in the number of properties, the number that were subject to the Council Tax Premium and the decision to increase the premium on long-term empty properties. They expressed that it was very disappointing that the tax increase was higher than inflation once again, but the situation was much better than what they had feared back in December.

 

The Statutory Head of Finance drew attention to the Section 25 Statement in the appendices, which was a personal statement by him highlighting the robustness of the estimates on which the budget was based, as well as the potential risks and mitigation actions. He emphasised that the Cabinet had received a medium-term report back in September, and that the projections were being updated regularly and were based on the latest information. He expressed that accepting an annual settlement was challenging, and that the result of the Senedd election in May would have implications for the Council.

 

The context of the budget was highlighted by looking at this year's budget deficit which highlighted the additional financial pressures on services, specifically social care. He explained that there was a recommendation to fund £9.9m of bids to address this. Despite this, he noted that the Council had a successful track record of complying with financial standards, codes of practice and sound governance organisation which was ratified annually by external financiers. It was explained that inflation rates had fallen to 2%, but that political events over the past week could affect them. Nevertheless, he remained confident that the projections were watertight.

 

In the context of the savings schemes, it was highlighted that the Council had managed to make savings over the years but that pressures continued to materialise, but there were mitigation measures in place to cope. It was reported that there was £110m in reserves, with £7.9m in general balances as well. It was explained that the general balances were at a reasonable level but needed to be reviewed. It was reported that Audit Wales had reviewed the Council's management of balances and had noted overall that the Council was constructive and provided assurance that there were arrangements in place to deal with funds.

 

It was noted that through the required work carried out to report on the robustness of the estimates that underpinned the budget, and having considered all the risks and mitigation actions, the Head of Finance was of the view that the Council's Budget for 2026/27 was robust, adequate and achievable.

 

Members were given an opportunity to ask questions and offer observations.

 

The significance of the decision to set a budget at a time of financial pressure was noted, and Plaid Cymru was thanked for reaching an agreement with the Labour Government. It was stressed that no one wanted to raise the tax in the face of financial pressure on residents. It was highlighted that excellent work was being carried out within the available budget, without making cuts to frontline services. In relation to the children's department, it was noted that there had been a marked increase in the number of individuals with profound complex needs who required specialist intervention. It was noted that this was not an easy budget but it was responsible and prioritised children and vulnerable people.

 

The members thanked the officers for the report and asked with regard to the financial assessment how premature the assessment was in light of the events of the previous week, and that oil costs had risen tremendously. It was expressed that the report had been published over a week ago, therefore they could not have known of events of the previous week. However, the assessment had been created with the situation as it was over a week ago, therefore the members could be assured that it was correct when it was sent. It was expressed that there were reserves for any costs that may increase such as energy costs, and therefore the Council would be able to cope with a rise in costs.

 

The Cabinet Member for Adults indicated that he welcomed the effort to set a balanced budget. He noted that he was seeing increased demand in the field daily, and that the decision to allocate £9.9m for the extra pressure was critical to securing services. He highlighted that setting the budget showed support for frontline staff and reflected the true cost of care in order to maintain quality, retain staff and avoid failures. It was recognised that setting a sustainable budget formed the basis of a sustainable service, albeit challenging in terms of finding the balance between raising taxes and maintaining services. It was emphasised that the budget was a clear statement of the values of the members, the county and their commitment to caring for vulnerable residents.

 

Comments were received from the Cabinet Member for Education who noted that the cost of teaching the next generation was high. He drew attention in particular to Additional Learning Needs, highlighting that additional funding had been identified in the budget. He stated that it was new funding that did not detract from any other services. Although this new funding was welcomed, he noted that the money was not enough and that a national revolution was needed. He highlighted that additional funding had been offered in England but no corresponding funding would be provided in Wales. However, he noted that the Government had announced that significant funding would be provided to the Welsh Government for ALN. He promised that whichever party would lead the Senedd in May, he would try his best to influence and receive a fair share of the money. 

 

There was agreement with the Cabinet Member for Education's comments, stressing the need to lobby the funding and that there was truly a need for a national revolution.

 

It was expressed that although £7.9 was available in the Council's general reserves, this represented approximately 1.3% of the budget. They noted the need to strengthen this, and that 3-5% was required.

 

It was noted that Central Government over the years had put more and more pressure on Local Government to maintain services at a lower level of budgets. The need to get the money to deliver services was emphasised.

 

A member enquired whether the Council had a database that monitored how many people who paid council tax had now had to apply for benefits, to see what the trend was over time. It was noted that the department had information about requests for discounts to Gwynedd, but not at a national level. A further conversation was offered with the member in order to understand what kind of information they required.

 

RESOLVED

 

1.     To establish a budget of £379,701,110 for 2026/27 to be funded through a Government Grant of £264,009,390 and £115,691,720 of Council Tax income (which is a base increase of 4.75% plus a further 0.42% to cover the levy from the North Wales Fire and Rescue Authority, which gives a total of 5.17%)

2.     To establish a capital programme of £40,179,430 in 2026/27, to be funded from the sources set out in Appendix 4 of the report.