Agenda item

To receive the information, consider any risks arising from the actual expenditure and income against the 2025 / 26 budget.

• To accept the report and note the relevant risks
• To invite the Heads of those Departments that are overspending to the Committee to report on the overspend
• That a report be presented to the committee on the legal costs of Article 4

 

 

 

 

 

It was noted that the report detailed the Council's expenditure in 2025/26, the out-turn underspend or overspend position of individual departments, and the reasons for it. Reference was made to an abbreviation of the final position of all departments which highlighted the amounts to be 'carried forward' at the end of the financial year along with the main issues and areas where there were significant differences. 

 

·        Expenditure in the fields of child out-of-county placements, waste, residential care and domiciliary care had continued to exceed the budget they were allocated.

·        A favourable position on several corporate budgets was helping to alleviate the financial situation for the Council as a whole by the end of the financial year.

·        That £3.2 million from the Financial Strategy Fund would need to be used to balance out the departments' financial deficit situation.

 

Adults, Health and Well-being Department: the department's budgetary deficit had reduced to £1.4 million by the end of the financial year. The pressures on the provider services continued and was responsible for £1 million of the departmental pressure, which was mainly overspend on staffing and the use of agency staff on residential care. The pressure also continued on the residential side of Mental Health services but there had been an improvement in the financial position of older people and the Learning Disability Service. There were also savings and cuts worth £1.5 million that had not been realised. 

 

Children and Families Department: since the November review, there had been an increase of 11 out-of-county placements, including exceptional cases of non-registered placements, which were more costly, leading to an increase in the department’s financial deficit from £1.9 million to £3.4 million by the end of the financial year. There had also been increasing pressure on the Post-16 Service budget and on support plans and field workers. However, there had been a reduction in pressure on the Derwen Service which continued to overspend by £443k at the end of the year.

 

The Economy Department / Byw'n Iach Company: over the past few years, the Byw'n Iach company had received financial support from the Council above the contractual payment. Although the amount was lower than last year's amount, the required amount would be £269k by the end of the year.

 

Highways, Engineering and YGC Department; a financial deficit of £407k with a reduction in the work being commissioned by external agencies having a negative impact on the income on Highways services. In Municipal, there was a combination of additional pressures on public toilet cleaning staff budgets, while there were income losses in land maintenance and public toilets.

 

Environment Department; a budgetary deficit of £1.38 million at the end of the year, with a continuing trend of overspend in waste accounting for £1.26 million of the departmental position. Despite the drop in parking income deficit since last year, the deficit stood at £464k. It was reported that several savings schemes in various services worth £1.27 million were slipping. The overspend in waste was to be funded from the gains from refunding Parc Adfer and income from a levy on packaging materials for producers and retailers.

 

Housing and Property Department; significant pressure remained on the emergency accommodation service, with expenditure in this area at £6.1 million this year, which was consistent with 2024/25. The financial position followed an additional budget of £4.2 million allocated from the Council Tax premium and an additional one-off budget of £859k allocated as a part of the bids system to assist with the increasing pressures.

 

Following a review of spending on Homelessness, it was suggested that a one-off bid of up to £800k should be allocated to assist with the pressure on emergency accommodation in 2026/27.

 

For many reasons, one-off underspending was reported on Corporate headings

 

Schools; school balances had seen a reduction of £1.2 million, with a decrease from £8.3 million in 2024/25 to £7.1 million in 2025/26. Seven primary schools and three secondary schools had been in deficit at the end of the 25/26 financial year and that the Finance Unit and the Education Department were working with the schools and governing bodies of these schools to correct the deficits. 

Funds; the Council's specific funds had been reviewed at the closure of the accounts. It was reported that two virements totalling £8.1 million were to be implemented from the Financial Strategy Support Fund, with £6.5 million to increase the Council's general balances and £1.5 million to be moved to a buildings safeguarding fund relating to the Corbett Arms, Tywyn. All virements, at the close of the accounts, meant that the Financial Strategy Fund was reduced to £12.7 million by the end of the financial year.

 

All recommendations and financial virements had been approved by the Cabinet on 19 May 2026 and regarding the next steps, it was noted that work was underway to complete the 2025/26 statutory financial statements for Audit Wales to audit.

 

The members thanked the officers for the report.

 

During the ensuing discussion, the following observations were made by Members:

·        Of the £3.5 million savings, there was no reference to how much savings had been achieved in 2025/26 – this information would have been useful. While these amounts could not be changed, lessons must be learned from previous years.

·        The settlement had been better than expected and had consequently helped to adjust the budgets of some departments that had been significantly overspending, nevertheless it would be beneficial to invite Heads of Department who regularly overspent to explain the rationale for the overspend – accountability was needed.

·        Heads of Department and Managers needed to take responsibility for the overspend – needed to change the mindset of 'there will be money available' – we needed to share information and work together to improve the situation.

·        Review agreements with providers – although incentives were given there was also a need to invoke penalties – suggested that there was room for improvement here by conducting a legal review.

·        There was a need to invest more in the economy and bring jobs into the area

·        The advent of the Small Group Homes for specialist child care was a welcome development – a means of avoiding the use of external provision and reducing costs. Welcomed that two homes, accommodating 2 children in each home, were already operational and a third was on the way in 2026/27.

·        Welcomed an increase in reserve balances – there was a need to try to keep the balance at least 2.5% at the end of the year and not to be tempted to use it to help in a crisis. Welcomed that the situation has been reviewed and the level of emergency use had risen.

·        That 'money that had been spent, but was not visible' needed to be highlighted, e.g., the legal costs of Article 4. A significant amount of money had been lost here due to carelessness. Were there other amounts being hidden within budgets?

 

In response to a question about Byw'n Iach's relationship with Cyngor Gwynedd and why the Council had subsidised the company significantly over recent years and continued to do so, it was noted that Byw'n Iach was an arm's length company originally set up to save business tax for the Council. During covid, the use of leisure centres decreased tremendously and the situation to date had not been fully recovered. Cyngor Gwynedd was the owner of Byw'n Iach and although the company had not performed within the fee of the original agreement (namely a fee paid by the Council to Byw'n Iach to run the company on its behalf), the business tax benefits still existed.

 

In response to a question about seven primary schools and three secondary schools with a deficit at the end of the 2025/26 financial year and the scale of the problem, it was noted that the three secondary schools had a deficit of between £7,000 and £786,000 (£1 million in total) and the scale of the primary schools deficit was between £11 and £1,700 (£80,000 in total) – varied from school to school depending on the circumstances. It was reiterated that both the Education and Finance Departments were working together to discuss the largest deficits. It was questioned how the deficit of one secondary school was £786,000 - how was the debt so big? And why was there no control over the spending?

 

In response to a question regarding which Department's budget was responsible for purchasing houses specifically for the provision of child placements (Small Group Homes), it was noted that the costs fell under the Children and Families Department, but that a grant had also been received towards the cost of purchasing the houses. It was reiterated that there were additional costs during the transitional period of not using external provision and opening the Small Group Homes.

 

It was reiterated that Audit Wales would be submitting two reports to the Committee in the near future, relating to issues relevant to the above - 'Report on Children's Services' and 'Local Government Funding'.

 

 

RESOLVED:

·        To accept the report and note the relevant risks

·        To invite the Heads of those Departments that were overspending to the Committee to report on the overspend

·        That a report be submitted to the committee on the legal costs of Article 4