Agenda item

Dewi A. Morgan, Head of Finance (CJC’s Statutory Finance Officer) and Sian Pugh, Assistant Head of Finance to present the report.

·        The CJC's out-turn position for 2025/26 was noted and accepted (Appendix 1), including the transfer of £1,067,414 to the reserves to fund future budgets. 

·        The Growth Deal’s out-turn position for 2025/26 was noted and accepted (Appendix 2). Due to the underspend reported, to show a neutral position for the year the use of £60,990 from the reserves which was in the budget was not needed, and an amount of £867,731 would be used from the North Wales Growth Deal grant, which is less than shown in the budget. 

·        The Growth Deal's reserves position was noted and accepted (Appendix 3).

·        To note the Growth Deal’s capital end of year review as of 31 March 2026 (Appendix 4).

·        To note and accept the Investment Zone's out-turn position for 2025/26 (Appendix 5).

·        To note and accept the Regional Skills Partnership’s out-turn position for 2025/26 (Appendix 6).

·        The above was noted and accepted subject to further reports to provide further information regarding: 

1.      The CJC's staff over the past three years and the plans in moving forward, 

2.      providing an analysis of the underspend and the use of reserves over the next few years together with the required percentage of reserves.

3.      Any financial obligations of delaying the levy for 2027-28.

The report was presented, detailing the revenue and capital out-turn position of the CJC for 2025/26.

It was explained that the total net out-turn position for the Strategic Planning, Transport and Corporate elements in nature had underspent by £1.067 million. It was elaborated that £600 thousand of this underspend had come from grants received from the Welsh Government during the year.

The Growth Deal out-turn position per expenditure heading and the corresponding funding streams for the year were detailed, noting that the total underspend was £543k with the main underspend under the heading 'employees'.

It added that an interest reserve of £5m had been set aside to fund borrowing costs in the coming years as expenditure on the capital schemes had commenced before receiving grant funding from the Government. It was clarified that the balance of the resources reserve as of 31 March 2026 was £4.4m, and almost one million of this fund had been earmarked for use in the 2026/27 budget.

A year-end review of the Growth Deal capital programme for 2025/26 was presented followed by a spending profile from 2026/27 onwards. It was highlighted that a total of £30.64 million of expenditure had been made on the Growth Deal by the end of 2025/26. A net reduction of £14.28m was noted in expenditure for 2025/26 compared to the budget approved in February 2025 due to projects slipping.

The Investment Zone's actual expenditure and income were reported, noting a neutral out-turn position for 2025/26. It was noted that the financial position of the Regional Skills Partnership also showed a neutral position for the year, with the expenditure of £290k being funded by a Welsh Government grant.

Concern was expressed about putting over £1 million into the reserves while local authorities were in such serious financial positions and the constant need to justify the expenditure of public money.

It was enquired if local authorities could delay the levy for 2027/28, which would still leave £700,000 in reserves. It was expressed that any proposal would be considered by the CJC, but that no financial advice could be provided without an opportunity to gather the relevant information and costs. It was explained that it would not be possible to fund all proposals but that taking a break from levy charging in 2027/28 would be a serious issue that would likely result in a financial risk to the CJC.

It was highlighted that the medium-term financial plan would be produced over the summer, with the budget coming into force following its approval by the CJC in September 2026. It was confirmed that a proportion of the reserves would be used to keep the levy as low as possible for 2026/27.

Concern was noted about a high level of reserves, potential future underspending, and the fact that the CJC did not have a reserves policy. It was confirmed that a policy could be developed that would outline the level of reserves considered acceptable. It was acknowledged that the current level of reserves was higher than recommended although it was explained that the level of reserves should be systematically reduced.

It was emphasised that £600k of the reserve had already been committed for 2026/27. It was noted that the overall role of the CJC was to develop the North Wales economy, highlighting that the CJC was under scrutiny by the Welsh and UK Governments, and failure to deliver the projects could result in significant risk.

It was highlighted that the CJC was responsible for investing £400 million of public sector funding in major capital projects. Members were asked to consider that these projects would create 10,000 new jobs in the North Wales economy over the next ten years and would also attract a total investment of up to £2 billion in North Wales. It was explained that the work of the CJC enabled economic growth and the delivery of high-value projects. It was stressed that withholding or reducing funding for these projects would result in projects not being delivered and jobs not being created.

It was asked if the decision could be postponed until the next meeting of the CJC in September 2026 in order to receive all additional information. Given that a large amount of the CJC's underspend is staffing related, it was requested that members be given the opportunity to review employee expenditure looking at staff growth, as well as review projected plans for the future. It was stressed that a better understanding was needed for 2026/27 to justify any levy.

It was emphasised that if they were not willing to accept any of the formal recommendations in the decision sought, the CJC would not be able to produce the formal statement of accounts for 2025/26. It was noted that it was vital that the accounts for 2025/26 be prepared, and therefore it was proposed that the wording of the decision sought could be amended to reflect the request for further information on the reserves earmarked, and to ensure that it was presented to members at the next meeting of the CJC.