To present the report of the Scrutiny Manager and the Head of Function (Resources)/Section 151 Officer.
Minutes:
Submitted – the report of the Head of Function (Resources)/Section 151 Officer outlining the context to the 2019/20 budget setting process. The report incorporated at Appendix 1, on the initial proposals for the 2019/20 budget. The paper provides a position statement on the following issues:-
· The Executive’s initial budget proposals
· Local Government initial settlement (Welsh Government)
· Council Tax
· Reserves and general balances
· Savings proposals
· Budget pressures
· Risks
· Impact on the Medium Term Financial Plan
The Portfolio Holder for Finance reported that setting the budget for 2019/20 will be a challenge due to the provisional local government budget settlement announcement by Welsh Government on 9 October, 2018 with a 1% cut in funding. He noted that before identifying any savings and increasing the Council Tax or the Council Tax premium the Council is facing a financial gap of £7.156m for the 2019/20 financial year. The services within the Council have identified savings of £3.7m and details of the savings have been reported to the Elected Members Briefing Sessions and has been included within Appendix 4 of the report to this Committee. He further referred to the Council’s balance of general reserves as at 31 March 2018 stood at £6.9m, which was just above the balance assessed by the Head of Function (Resources)/151 Officer as the minimum required. However, the current budget position for 2018/19 is projecting an overspend of over £2m and this will have to be funded from the general reserves which will result that the level of general reserves will be below the minimum recommended balance. However, he said that following the UK Budget announcement on the 29th October, 2018, it is expected that additional funding will be received by the Welsh Government (as part of the Barnett formula for Wales), and Welsh Government has expressed that local government will be in the forefront to receive any additional funding available. The Portfolio Holder further said that Welsh Government is also considering as to how the new Teachers’ Pension is to be funded as it will be a financial burden on local authorities. He wished to note an amendment to the report that the nappy collection service will be consulted upon during the consultation process of the 2018/19 Budget.
The Head of Function (Resources)/Section 151 Officer reported that the Medium Term Financial Plan sets out a number of assumptions and these have been taken into account in calculating the standstill budget for 2019/20. He referred to the Standstill Budget as regards to the services provided at present by the Council and which highlights the requirements for additional funding for services which are under financial pressure i.e. Children’s Services. He said that ‘Committed Changes’ within the budget are amendments which are taken into account in drawing up the standstill budget and they reflect an increase/decrease in costs which are outside the control of the Council. These were highlighted within paragraph 3 of the report. The Head of Function further said that any change to the Council Tax premium will impact on the Council’s funding and change the funding gap. He referred to the premium for empty properties and second homes which may be a matter for discussion during the consultation process on the budget for 2019/20.
Councillor Dafydd Roberts, on behalf of the Finance Scrutiny Panel, gave detailed consideration to some of the initial draft budget proposals at its last meeting held on 26th September, 2018. The Finance Scrutiny Panel had specifically prioritised 3 service areas i.e. Learning Services, Adult Services and Highways, Waste and Property. A summary of the Panel’s deliberations was attached as Appendix 2 to the report.
The Committee considered the information presented and made the following points :-
· The Committee expressed deep concerns as to the unacceptable cut of 1% in the financial settlement for 2019/20. It was noted that the WLGA is campaigning to put pressure on Welsh Government for further funding within the final local government settlement. Questions were raised as to the formula used by WG as regards to local government settlement. The Head of Function (Resources)/Section 151 Officer responded that WG reviewed their local government settlement formula for 2017/18 and 2018/19 which had resulted in rural authorities receiving additional funding. However, the funding formula appears to favour urban areas in South Wales who received a smaller reduction due to population increase in those urban areas. An analysis of the Standard Spending Assessment allocation does not identify one clear reason as to why Anglesey has fared badly in this year’s settlement compared to previous years. The Leader of the Council said that the North Wales Local Authority’s Leaders Group has recently requested a meeting with the Cabinet Member for Finance, Mr Mark Drakeford AM to discuss the local government settlement, but to date the meeting is still awaiting to take place by WG. It was noted that the WLGA is campaigning to put pressure on Welsh Government for further funding within the final local government settlement. The Committee considered that a formal response needs to be undertaken to the Welsh Government expressing their concerns with the provisional settlement and to press of additional funding in the final settlement.
· The Committee considered that the 2nd Homes/Empty Homes premium needs to be increased as a method by which the budget funding gap can be closed;
· Clarification was sought to the allocated formula used as regards to funding per pupil and the methodology of that funding transferring when a pupil transfers to another school. The Head of Function (Resources)/Section 151 Officer responded that funding towards schools is distributed by an allocated formula which is driven by the number of pupils within a school. The formula allocates more per pupil to the smaller schools as it provides funding to ensure a minimum staffing level and that the building costs are funded in full and as a result they become a higher proportion of the overall budget for the smaller schools.
It was RESOLVED to recommend to the Executive :-
· That a formal response be submitted to the Welsh Government expressing their disappointment with regards to provisional settlement and to press for additional funding in the final settlement in due course;
· To accept the standstill budget and not to request services to find further savings nor to use the Council’s reserves as means of closing the financial gap;
· That consideration needs to be given to increasing the 2nd Homes/Empty Homes premium.
ACTION : As noted above.
(Mr Keith Roberts, Co-opted Member abstained from voting).