Agenda item

Medium Term Financial Strategy and Budget 2020/21

To submit a report by the Director of Function (Resources)/Section 151 Officer.


The report of the Director of Function (Resources)/Section 151 Officer seeking the Executive’s views on the Council’s Revenue Budget and resulting Council Tax for 2020/21; the updated Medium Term Financial Strategy and the use of one off funds to support the budget was presented.


The Portfolio Member for Finance at this point declared a personal but not prejudicial interest in respect of the Council Tax Premium.


The Portfolio Member for Finance reported that whilst the Council welcomes the additional funding made available as part of the 2020/21 revenue settlement, the financial outlook remains challenging. It is also difficult to comprehend how the funding formula is applied given that it has led to noticeable variations in the increases which the councils in Wales have received.  As it is, Anglesey’s settlement has increased by 3.8%. In referring to the public consultation on the draft revenue budget proposals which was not as extensive this year due to the shortened timescale, the Portfolio Member said that although there was a majority in favour of investing in Adults’ Services in response to the increase in demand; in protecting school budgets and in implementing the proposed savings, there was less support for a Council Tax increase of between 4.5% and 5% with 69.88% of respondents opposing such an increase. The Portfolio Member said that the Authority is legally bound to balance its budget.


The Director of Function (Resources)/Section 151 Officer advised that the final funding settlement confirmed on 25 February, 2020 was unchanged from the provisional settlement of £101.005m for Anglesey announced in December, 2019 which was reported to the Executive at its 13 January, 2020 meeting but was accompanied by additional information which sought to clarify the difference in settlement increases between authorities. After taking into account the final settlement figure, the revised standstill budget requirement of £142.175m would require £41.172m in Council Tax funding equivalent to a 4.58% increase in the level of Council Tax.


The proposed budget incorporates a number of assumptions in terms of likely levels of income and expenditure in future years meaning there are therefore a number of financial risks inherent in the proposed budget. These are highlighted in section 5 of the report with the main risks being the staff pay award and the demand for services. The teachers’ pay award up to September, 2020 has been agreed and the required sum included in the budget proposal. However, the pay award for the period September 2021 onwards has not and although a 2% increase has been allowed for, it may not be sufficient. A greater risk is posed by the non-teaching pay award effective form 1 April, 2020 which has not been agreed. The Employers have offered a 2% increase but the Unions are seeking a 10% increase. Additional funding has been included in the budget to cover a 2% pay rise. Each 1% above this rate increases the annual cost by approximately £450k. The other major risk is around demand in particular in Adults’ Services, Children’s Services and additional special education services. The standstill budget for 2020/21 has taken into account the increased demand experienced during 2019/20 but any further increases would be unfunded and would increase the risk of further overspending in 2020/21.


Normally in setting the budget, the Medium Term Financial Plan would also be updated; however, given the uncertainty surrounding future funding, any update at this point would be speculative at best and could misrepresent the true position that will materialise. The situation is expected to become clearer over the coming months and the Executive will receive an update on the Council’s financial position in September, 2020.


Councillor Richard Owain Jones, Vice-Chair of the meeting of the Corporate Scrutiny Committee held on 27 February, 2020 reported on the Committee’s deliberations at the meeting. The Committee had discussed the 2020/21 final Revenue Budget proposals taking into consideration the feedback from the public consultation and a detailed verbal presentation given by the Director of Function (Resources)/Section 151 Officer on the budget options and how they might impact on the level of Council Tax increase. In noting the final funding settlement which was positive, the Committee had nevertheless expressed its disappointment that Welsh Government had not set a funding floor which would have meant that no council would have had a settlement increase of less than 4% (Anglesey’s increase being 3.8%). The Committee was supportive of the proposed additional investment in Adults’ Services to meet increase demand and of protecting schools’ budgets by not implementing the £800k reduction in the schools’ delegated budget deferred from 2019/20. The Committee also endorsed implementing the identified savings proposals apart from the increase in town centre car park fees (which it felt could be counterproductive in economic terms) but did favour abolishing the 50p tariff. The Committee acknowledged the risks to the 2020/21 Budget especially in relation to the staff pay award and service demand and on that basis it recommended a 5% increase in Council Tax.


The Executive considered the information presented and the report from Scrutiny. The Portfolio Member for Finance said that having been party to Scrutiny’s discussions at its 27 February meeting he was prepared to accept Scrutiny’s recommendations with regard to not increasing town centre car park charges and abolishing the 50p tariff but could not support a Council Tax increase of 5% which he believed would be too much to ask of Anglesey’s residents especially after last year’s Council Tax increase of 9.5%. He therefore proposed a net revenue budget of £142.146m for 2020/21 and a Council Tax increase of 4.5% which raises the Band Council Tax by £56.16 to £1,304.73. In endorsing the proposal the Executive further noted that it would be helpful were the Welsh Government, Unions and Employers to conduct pay negotiations in advance of budget setting so that councils are informed by the end of January each year about the level of the pay award and can budget for the increase with some certainty thereby eliminating the risk to the budget that an undetermined pay award poses. It was also suggested that in view of the legal requirement on councils to balance their budgets, Welsh Government should be asked to consider funding additional commitments/cost pressures that fall to councils which they have not been able to influence.


It was resolved –


           To note the formal consultation meetings on the budget and the resulting feedback as outlined in Section 2 of Appendix 1 and in Appendix 2 to the report.

           To agree the final details of the Council’s proposed budget including the revised funding in response to budget pressures and the proposed savings as shown in Section 8 of Appendix 1 and in Appendix 3 with the exception of increasing car park fees for town sites which shall remain unchanged apart from the 50p rate which shall be abolished making £1 the minimum payment.

           To note the Section 151 Officer’s recommendation that the Council should be working towards achieving a minimum of £7.1m general balances.

           To note the comments made by the Section 151 Officer on the robustness of the estimates made as set out in section 6 of Appendix 1.

           To recommend a net budget for the County Council of £142.146m and resulting increase in the level of Council Tax of 4.5% (£56.16 – Band D) to the Full Council, noting that a formal resolution, including the North Wales Police and Community Council precepts, will be presented to the Council on 10 March, 2020.

           To authorise the Section 151 Officer to make such changes as may be necessary before the submission of the final proposals to the Council.

           To agree that any unforeseen pressures on demand led budgets during the financial year will be able to draw upon funding from the general contingencies budget.

           To request the Council to authorise the Executive to release up to £250k from general balances if the general contingencies budget is fully committed during the year.

           To delegate to the Section 151 Officer the power to release funding from the general contingency up to £50k for any single item. Any item in excess of £50k not to be approved without the prior consent of the Executive.

           To confirm that the level of Council Tax Premium for second homes remains at 35% and for empty homes remains at 100%.

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