Agenda item

To present the report of the Head of Function (Resources) and Section 151 Officer.

The report of the Head of Function (Resources) and Section 151 Officer incorporating the Wales Audit Office’s report on Savings Planning at the Council along with the Management response to the recommendations made therein was presented for the Committee’s consideration.

The Head of Function (Resources) and Section 151 Officer reported that the Wales Audit Office’s Savings Planning report is the result of a further review of the Council’s financial planning arrangements undertaken in September, 2016.This review was conducted in all of the Welsh Local Authorities and follows on from an earlier review of financial resilience in local authorities which was reported upon at individual authority level and at national level through a national summary report published in August 2016.The Officer referred to the scope of the Savings Planning review and said that the resulting report comes to the conclusion that although the Council “has an improving financial planning framework, underdeveloped savings plans may not fully support financial resilience.” The report also identifies some positive change in the position from 2015/16 and notes that the Council “has recognised the need for it to change its strategic approach to financial planning and to review its approach to fees and charges.” The report has made five proposals for improvement; these are detailed in Appendix 2 along with the Management response and completion date for the actions proposed.

Mr Gwilym Bury, WAO said that the report is a positive report for the Council and reflects the fact that the Council has continued to strengthen its financial arrangements. Where process can be improved is with regard to how equality impact assessments of savings proposals are carried out. Although these were done they were not all undertaken at the time the savings proposals were agreed. It would assist Elected Members to make fully informed decisions on savings proposals if an equality impact assessment of each proposal was carried out beforehand. The Head of Function (Resources) and Section 151 Officer confirmed that this is being addressed as part of the review of the 2017/18 budget setting process.

The Committee considered the report and made the following points –

•           The Committee sought assurance that Management is confident that it is able to develop savings plans that are robust, accurate and capable of being delivered thereby improving the Council’s resilience to withstand future financial pressures. The Head of Function (Resources) and Section 151 Officer said that the Council’s strategy over recent years has worked to eliminate the slack in the budget to the extent that this approach is no longer feasible or adequate. While there is still scope to improve processes, the long-term approach necessarily involves re-considering what services can be delivered bearing in mind the services the Council is required by law to deliver and those which it is not and are discretionary, and also the way in which they should be delivered. The bulk of the Council’s expenditure is on Education, Social Services and Highways which are all statutory services; it is therefore difficult to see how the Council can continue to operate effectively and viably in a context of reducing budgets without transforming how services are delivered in order to reduce costs. This process has commenced within the Council and is ongoing.

The Portfolio Member for Finance agreed with the comments made and added that the Council has in recent years made significant improvements in its financial and budget planning arrangements. The way councils are funded and the timing of the Welsh Government’s announcement of the local government settlement makes budget planning difficult. Budget and savings planning on a year by year basis no longer meets the need; the Council has to take a long term view and key to this is the transformation of services and the way in which they are delivered.

•           The Committee sought assurance with regard to the Council’s financial planning arrangements and the continuation of the austerity agenda, that 5% general balances remains sufficient and viable. The Head of Function (Resources) and Section 151 Officer said that as a general rule of thumb, 5% of the net revenue budget is considered to be an acceptable level of resources to be held in reserve. For the Council this equates to £6m.However, certain considerations need to be resolved before the final reserves position becomes clear including Equal Pay and whether or not the Welsh Government approves a capitalisation directive for equal pay that would allow the Authority to capitalise equal pay costs. Should that not happen, then meeting the costs of remaining equal pay claims would have to be met from general balances. Last year, £1m was released from general balances to improve the Council’s business processes in order to generate further efficiency savings in future; whilst the use of reserves for such a purpose is acceptable, he would not advise drawing on reserves to reduce Council Tax increases.

•           The Committee sought clarification of whether the Welsh Government’s advocacy of regional collaboration and working especially with regard to the larger statutory services is likely to impact on an individual authority’s savings plans when that authority is expected to align its services with those of up to five other authorities which may have a different baseline and a different approach.

The Head of Function (Resources) and Section 151 Officer said that whilst  the Welsh Government’s White Paper on Local Government Reform does not make regional working mandatory, it does propose that local authorities work together and share responsibilities where that is in the interests of the service, of efficiency and where it has cost benefits. What has not been addressed is the cost of the governance and administration arrangements for regional working. Where resources are pooled and joint committees established there has to be accountability for them and those arrangements have cost implications. This is an assessment which local authorities have to make in entering into regional and collaborative working arrangements.

It was resolved to –

•           Accept the findings of the Auditor’s report and to note its conclusions, and to acknowledge that the Council is continuing to review and refine its arrangements is respect of financial planning.

•           Accept the Management response and to agree that it be submitted to the Wales Audit Office.

NO FURTHER ACTION ENSUING