Agenda item

Revenue Budget Monitoring - Quarter 4, 2020/21

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


The report of the Director of Function (Resources) and Section 151 Officer setting out the Council’s financial performance to date and expected outturn for 2020/21 was presented for the Executive’s consideration.


Councillor Robin Williams, Portfolio Member for Finance presented the report highlighting that due to the impact of the Covid 19 pandemic on the normal delivery of services and the financial support provided by Welsh Government to help councils deal with the pandemic, the Council’s overall financial position for 2020/21 including Corporate Finance and the Council Tax fund is an underspend of £4.204m. This outcome is largely in keeping with the position in which the other North Wales councils find themselves who for the same reasons mainly confirmation of further late funding from Welsh Government, have reported underspends at the end of Quarter 4.  The underspend takes the Council’s general balances to £11.6m and although this is a very healthy position to be in it would be unwise to use it as an opportunity for a spending spree; the service review process will begin shortly and each service’s requirements and aspirations will be considered as will the funding options. The outlook in terms of how long the Coronavirus pandemic will last and what its impact will be on the Council’s budgets remains uncertain as does the continuation and level of Welsh Government funding support, hence the need to hold sufficient cash in reserve.


The Director of Function (Resources) and Section 151 Officer advised that the 2020/21 financial year has not been a normal year with Covid 19 having had a significant impact on the Council’s finances. The support provided by Welsh Government - £6m to meet additional Covid related costs and £2.6m for loss of income – is very much welcomed for without this support  the Council’s financial position would have been much worse -  in the region of a £4m overspend. The Council’s general balances at the year-end stand at £11.6m which equates to 8% of its net revenue expenditure which exceeds the 5% minimum reserve level agreed by Council. How the balances may be used will be the subject of discussion but bearing in mind that there is still uncertainty regarding the impact of Covid 19 on budgets this year as well as regarding the level of demand on services as restrictions are lifted which may result in services overspending which would then have to be met from the general balances.


Referring to the reduction in Council Tax income for 2020/21 the Section 151 Officer highlighted the transfer of domestic properties to self-catering properties on the Business Rates register as a significant contributing factor – around 200 such properties switched from domestic Council Tax to business rates during the year. These transfers can be backdated a number of years meaning the Council not only loses the current year’s Council Tax but must refund any payments made back to the applicable date of transfer leading to a significant loss of income in the year. Separately, Council Tax debt has risen from around £2.3m to £4m; Welsh Government has provided additional funding to cover this loss of income and this is being held in an earmarked reserve to be used as and when required.


The Council’s draft accounts for 2020/21 have now been published and are subject to audit. The outcome of the audit process may result in amendments to the accounts which could in turn lead to the general fund balance total being adjusted.


Councillor Dafydd Roberts, Chair of the Finance Scrutiny Panel confirmed that the Panel in scrutinising the Quarter 4 revenue budget report had expressed concern about the erosion of the tax base as more domestic properties make the switch from Council Tax to Business Rates. The Panel will be looking in due course at the response to the planned consultation on increasing the Council Tax premium on second homes and empty properties.


The Executive’s Members welcomed the budget surplus and the boost to the Council’s general fund balance which this had provided and were appreciative of the support which Welsh Government had given councils throughout the pandemic period. They also acknowledged the need to be cautious in the use of the balances because of the uncertainty in respect of future demand on services and future levels of funding. Whilst recognising that utilising the balances to fund new facilities/provision/items carries much appeal, the Executive highlighted that the Council is facing a number of investment commitments with regard to its existing assets and that alternative means of funding capital expenditure are available and should also be explored.


The Director of Function (Resources) Section 151 Officer further advised that retaining a healthy level of balances is important given there are many uncertainties in the future not least the ongoing impact of Covid 19 on the Council’s income streams as leisure centres continue to operate below capacity and reduced footfall in town centres as people continue to work and shop from home results in reduced parking income. Welsh Government support is not limitless and will not continue for ever and the Council will have to consider the long term impact of the pandemic on some of its budgets and plan accordingly. Having a good level of reserves to fall back on will allow the Council the leeway to make those adjustments and will mitigate any overspending should that be necessary. Also, there is added uncertainty regarding Welsh Government’s funding settlement for local government next year and beyond with no indication having been given of its funding plans for local government in the years to come which would help with any decisions the Council might make with regard to releasing balances.


In light of the discussion and the need for longer term certainty regarding Welsh Government funding the Chair proposed and it was supported, that the a letter be sent on behalf of the Executive to the Welsh Government’s Minister for Finance and Local Government to ask for guidance regarding Welsh Government’s funding plans for local government for the next three years so that councils are better able to plan strategically.


It was resolved –


·        To note the position set out in Appendices A and B to the report in respect of the Authority’s financial performance to date and expected outturn for 2020/21.

·        To note the summary of Contingency budgets for 2020/21 detailed in Appendix C to the report.

·        To note the position of the Invest to Save programmes in Appendix CH to the report.

·        To note the position of efficiency savings for 2020/21 in Appendix D to the report.

·        To note the monitoring of agency and consultancy costs for 2020/2 in Appendices DD, E and F to the report.

·        That a letter be sent on behalf of the Executive to Welsh Government’s Minister for Finance and Local Government to ask for an indication of Welsh Government’s funding plans for local government for the next 3 years in order to help councils plan more strategically over the medium term.

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