The Chair of the Finance Scrutiny Panel to provide an oral report.
Minutes:
Councillor Dafydd Roberts, Chair of the Finance Scrutiny Panel provided a verbal report of the matters discussed at the Finance Scrutiny Panel’s 3 June, 2021 meeting as follows –
• Revenue Budget 2020/21 Quarter 4 update
The Panel having received a verbal presentation by the Director of Resources (Function)/ Section 151 Officer noted the £4m end of year underspend and the reasons for it including reduced demand for some services in lockdown and Welsh Government financial support for both increased costs and loss of income due to the pandemic. The schools’ financial situation and increased balances were noted as was the underspend on central education costs because of the enforced closure of schools for much of the year. The Panel heard that 3 schools are now in deficit compared to 11 last year.
The Panel noted also that services had underspent to the tune of £3m; those services were outlined and why they had underspent was explained. The need to review the children’s services out of county budget was recognised because of the extra funding provided in the past two years and the reduced demand for out of county placements as the Authority’s own foster service provision has increased. The funding side of the Council’s business was discussed including the Council Tax, Council Tax Premium, Non-domestic rates and Revenue Support Grant where the income was £133k short of the budget .This was attributable in the main to 200 second home properties switching from Council Tax to business rates and the Council having to reimburse the difference. Despite this the number of second homes paying the premium has remained constant indicating that the number of properties coming into the second and empty homes category is equivalent to those switching. In agreeing that the Panel would scrutinise the response to the consultation on increasing the Council Tax premium, it was noted that it is becoming increasingly challenging for young people to buy a property and that some form of scheme to help them is required. The Panel also noted the few areas of over expenditure within the Council.
The Panel in considering future financial prospects noted the uncertainty around future funding settlements and the level of demand for some of the Council’s services as it comes out of the pandemic which it recognised as risks. The importance therefore of maintaining a healthy level of balances to meet future potential demand pressures and/or reduced funding was noted. Concluding its scrutiny of the Qtr.4 revenue side of the budget the Panel recommended the following for the Committee’s attention –
• To note the Authority’s financial performance at the end of Quarter 4 2020/21
• To acknowledge the uncertainty in respect of the 2022/23 funding settlement and the possibility of increased demand for services recognising the importance therefore of maintaining a prudent level of reserves.
• To scrutinise the response to the consultation on increasing the Council Tax premium in due course.
• Capital Budget Quarter 4 2020/21 update
The Panel having received a verbal presentation by the Director of Resources (Function)/ Section 151 Officer noted that the underspend on the 2020/21 capital programme was £25m which is higher than in previous years but for which there are specific reasons not least the delays to capital schemes caused by the Covid 19 pandemic in what has been an exceptional year. The Panel was assured that no external funding would be lost as a result of the slippage. It was noted also that the price of building materials has increased and that some are in short supply potentially affecting capital projects going forward– the Panel was informed that where tenders are in place, then those prices will be maintained. The Panel recommended that the expenditure against the 2020/21 capital budget at Quarter 4 be noted.
In noting the report back from the Chair of the Finance Scrutiny Panel on the Quarter 4 Revenue and Capital Budgets position, Councillor Bryan Owen highlighted that near to 10% of the Council’s budget is now held in reserves; he queried therefore whether the Authority’s high level of reserves will impact on its funding settlement from Welsh Government on the reasoning that holding so much cash in reserve might be taken to indicate that the Authority can manage with less. He further suggested that had the Authority not raised the Council Tax for 2021/22 then it still would have had a sufficient amount of reserves and that it was perhaps time to consider putting those reserves to good use for the benefit of the taxpayer by improving services or providing facilities in communities e.g. 3G pitches.
Councillor Dafydd Roberts said that the Finance Scrutiny Panel would support using reserves if that was done in a reasonable way and had advocated a reduced increase in Council Tax for 2021/22.
Councillor Robin Williams, Portfolio Member for Finance in acknowledging the point raised, said that IoACC’s Council Tax increase for 2021/22 was the second lowest in North Wales. Whilst the reserves will be utilised in some form and investment made in the Island’s resources, the Authority needs be circumspect in managing its reserves because of the degree of uncertainty regarding the future. The process of reviewing service budgets will begin later this month and will provide services with an opportunity to discuss their aspirations and to consider whether those can be incorporated within the Council’s spending plans.
The Director of Function (Resources)/Section 151 Officer advised that the Authority’s current positive financial position is due to late funding from Welsh Government which was received after the 2021/22 budget was set. The Authority needs to ensure that it makes the best use of reserves which means not using them solely to fund capital expenditure but having regard to pressure on services in the coming year and the need possibly to support the revenue budget as a result. In utilising the reserves consideration will have to be given to projects that make a difference to Anglesey’s residents and to the possibility also that the reserves may be required to fill a funding gap between a reduced settlement and the savings the Authority is able to deliver.
There followed a discussion about the Council Tax premium and whether the income it generates is then targeted towards those communities where the number of second or empty homes is highest. A point was made about the premium being a double edged sword affecting local people who may come into possession of a second property they are then not able to dispose of which may remain empty for a long period.
The Director of Function (Resources)/Section 151 Officer clarified that the revenue generated by the Council Tax premium goes into the budget and an element is allocated to the Housing Service’s budget to help young people across the Island with their housing needs; it is not targeted at areas where the number of second and/or empty homes is high but is available to meet eligible claims wherever on the Island they are made. With regard to empty homes, owners of empty homes are exempt from paying the Council Tax and premium for the first 6 months after the property has become empty; if the property is being actively marketed the premium will not apply for a further 12 months. Under the Council’s Council Tax Discretionary Relief Policy the Section 151 Officer has the authority to consider cases where having to pay the Council Tax and/or premium would cause financial hardship and if claimants are able to demonstrate that that is the case and that they are unable to dispose of the property, they can be exempted from paying the premium. Such cases are few the purpose of the premium being to induce people to bring empty homes back into use by upgrading, selling or letting them.
It was resolved to accept the report of the Chair of the Finance Scrutiny Panel, to note the points brought to the Committee’s attention and to thank Councillor Dafydd Roberts for the feedback.
NO FURTHER ACTION