Agenda item

To present the report of the Director of Function (Resources)/Section 151 Officer.

 The report of the Director of Function (Resources)Section 151 Officer incorporating the Council’s requirement to put in place a robust system to monitor and control its revenue budget and a key element is a Medium Term Financial Plan was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that the Plan sets out the Council’s budget strategy over the next three year period and sets out the assumptions which will be taken forward to the annual budget setting process.  He said that it is difficult to predict the financial position of the Council and especially as to Welsh Government financial settlement for the next three years.  A comprehensive spending review has been planned by the UK Government for two to three years and in turn with impact on the Welsh Government’s ability to provide Welsh local authorities with an indication on the level of potential funding over the next three years.

The Director of Function (Resources)/Section 151 Officer reiterated the comments of the Portfolio Member that it is difficult to predict the financial position of the Council and it is anticipated that WG will only provide the local authorities with the financial settlement for the forthcoming year when it announces it provisional settlement later in the year and it is extremely difficult to determine what any potential funding gap will for the forthcoming years.  The Medium Term Financial Plan takes account of all known changes that are required to be built into the 2022/2023 base budget, and makes assumptions on the main factors that impact the Council’s revenue budget (increase pay costs, increase in NI contributions, pensions, energy increases, general inflation etc).  The Director of Function (Resources)/Section 151 Officer referred to the main budget pressures and risks facing the Council with Pay Increases (Non-Teaching Pay) with a current offer of 1.75%; Pay Increases (Teachers Pay); NI contributions increase of 1.25% to fund the increasing cost of social care; Children’s Services – potential increase in children been put in care; Adult Services (elderly, mental health, learning disabilities etc) – increase in the demand for the service; Elderly Nursing and Residential Care Fees; Out of County School Placements; Council Tax Reduction Scheme (furlough scheme comes to an end may have an impact in increasing number of people requiring assistance in paying their Council Tax).

The Director of Function (Resources)/Section 151 Officer referred to Table 3 within the report which reflects the impact of Council Funding for Changes in AEF and Council Tax 2022/23.  The reduction in AEF in 2022/22 would require an increase of between 4% and 5% in Council Tax to maintain the current level of funding in cash terms.  In order to fully meet the funding gap for 2022/23, it would require a 5% increase in AEF, along with a 3% rise in Council Tax, to fully fund the additional net expenditure. 

Councillor Carwyn Jones said that the effect of the pandemic, furlough scheme and Brexit has had immense financial pressures and there is an assumption that inflation will rise to 4%.  Councillor Jones ascertained as to the figure of financial cuts made by the Authority since 2013.  The Director of Function (Resources)/Section 151 Officer responded that during setting out the budget process yearly, extra resources is place within services that are under pressure such as Adults’ and Children’s Services.  He noted that the assumption of savings achieved by the Authority since 2013 is £24.6m.  The financial cuts within services have been mainly in Highways, Property, Waste, Planning, Public Protection, Leisure and Economic Development and it will be difficult to continue some services if further cuts are faced in the future.

The Leader ascertained whether the Council was in a better situation as regards to its financial position three years ago.  The Director of Function (Resources)/Section 151 Officer responded that the financial reserves of the Council has increased over the last two years which places the Council in a better financial position.  

It was RESOLVED:-

·      That the Council puts in place a robust system to monitor and control its revenue budget and a key element of that system is a Medium Term Financial Plan.  The plan sets out the Council’s budget strategy over the next three year period and sets out the assumptions which will be take forward to the annual budget setting process;

·      To note the contents of the plan, to approve the assumptions made and to consider how to bridge the funding gap identified in the report as part of the process to set the 2022/23 revenue budget as detailed in Appendix 1 of the report.