Agenda item

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

Councillor Robin Williams, Portfolio Member for Finance presented the report by the Director of Function (Resources)/Section 151 Officer setting out the Executive’s provisional revenue budget for 2022/23.

The provisional settlement for Local Government in Wales announced on 21 December, 2021 shows an increase of £456m in the overall level of funding for Wales which is equivalent to a 9.8% increase in cash terms. For Anglesey, the increase in comparison to the Aggregate External Funding (AEF) in 2021/22 is £9.74m or 9.27%. While the increase is to be welcomed and provides the Council with an opportunity to invest in services for the first time in many years, the positivity has to be caveated by what the 2022/23 provisional settlement says about subsequent years with an indicative rise of 3.5% in the AEF for Wales indicated for 2023/24 which would still make it possible to continue to invest in services should that increase be replicated for Anglesey before the position begins to worsen again in 2024/25. The figures presented include estimated provision for pay awards regarding which there remains an element of uncertainty - and other staffing pressures, non-pay inflation, movement in pupil numbers, levies including for the newly established North Wales Corporate Joint Committee, capital financing charges and contingencies. The budget has been developed to also allow for funding expectations from Welsh Government where the AEF is expected to cover other cost pressures in 2022/23 for which no extra funding will be provided by Welsh Government. These include payment of the Real Living Wage to care staff, homelessness prevention; managing the ongoing impact of the Covid pandemic and new duties arising from the Local Government and Elections (Wales) Act 2021 and are set out in more detail in section 4.8 of the report. The settlement provides the Council with an opportunity to address some of the service related risks and issues that have arisen as a result of a long period of austerity during which capacity and provision have been reduced. Table 2 summarises the proposed investment in services although these proposals will be further examined before the adoption of the final budget proposal in March, 2022.

After taking account of the provisional settlement from Welsh Government and the main budget changes (before any change in Council Tax) the starting point for the 2022/23 budget is a shortfall of £859k which it is proposed be funded by a 2% increase in Council Tax (likely to be among the lowest increases in Wales) taking the Band D charge to £1,367.46. The proposed net revenue budget for 2022/23 is £158.365m.

The Director of Function (Resources)/Section 151 Officer reported that the main financial risks to highlight for the budget are summarised in section 6.5 of the report; these  are not covered in the budget or potentially are only partly addressed and they relate to Covid costs and potential loss of income although it is hoped Welsh Government would step in to provide support should the Covid situation deteriorate significantly; uncertainty around the final staff pay award; general inflation with rising prices affecting the cost of purchased goods and services which is mitigated in part by the protection afforded  by long-term contracts; fluctuations in  service demand; the reduction and/or loss of grant income  and additional duties and costs in establishing  the new Port Health Authority. Discussions are also ongoing regionally with regard to agreeing certain elements of residential and care home fees. The initial budget proposal reflects the resources required to operate services at 2021/22 level but updated to take account of known changes and costs in 2022/23. The forecast for 2023/24 and beyond is more uncertain because of the uncertainty around inflation rates although based on the information available as referred to in paragraph 7.2 of the report it is likely that investment will still be possible in 2023/24 while the indicative 2.4% increase in AEF in 2024/25 would require a 2% Council Tax increase just to cover costs.

Councillor Dylan Rees, Vice-Chair of the Corporate Scrutiny Committee reported from the Committee’s meeting earlier in the day at which the initial revenue budget proposal for 2022/23 had been scrutinised. He confirmed that having considered all the information presented both written and verbally at the meeting as well as feedback from the Finance Scrutiny Panel, the Committee had resolved to recommend the initial draft revenue budget proposal for 2022/23 to the Executive to include a 2% increase in Council Tax in order to create a balanced and prudent budget, with no votes being cast against the proposal but with two abstentions. The Committee had likewise welcomed the opportunity which the settlement provides to invest in services in the forthcoming year.

Councillor Dafydd Roberts, Chair of the Finance Scrutiny Panel confirmed that the Panel shared the conclusions of the Corporate Scrutiny Committee and that it deemed the initial draft revenue budget proposal for 2022/23 to be reasonable and based on sound estimates; the Panel also acknowledged the risks around the budget as identified in the Section 151 Officer’s report.

The Executive collectively welcomed the opportunity which the provisional settlement provides to make much needed investment in services after a very long period of service cuts and retrenchment and was keen to emphasise that the approval of the draft initial budget proposal is the culmination of a budget development process that has taken many months and involved hours of discussion, analysis and challenge. Although the provisional settlement was acknowledged as positive the Executive recognised that the financial situation is not without risk with Councillor  Robin Williams Portfolio Member for Finance highlighting the additional requirements befalling the Council in undertaking the duties as the Port Health Authority for Holyhead as a particular challenge as there is no certainty that the income generated will cover the costs meaning there may be an additional unquantified cost for the Council in 2022/23 which is not funded in the proposed budget. Representations to Welsh Government including by letter on this matter have not persuaded Welsh Government to commit to providing additional financial support to meet the risk although discussions are ongoing.

It was resolved to approve the following –

·         The initial proposed budget for 2022/23 of £158.365m.

·         A proposed increase in Council Tax of 2%, taking the Band D charge to £1,367.46.

·         That the Executive seek the opinion of the public on the initial budget proposal and Council Tax rise for 2022/23.