Agenda item

2022/23 Revenue Budget Setting - Final Draft Proposals

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



The report of the Scrutiny Manager was presented for the Committee’s consideration. Attached to the report was the report of the Director of Function (Resources) and Section 151 Officer to be presented to the Executive on 3 March, 2022 on the final draft proposals for the 2022/23 revenue budget (the Corporate Scrutiny Committee having scrutinised the initial draft revenue budget proposals at its meeting on 24 January, 2022)


Councillor Robin Williams, Portfolio Member for Finance in presenting the report confirmed that the Executive’s initial draft proposals had been out to public consultation  which due to the limited time available as a result of the late announcement of the provisional settlement, only ran for a period of a fortnight between 26th January, and 9th February, 2022. The consultation set out the Council’s financial position, the financial risks and issues which the Council faces and sought the views of Anglesey taxpayers on the Executive’s proposal to address those risks through re-investment in services partly funded by 2% increase in Council Tax. The outcome of the process is analysed in detail in the report but in summary it can be reported that 115 responses were received of which 31% agreed with the proposed 2% increase in the Council Tax and 69% did not agree. Due to the delays in receiving the provisional and final settlements, the budget timetable for 2022/23 has had to be condensed to enable the Council to set the Council tax within the timeframe set out by law meaning that the time available for the public consultation has been short raising the question of the effectiveness of the process. The final draft budget proposal remains unchanged from the initial proposal put forward in January, 2022 namely a net budget for the County Council of £158.365m and resulting increase of 2% in the Council Tax which is the lowest increase in North Wales and places Anglesey eighteenth out of the twenty-two local authorities in Wales.

The Director of Function (Resources)/Section 151 Officer focused on the risks to the budget and their implications as well as factors that could mitigate those risks thereby lessening their impact. These risks were set out in detail in paragraph 5.3 of the report with the most prominent being the uncertainty around pay and price inflation during 2022/23. Other risks include movement in interest rate; reduction and/or withdrawal of grant funding; non-achievement of income targets; non-payment and/or avoidance of Council Tax premium; movement in the Council Tax base which may affect the Council Tax yield as well as lower collection rate because of the pandemic; and a change in demand for services. However, having considered all the risks and the mitigating actions, the Director of Function (Resources)/ Section 151 Officer confirmed that it was his view that the budgets are robust and deliverable.

As at 31 March, 2021, the Council’s general reserves stood at £11.437m which is equivalent to 7.77% of the Council’s net revenue budget for 2020/21. During the year, £4.5m of  reserves have been put to the uses described in paragraph 6.5 of the report whereas earmarked reserves to the value  of 643k  have been transferred back into general balances  meaning the revised level of reserves currently stands at £7.554m. £1.681m of the general balances have been allocated as funding for the 2022/23 capital programme. However, it is anticipated that there will be a significant underspend in 2021/22 (due to the receipt of additional Welsh Government grant funding) with £2m being a conservative estimate. This will allow the general balances to be replenished bringing them to around £8m at the end of the financial year which is around 5% of the net revenue budget for 2022/23 which is considered an acceptable level. Financial risks are also mitigated by holding Earmarked reserves which are held to mitigate specific risks or to fund specific projects. At the beginning of the year the Council held £15.455m as earmarked reserves part of which could be returned to the general balances should the Council’s financial position worsen significantly during 2022/23. Having taken into consideration the level of the Council’s general balances, school balances, earmarked reserves and contingency budgets, the Section 151 Officer is satisfied that the Council’s financial position is sufficiently robust to withstand any difficulties that may arise during 2022/23 if the proposed budget is insufficient to meet the actual costs incurred by the Council during 2022/23.

Since the completion of the initial budget proposals, further work has been undertaken to review and revise the final budget for 2022/23 including a full review of all the investments in the services by the Executive. This has resulted in changes to the initial budget proposal in terms of individual budget headings and the budget allocations between services, but has not had any impact on the final net budget requirement which remains at £158.365m funded by £114.549 AEF and £43.816m Council Tax. The Welsh Government will publish its final local government settlement on 2 March, 2022; whilst it is not anticipated that there will be any significant change between the provisional and final settlement, any change will be accounted for by adjusting the level of general contingency if the variance is small or by funding from/contributing to the Council’s general balances should the variance be larger. The proposed level of Council Tax will remain unchanged even if the AEF differs from the figure shown in the provisional settlement.

Looking further ahead and based on initial indicative figures provided by Welsh Government it appears that there may be some scope for further re-investment in services in 2023/24 before the financial position worsens again in 2024/25. An updated Medium Term Financial Strategy will be presented to the Executive in September, 2022.

In response to questions by the Committee, Officers confirmed the following –

·                  That from the £43.816m Council Tax income in the 2022/23 around £1.5m is generated by the second homes premium and around £400k is generated by the empty homes premium. The number of properties being identified as self-catering accommodation and transferring to the business rates register has increased from 977 properties in February, 2021 to 1,000 properties in February, 2022, an increase of 83 properties. There is also a significant number of second homes on the Council Tax register. Whilst the Council keeps a record of properties paying the premium it is difficult to provide a narrative around the figures in terms of movements and transfers to business rates.

·                  That with regard to the public consultation process and the framing of questions in a way that is understood by the public with particular reference to those respondents who did not agree with the Council Tax increase but still wanted investment in services, the consultation asked whether the public agreed or not with the 2% Council Tax increase and if not, which services would they like to see being given priority.

·                  That the Council is likely protected in the short term from the adverse economic effects of world events and other factors. However, if after 2022/23, the national economy comes under pressure then that could have repercussions for both the funding allocation from Central Government to Welsh Government and the resulting settlement for local government in Wales. Continued high inflation will also affect the Council’s contracts and subsequently its costs eventually; the Council will need to monitor how the wider situation evolves and prepare for the worst which could mean planning for savings. There may also be demands on local government as a consequence of the situation in the Ukraine e.g. there may be a requirement to accommodate refugees which would result in additional demand for services. Whilst additional Government financial support could be provided in such an event, having a healthy level of general balances would help the Council meet any increase in demand.

·                  That the reduction in the Council’s general reserves from £11.437m as at 31 March, 2021 to an estimated £8m at the end of financial year can be explained by the £3m allocated in the year to roof repairs at Canolfan Addysg y Bont; the transfer of £1.376m into specific service reserves and the use of £0.150m for other purposes. However, £0.643m of previously earmarked reserves have been transferred back into general balances meaning they currently stand at £7.554m. In addition, notwithstanding  £1.681m of the general balances have been allocated to support the 2022/23 capital programme, it is anticipated that the  2021/22 budget will be underspent by at least £2m which sum can be used to replenish the general balances bringing them back to in the region of £8m.


Having considered the information presented both written and verbally at the meeting, it was resolved to endorse the final draft proposed revenue budget for 2022/23 to include a Council Tax increase of 2% and to recommend the same to the Executive.

 (Councillors Aled Morris Jones and Bryan Owen abstained from voting)


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