Agenda item

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

The report of the Director of Function (Resources)/Section 151 Officer incorporating the initial draft Revenue Budget proposals for 2025/26 was presented for the Executive’s consideration and approval for the purpose of public consultation.

Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance and Housing in presenting the report said that the initial draft budget proposals were set out fully to the meeting of the Corporate Scrutiny Committee on 15 January 2025 where they were examined and challenged in detail by both the committee and members of the Partnership and Regeneration Scrutiny Committee invited to attend in a comprehensive discussion. He summarised the position by saying that the draft local government settlement announced by Welsh Government on 10 December 2024 provided an increase of 3.6% for Anglesey (0.7% below the Welsh average and the 16^th highest increase from the 22 authorities in Wales). Although the settlement was better than had been expected it falls far short of what is needed to keep pace with the cost pressures facing the Council and after the main budget changes have been accounted for as explained in section 4 of the Section 151 Officer’s report, the Council is left with a funding gap of £10.791m before any change in Council Tax. If the Council was to seek to make up the budget shortfall through Council Tax alone it would mean raising Council Tax by 20.6% which the Executive accepts is unrealistic and not a step it would wish to take. The Executive is therefore proposing an approach based on a combination of budget savings, use of reserves and Council Tax increase to produce a balanced budget which by law the Council is required to do. An initial draft revenue budget of £195.234m is proposed made up of budget savings of £699k, utilisation of £2m of reserves and a Council Tax increase of 9.5% (to include 0.65% Fire Service Levy) which would increase the Council Tax on a Band D property by £2.87 per week. The Executive is asked to approve the initial draft budget proposals for public consultation which is planned to run from 22 January to 7 February. Councillor Robin Williams urged Anglesey residents to take part in the consultation and to make known their views which will inform the final budget proposal ahead of its submission to the Full Council on 6 March. He added that confirmation of the final settlement would not be received until February and any consequent changes and impact on the proposed budget would be considered at that time.

The Director of Function (Resources)/Section 151 Officer confirmed that the outcome of the public consultation process will be reported to the Corporate Scrutiny Committee which will examine the final budget proposal in light of the public feedback at its meeting on 19 February 2025 with the Executive then meeting on 27 February to recommend a final budget for 2025/26 for Full Council’s approval. He also encouraged Anglesey residents to read the budget report and to view the webcast of the Corporate Scrutiny Committee meeting last week to better understand the reasons for the proposed Council Tax increase and the challenges faced by the Council in putting together a balanced budget for 2025/26.  

Councillor Douglas Fowlie, Chair of the Corporate Scrutiny Committee spoke to confirm that the committee at its meeting on 15 January 2025  having considered all the budget documentation presented and the responses of the relevant  Portfolio Members and officers to matters raised in relation to the details and impact of individual proposals, had resolved to support the initial draft budget proposals for 2025/26 as presented in order to set a balanced budget, and to recommend them to the Executive for public consultation.

The Chair thanked Councillor Douglas Fowlie and Scrutiny members for a full and instructive discussion at the 15 January meeting. In referring to one of the fundamental issues raised at the meeting as having been the justification for increasing Council Tax by 9.5% when the Council has received more funding, he explained that although the Council has received a better than planned for settlement, in order to be able to continue to deliver its core services at the current level without implementing any savings and keeping Council Tax increase to a minimum, the Council would have had to receive a settlement of 9% from Welsh Government as opposed to the 3.6% which it actually received. Given the budget gap – the difference between the funding the Council has received and what it needs to spend to provide services in 2025/26, producing a balanced budget for 2025/26 has been challenging. The Chair emphasised that while no member wants to increase Council Tax or cut services there are few options available to balance the budget and that there needs therefore to be proper financial recognition by the Westminster and Welsh Governments of the services which local government provides if those services are to remain sustainable in the future.

At the request of the Executive which was keen that there should be public understanding of the kind of challenges the Council has had to address in balancing the budget for 2025/26, the Director of Function (Resources)/

Section 151 Officer referred to the pressures which the Council is facing due to rising costs for goods and services, pay increases including the increase to the National Living Wage and changes to NI employer contributions as well as growing demand for Council services especially in children and adults’ social care and in homelessness. The Section 151 Officer explained the impact of all these factors on how the budget is set in practice many of which are beyond the Council’s control and which it can only seek to manage as best as possible.

The Director of Social Services clarified how the demand for children’s social care can add significantly to the Council’s costs especially in complex cases where children’s needs are such that they require specialist care in high cost placements outside Anglesey. These are demands which the Council has to respond to and make provision for. He explained how the Council is seeking to limit the impact of these pressures by strengthening its own provision chiefly through the development of small care homes (Cartrefi Clyd) on the island and by providing early intervention and support for children and their families to prevent problems from escalating into serious issues. The Executive further noted that similar pressures are being felt in adult social care where an ageing population with increasingly complicated needs means there is more demand for the Council’s services.

The Section 151 Officer advised that the challenges which the Council is having to manage are not unique to Anglesey and that councils across Wales are experiencing the same budget pressures. The indications are that most councils are considering above inflation increases in Council Tax for 2025/26 with a number of proposed increases in the region of 8% to 9.5% or above. Anglesey’s Council Tax was the lowest in North Wales in 2024/25 and was £80 below the Welsh average. He further advised that the final Council Tax bill will also include the 2025/26 police and town/community council precepts which cover the cost of policing in North Wales and the budget requirements of town and community councils to provide the services they are responsible for. He also explained how factors in the wider UK economy as well as global issues could influence the funding outlook for local government in 2026/27 and beyond. The Government’s planned spending review in Spring 2025 is expected to provide clarity on the matter and it is hoped that it will also provide an indication of future years’ funding including for Welsh Government so that councils in Wales can better plan for the medium term beyond the current one year cycle which is what councils have been lobbying for through the WLGA. 

In closing comments, Executive members highlighted that developing the budget for 2025/26 had been a long and challenging process over many months. They also highlighted that the formula by which funding is allocated to councils in Wales is disadvantageous to more rural councils with an elderly population such as Anglesey which has received a below average settlement compared to that allocated to urban councils mostly in the South.

It was resolved to approve the following –

·         The initial proposed budget for 2025/26 of £195.234m.

·         A proposed increase in Council Tax of 8.85%, plus 0.65% to cover the Fire Levy making a total of 9.50% which takes the Band D charge to £1,721.70.

·         To formally propose to maintain the premium on empty and second homes at 100%.

·         That £2.000m is released from the Council’s general balances and earmarked reserves in order to balance the 2025/26 revenue budget.