Agenda item

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

The report of the Head of Democracy was presented for the Committee’s consideration. The report outlined the context to the 2026/27 Budget setting process and highlighted the key issues and questions for Scrutiny in formulating a formal response to the Executive’s final draft revenue budget proposals. The report of the Director of Function (Resources)/Section 151 Officer, summarising the Executive’s final draft budget proposals together with the updated medium term outlook was attached at Appendix 1 to the report.

Councillor Gary Pritchard, Leader and Portfolio Member for Economic Development  presented the report and noted that the Corporate Scrutiny Committee is being asked to review the final draft revenue budget proposals for 2026/27 and provide a formal response to the Executive before the budget goes to the Full Council on 5 March 2026. The initial draft budget proposals were discussed in detail at this committee’s 21 January meeting including the significant financial pressures and challenges faced by the Council. The final proposals remain unchanged i.e. a total budget of £207.029m, a proposed 5.1% Council Tax increase and the use of £1.685m of reserves to balance the budget. In setting the proposed budget the Executive has recognised the need to protect frontline services and to increase funding for adult and children’s services to meet rising demand while ensuring that schools receive the funding required to meet inflationary pressures.

The Director of Function (Resources)/Section 151 Officer confirmed that no matters have arisen since the issuing of the initial budget proposal which requires amendment to the net expenditure budget which remains at £207.029m. He advised the committee of his statutory duty to report on the robustness of the budget estimates and the adequacy of the Council’s financial reserves. He explained that the 2026/27 budget is based on an assessment of the costs and income expected in the coming financial year with assumptions applied and risks identified. The main risks are highlighted in section 5 of the report and having considered all the risks and the mitigating actions, he concluded that in his view, the budget is robust and deliverable and the Council’s current level of healthy general balances and earmarked provides sufficient mitigation against the risks identified. With regard to the medium term outlook he noted that based on the latest information, significant savings will still be required in 2027/28 and 2028/29 although inflation, pay awards and demand for services remain major uncertainties.

Councillor Geraint Bebb, Chair of the Resources Scrutiny Panel reported on the outcome of the Panel’s meeting on 12 February 2026 at which the final draft revenue budget proposals for 2026/27 were considered. Having reviewed the documentation presented by the Director of Function (Resources)/Section 151 Officer and having noted that the final draft budget proposals were unchanged from the initial proposals, the Panel had resolved to support  the final draft revenue budget proposals for 2026/27 as presented and to recommend them to the Corporate Scrutiny Committee.

In responding to the committee’s questions on the final draft revenue budget proposals for 2026/27, Officers and Portfolio Members provided further clarification. They explained - 

·      That the allocations of £146,100 for food safety inspections in 2026/27 and £64,600 from 2028/29 onwards are intended to increase inspection capacity and address the backlog of approximately 700 non-high risk businesses awaiting inspection. The backlog has arisen from pandemic related capacity constraints and from the introduction of new regulatory requirements for  licensing and inspecting premises such as tattoo studios and beauty parlours, which have required priority attention. The underperformance of the service has also been recognised through the scorecard monitoring process. The investment is designed to provide additional capacity needed to clear the backlog, after which the enhanced capacity is expected to ensure the service can meet the required number of inspections each year.

·      The £364,200 allocation for cyber security reflects the increasing risk of cyber-attacks which is an identified risk on the strategic risk register. The funding is intended to support  preparation, defence and business continuity arrangements in the event of an attack, and to ensure full compliance  with the Cyber Assessment Framework. The sum will be held in reserve until the newly appointed Head of Digital, Performance and Modernisation has reviewed the position and confirmed the level of need, either in full or in part, with any unused balance to be returned to the General Fund.

·      The drafting, consultation and finalisation of the new Local Development Plan is estimated to cost in the region of £800k. An earmarked reserve of £500k ins in place but the additional £300k is unfunded. The inclusion of £100k in the revenue budget until 2028/29 when the Plan is expected to be published would allow the plan to be completed and all costs funded. The Director of Function (Resources)/Section 151 Officer provided further clarification of the detailed costs associated with the Local Development Plan.

·      That despite the final settlement being higher than forecast, it is still insufficient to fully meet the scale of cost pressures faced by the Council. But without the increased funding the Council Tax increase would likely be higher. Anglesey like other rural authorities is also disadvantaged by the funding formula which is influenced by population based data which means that councils with smaller populations receive proportionately less funding even though the cost of delivering services in rural areas is often significantly higher. The proposed Council Tax increase is comparable to that of other councils in the region which are also facing the same pressures.

·      The wellbeing of Anglesey’s residents is central to all the Executive’ s discussions, particularly in relation to the budget which aims to protect the services that people rely on, especially those who are most vulnerable. However, with a limited increase in Welsh Government funding, rising costs and increasing demand for services, the Council’s options for achieving a balanced budget are restricted to reducing services, increasing Council Tax or drawing on reserves. To support residents who may struggle financially, the Council  continues to invest in support and advice organisations including Citizens Advice and the J. E. O’Toole Centre. In addition, the Council Tax Reduction Scheme is available  for individuals who are experiencing difficulty in paying council tax.

·      With regard to the increasing demand for children’s social care and the cost of placements, the Welsh Government’s policy to move towards a not for profit model for children’s care in Wales although well-intentioned,  has reduced the availability of placements and contributed to higher costs in the transition period. The Council has invested in a wide range of preventative and early intervention services and is continuing to expand its Cartrefi Clyd model. This approach is designed to provide looked after children with a supportive and more family like environment in small residential homes within the community. As well as offering a more personalised experience and greater stability for the child, the model makes more efficient use of resources by reducing reliance on expensive out of county placements. However, where children have more complex needs that require specialised provision, out of county placements may still be necessary.

The Portfolio Member for Children, Young People and Families and the Director of Social Services outlined the costs involved and described the structure and operational arrangements of the Cartrefi Clyd model.

·           The report at section 5 sets out the financial risks to the budget. These include pay inflation uncertainty with no NJC pay offer yet agreed for 2026/27 and teachers pay award still to be determined, price inflation and potential changes in interest rates. Grant availability remains a risk  with more than £30m of income dependent on grants. Further risks relate to income generation e.g. in leisure, planning and parking where   ongoing cost of living pressures may affect demand, and the demand for services  especially in social care, additional learning needs and homelessness. Other risks are  fluctuations in Council Tax premium on second homes and empty properties and Council Tax collection rates arising from wider cost of living challenges. In setting the budget, the Council must strike an appropriate balance between optimism risk where assumptions may be overly positive and underestimate future costs and overcaution risk where assumptions are too conservative and result in the Council Tax being set   higher than necessary.

Having scrutinised the final  draft Revenue Budget proposals for 2026/27 and having regard to the matters raised in discussion and the responses provided by the Officers and Portfolio Members it was resolved to support the 2026/27 final draft Revenue Budget proposals as presented and to recommend them to the Executive to include a proposed increase of 5.1% in the Council Tax  taking the Band D charge to £1,792.98, use of £1.685m of reserves to balance the budget and the maintenance of the second and empty homes premium at 100%.

(Councillors Jeff Evans, Aled M. Jones and R. Llewelyn Jones abstained)