Agenda item

To submit a report by the Head of Function (Resources) on the Executive’s final budget proposals to the County Council.

Reported by the Portfolio Holder for Finance on the proposed final budget proposals together with a review of the medium term revenue budget strategy.

 

Reported – That the report showed the detailed revenue budget proposals requiring final review and agreement for 2014-15 and the resulting impact on the County Council’s budget. These were matters for the Council to agree and the Executive were asked to make final recommendations to the Council. The report also updated the latest Medium Term Financial Strategy which provided a context for work on the Council’s future budgets and included the latest information for the efficiency strategy.

 

The report paid particular reference to the following matters:-

 

● The Council’s Revenue Budget and Council Tax 2014-15 recommendations;

  

● Consultation on the draft budget proposals (detailed at Paragraph 4.1.1 and 4.3.6 of the report).

 

Revenue Budget 2014-15

 

The initial draft revenue budget was presented to the Executive in December 2013 which presented a draft standstill position budget, highlighting a potential gap of £7.661m between the standstill position and the total of the Aggregated Exchequer Funding and 5% increase in Council Tax.

 

The report also referred to the ongoing work to identify the savings required across all Departments, which would not necessarily be split evenly between all Directorates.

 

Since the draft budget proposals were presented to the Executive on 16^th December 2013 a number of issues had emerged which required amendments to the proposals and these were summarised at Paragraph 4.2.3 of the report. The Executive was requested to confirm these adjustments.

 

●Savings– The Executive were informed on 15 July, 2013 that there was a projected funding gap of up to £7.511m in 2014-15 which equated to a percentage reduction in budgets of 5.4%. Different options for savings profiles were presented, showing the target reductions that would be set at different percentage levels if applied evenly across the board with further columns showing the effect of protection for particular services. The base percentage which produced the required total saving was 7.2%. Following further discussions at Member and Officer level since that date, a final list of proposed savings had been drawn up which was summarised at Paragraph 4.3.5 of the report and set out in detail at Appendix C of the report. The total required from the Services now equated to £7.416m.

 

Various matters were raised during the scrutiny and consultation process and these were summarised at Paragraph 4.3.6. of the report. In addition, Directorates had carried out further work to prioritise and review their proposals and the revised savings total now stood at £6.263m, a reduction of £1.153m over the proposals submitted to the Executive in December. (Appendix 2 of the report referred).

 

●Pressures and Growth – the report to the Executive on 16^th December included allowances for pressures and growth totalling £1.136m and £276k respectively.  There had been four changes to these figures and these were detailed at Paragraph 4.4.1 of the report. Further details of growth and pressures were shown at Appendices 3 and 4 respectively.

 

●Council Tax - the standstill position within reports to the Executive assumed a council tax increase of 5%. Each 0.5% reduction or increase was equal to approximately £141k. The proposal in this report was now to increase Council Tax by 4.5%, which would be met by reducing the value of the Corporate Contingency by a corresponding amount.This equated to a weekly increase of 81p over 2013-14 levels.

 

●General and Specific Reserves, Contingencies and Financial Risks - The proposed budget incorporated a number of assumptions in terms of likely levels of income and expenditure in future years. There were, therefore, inevitably a number of financial risks inherent in the proposed budget and the key financial risks were highlighted at Paragraph 4.6.1 of the report. In terms of any contingencies and reserves, the Section 151 Officer needed to review these in their totality in conjunction with the base budget itself and the financial risks which faced the Authority. In addition, this review should incorporate a medium term view where needed and should take into account key developments that may impact on the need and use of one off resources.

 

The budget for 2013-14 included a planned contribution to general balances of £500k to maintain the level of general reserves at £5m. After making this contribution and the revised forecast addition to balances of £23k in 2013/14, the level of general balances was likely to be of the order of £6.3m, well ahead of the target threshold of £5m.

 

There was, however, an identified risk facing the Council relating to the cost of child placements within Social Services in 2014-15 and beyond. To counter this risk, the Executive was asked to approve the use of £300k from General Balances in 2013/14. Consideration should also be given to transfer £1m to reserves, also in 2013/14, to fund potential severance liabilities arising from budget reductions. Overall, the level of general balances would remain at an estimated £5m after allowing for these changes, the approved threshold.

 

●Robustness of Estimates - Section 25 of the Local Government Act 2003 required the Chief Finance Officer to report on the robustness of budget estimates and adequacy of financial reserves, and required the Council to take account of this report as it adopted its budget. The following different risks to the budget were considered:-

 

● Inflation Risk.

● Interest Rate Risk.

● Grants Risk.

● Income Risks.

● Optimism Risk.

● Over-caution Risk.

● Salary and Grading Risks.

● Savings Slippage.

● Social Care and Residential Fees.

● Staff redundancy costs.

● Outcome Agreement grant

● Council Tax Support Scheme

 

●Proposed Budget and Council Tax Level - The table at Paragraph 6.1 of the report showed the available and required budget funding with an increase in Council Tax of 4.5%. In setting Council Tax, the Council needed to be aware of the need to set a balanced budget.

 

Before the Executive could recommend a budget to Council, it required decisions based around the figures shown in the table. These decisions included:-

 

● Delete specific savings items;

● Provide additional capacity within services;

● Fund new initiatives and policies;

● Increase the base amount of Council Tax by the proposed level and so balance the budget.

 

●Equalities Impact Assessments - In delivering its services the Council had to be mindful of its duties to discharge its statutory obligations under the Equalities Act. Commentary on individual proposals was contained within the appendices for growth and savings. Any option which had a significant impact on services would need to be monitored closely by the service.

 

●Treasury Management Strategy - In accordance with the CIPFA Code of Practice on Treasury Management the Council was required to approve the 2014-15 Treasury Management Strategy Statement and Investment Strategy prior to the beginning of the financial year.

 

●Updating the Medium Term Revenue Budget Strategy - The initial budget report to the Executive on 16th December, 2013 updated the Medium Term Financial Strategy for changes in the funding notification from the Welsh Government. These assumptions included a level of pay award and inflation. The table at Paragraph 9.2 of the report was a further update of the medium term financial strategy, which had been updated for the proposed 2014-15 budget together with assumptions for 2015-16 to 2016-17.

 

● Links to Council Policies and Priorities - In drawing up budget proposals, due regard had been given to key Council policies and priorities.

 

● Options Available – detailed at Paragraph 11.1 of the report.

 

● Staffing Implications – detailed at Paragraph 12 of the report.

 

● Local Issues – detailed at Paragraph 13.1 of the report

 

● Consultation – detailed at Paragraph 14.1 of the report.

 

Councillor A.Morris Jones wished to minute his appreciation to Councillor H.Eifion Jones and to the Head of Function(Resources) and her team for their work in drawing up the Council budget for 2014-15.

 

 

RESOLVED

 

●To note the formal consultation meetings on the budget as outlined in paragraph 4.1 of the report;

 

●To note the equalities impact assessment summary on the budget proposals in Section 7 of the report;

 

●To agree that, within the proposed budget, schools are given an increase in budget which meets the Welsh Government’s pledge for schools’ funding as detailed in paragraph 4.1.3 of the report;

 

●To agree the final details of the Council’s proposed budget, investments, pressures and savings as shown in Appendices 1-5 of the report;

 

●To note the Section 151 Officer’s recommendations that minimum Council Fund Balances be maintained at £5m, the confirmation of the robustness of the estimates underlying the proposals and the adequacy of the General Reserves in the context of other earmarked reserves;

 

●To confirm the adjustments detailed within the table at Paragraph 4.2.3 of the report;

 

●To recommend a net budget for the County Council and resulting Council Tax to Council, noting that a formal resolution including the North Wales Police and Community Councils’ precepts will be presented to Council on 27 February, 2014;

 

●To authorise the Section 151 Officer to make such changes as may be necessary before submission to the Council.