Agenda item

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

The report of the Head of Function (Resources) and Section 151 Officer incorporating the detailed revenue budget proposals for 2017/18 and the resulting impact on the Isle of Anglesey County Council’s revenue budget was presented for consideration. The report also updated the Medium Term Financial Plan which provides a context for work on the Council’s future budgets. The Executive was asked to make final recommendations to the County Council which has the responsibility for approving the definitive Budget for the following year.

The Portfolio Member for Finance reported on the process which had led to the detailed revenue budget proposals and which had involved contributions by Members, Officers, the public and other interested groups and stakeholders. The initial draft Budget proposals for 2017/18 were approved by the Executive in November, 2016 and were thereafter issued for public consultation. These were based on an increase of 0.3% in the Welsh Government’s draft revenue support grant settlement (which accounts for around 80% of the Council’s funding) which although better than expected, was not sufficient to bridge the funding gap. The Welsh Government’s final and improved settlement announcement of a 0.5% increase was made in December, 2016; this was still below the rate of inflation and left the Council with a budget deficit to address. The bulk of the Council’s spending is made up of staff costs; for 2017/18 the staff pay award is 1%. Services across the Council are experiencing budget pressures; these are being felt most acutely in Children’s Services and Adults’ Services and in the Out of County Education budget. There are also significant changes planned in the schools sector in Anglesey with some of the cost of borrowing for the 21st Century Schools programme likely to be experienced in the revenue budget. Savings in the region of £2.9m were identified as necessary in November when the public consultation was launched; following the receipt of the public’s responses and consideration of the issues raised therein, the budget proposals have been amended as set out in paragraph 10 of Appendix 1 with the modified proposals addressing the predominant concerns expressed via the public consultation. The revisions to the budget proposals have had the effect of reducing the total value of the savings proposals to £2.444m (Appendix 3) and these relate primarily to smarter working and have minimal direct impact on services. Despite the changes proposed, the Council’s overall financial position remains robust.

The Head of Function (Resources) and Section 151 Officer said that he was required to ensure as far as possible that the process by which the Budget has been formulated and the assumptions and estimates on which it is based are robust; he could say that he was satisfied that that is the case and that the budgets are deliverable. The different risks to the budget are acknowledged and set out in section 8 of the report and because of those risks it is advisable and necessary to have funds in reserve so as to be able to meet any unplanned costs as a result of any of those risks materialising. Section 13 of the report updates the Medium Term Financial Strategy. Due to the uncertainty in relation to future settlements post 2017/18 and the difficulty this creates as regards making projections with any accuracy, section 13 provides two possible models based on a worst case scenario (Table 9) in which the Council will have to find savings of around £8m over the next 3 years, and a best case scenario (Table10) where the savings required are on a lesser scale of around £3m. An updated Medium Term Financial Strategy will be presented to the Executive as information on future settlements becomes clearer.

Councillor R. Meirion Jones, Chair of the Corporate Scrutiny Committee reported on the outcome of the Committee’s deliberations regarding the final budget proposals from its meeting held on 6th February, 2017. The Committee carefully scrutinised the proposals and having regard to the substance of the public responses to the draft proposals and the subsequent modification of those proposals as in paragraph 10 of Appendix 1, it resolved to support the final budget proposals with the addenda that schools’ attention be drawn to  the need for them to provide an undertaking to deliver the £490k efficiency savings in respect of teaching assistant costs or other savings to the delegated budgets in 2018/19 and to plan accordingly; that the Scrutiny Committee be provided with periodic information regarding the Council’s balances and reserves position and that it also be provided with the Public Consultation document/questionnaire at an earlier stage in the budget setting process to help influence its form and language to make it more accessible to the public.

The Executive acknowledged and noted Scrutiny’s input to the 2017/18 Budget setting process.

Councillor R. Llewelyn Jones, having requested to speak at this meeting made the case for freezing the price of school meals in 2017/18 and cited affordability and the impact on lower income families who are not entitled to free school meals as reasons for not implementing the proposed increase of 10p per meal per day.

The Portfolio Member for Finance said that the Council has in the past taken the approach of not increasing charges as a result of which it has in recent years, fallen behind other local authorities in the region meaning there is a legacy of playing catch up for the new Council. Added to that is the fact that the cost of food is rising with food inflation currently outstripping Consumer Price Index figures. The increase in the price of school meals as proposed is a modest one and it is not unreasonable to expect people to pay a fair price for the services they receive.

The Head of Learning said that the National Living Wage came into effect in April, 2016 and this along with the 2017 pay increase has meant a significant increase of 11.7% in wage costs over the past two years. The aim of increasing prices by 5% last year and 5% this year goes some way towards meeting those costs. However, the actual costs of producing school meals have risen by almost 15% over the past two years. The price increase this year does not cover the increased cost of production.

The Chief Executive said that the price of school meals does not reflect the true cost of provision. If the increase in price was not to be implemented, the loss of revenue would have to be made up from elsewhere either from the schools’ delegated budgets or the education central budget or from other service budgets which are already under pressure.

It was resolved –

•           To note the formal consultation meetings on the budget along with the resulting feedback as outlined in Section 2 of Appendix 1 and Appendix 2 to the report.

•           To note the Equalities Impact Assessment summary on the budget proposals as outlined in Section 11 of the report.

•           To agree the final details of the Council’s proposed budget including the revised funding in response to budget pressures and the proposed savings as shown in Section 10 of Appendix 1 and Appendix 3 of the report.

•           To allocate the savings required on schools’ budgets to the 3 school sectors as outlined in Section 12 of Appendix 1 to the report.

•           To note the Section 151 Officer’s recommendation that a minimum of £6m general balances is maintained for 2017/18.

•           To note the comments made by the Section 151 Officer on the robustness of the estimates made as set out in Section 8 of Appendix 1.

•           To recommend a net budget for the County Council and resulting increase in the level of Council Tax to the full Council, noting that a formal resolution, including the North Wales Police and Community Council precepts, will be presented to the Council on the 28 February, 2017.

•           To authorise the Section 151 Officer to make such changes as may be necessary before the submission of the final proposals to the Council.

•           To agree that any unforeseen pressures on demand led budgets during the financial year will be able to draw upon funding from the general contingencies budget.

•           To request the Council to authorise the Executive to release up to £250k from general balances if the general contingencies budget is fully committed during the year.

•           To delegate to the Section 151 Officer the power to release funding from the general contingency up to £50k for any single item. Any item in excess of £50k not to be approved without the prior consent of the Executive.

•           To recommend to the Council a 2.5% increase in the level of the Council Tax.