Agenda item

To consider a report by Councillor Julian Thompson-Hill, Lead Member for Finance, Performance and Strategic Assets (copy enclosed) setting out the implications of the Local Government Settlement 2021/22 and proposals to finalise the budget for 2021/22.

RESOLVED that Cabinet –

(a)       notes the impact of the Draft Local Government Settlement 2021/22;

(b)       supports the proposals outlined in Appendix 1 to the report, and detailed in Section 4 of the report, and recommends them to the full Council in order to finalise the budget for 2021/22;

(c)        recommends to Council the average Council Tax rise of 3.8% proposed;

(d)       recommends to Council that authority is delegated to the Head of Finance and Property in consultation with the Lead Member for Finance to adjust the use of cash included in the budget proposals by up to £500k if there is movement between the draft and final settlement figures in order to allow the setting of Council Tax in a timely manner, and

(e)       confirms that it has read, understood and taken account of the Well-being Impact Assessment submitted as part of the report.

Councillor Julian Thompson-Hill presented the report setting out the implications of the draft Local Government Settlement 2021/22 and proposals to finalise the budget for 2021/22, including the level of Council Tax.

Councillor Thompson-Hill provided an overview of the budget process and latest budget position and elaborated upon the proposals for consideration and recommendation to full Council in order to set the budget for 2021/22.  The draft settlement had resulted in a positive settlement of +3.6% (compared to the Welsh average of 3.8%) with the final settlement expected on 2 March 2021.  Pressures amounting to £9.903m had been detailed and the impact of using £685k of cash in 2020/21 meant the total shortfall amounted to £10.588m.  The +3.6% settlement generated £5.42m leaving a funding gap of £5.167m with proposals to bridge that gap identified in the report and further explained at the meeting.  A Council Tax rise of 3.8% had been proposed to generate £2.132m additional revenue.  Due to the lateness of the final settlement it was recommended that authority be delegated to enable cash adjustments included in the budget proposals of up to £500k.

The Head of Finance and Property added that the budget was very much business as usual with an assumption that a level of Welsh Government support would be forthcoming if Covid-19 related pressures continued.  He also confirmed there would be early engagement with members on the budget process for next year.

Main areas of debate focused on the following –

·         Councillor Mark Young referred to the funding shortfall and years of funding cuts to local authority budgets and he questioned the sustainability of future service delivery and sought an update on previous requests for a three year budget to aid future financial planning.  The Leader responded that the positive settlements over the last two years had to be appreciated, particularly given the current financial situation faced by both UK and Welsh Governments.  There had been regular and positive dialogue with Welsh Ministers throughout the pandemic and they understood the challenges and pressures faced by local government and Welsh Government had been supportive in the way they had responded and reacted to the Covid-19 situation.  However the forthcoming Welsh Parliament election may result in a change Minister which could have a significant impact.  The Chief Executive welcomed the funding settlement which enabled the authority to cover most service pressures for 2021/22 but there was no guarantee that emerging pressures from Covid-19 related income loss would be met.  If future settlements were not sustained at such a level to meet increasing pressures, particularly in social care, difficult decisions would need to be made.  In terms of a three year settlement the Head of Finance and Property explained that the original proposal for a comprehensive spending review had been delayed due to Covid-19 and a one year settlement had been announced by the Chancellor last November.  Welsh Government would need a three year indication of their figures from the UK Treasury to realistically be in a position to provide a three year settlement for local government going forward

·         Councillor Glenn Swingler referred to year on year savings made by schools and felt it was not appropriate to seek further savings in light of the difficulties faced in responding to Covid-19 and he queried the amount of investment made within schools.  In terms of the overall savings package he asked whether it could be revisited to further consider the affordability element for residents.  The Lead Member for Finance clarified that work had been ongoing with the School Budget Forum (SBF) for some time, as in previous years, to deliver the 1% saving (all other services were expected to find 4% saving).  The 1% saving equated to £733k with an additional £3.27m proposed to be allocated so the overall schools delegated budget would increase by about £2.5m as an overall net figure.  The schools increase was for revenue spend and investment in schools via the Modernising Education budget was completely separate.  The Lead Member for Education confirmed the proposal had the support of the SBF and there was a net gain in the budget.  However he highlighted pressures on schools in terms of financing blended learning and Covid-19 regulations etc. and work was ongoing to seek any funding which may be available from Welsh Government to offset the costs incurred by schools.  In responding to the point made regarding the overall package of budget proposals the Lead Member for Finance explained the option of either reducing the amount in the budget to cover budget pressures (although most were unavoidable) or change the amount of Council Tax.  He did not believe that residents should be charged more than was needed to deliver services, even more so this financial year and additional hardships faced as a result of Covid-19.  The recommendation to raise Council Tax by 3.8% had not been made lightly given the impact it would have on residents.  If a lower level was recommended it would mean that some pressures would not be met or additional cuts to services.  Consequently he believed the budget proposals represented the best way of addressing pressures with the least negative impact on residents

·         in response to questions from Councillor Paul Penlington regarding the budget figures the Lead Member for Finance clarified that the shortfall figure in the report before addressing Council Tax was a funding gap of £5.167m.  The items listed at paragraph 4.4 of the report had been proposed to help bridge the funding gap leaving the required £2.132m which equated to the 3.8% rise in Council Tax proposed.  If Council Tax was set at a lower rate than 3.8% it would mean that either additional cuts would need to be made to services or not meeting all of the pressures identified in paragraph 4.3 of the report.

RESOLVED that Cabinet –

(a)       notes the impact of the Draft Local Government Settlement 2021/22;

(b)       supports the proposals outlined in Appendix 1 to the report, and detailed in Section 4 of the report, and recommends them to the full Council in order to finalise the budget for 2021/22;

(c)        recommends to Council the average Council Tax rise of 3.8% proposed;

(d)       recommends to Council that authority is delegated to the Head of Finance and Property in consultation with the Lead Member for Finance to adjust the use of cash included in the budget proposals by up to £500k if there is movement between the draft and final settlement figures in order to allow the setting of Council Tax in a timely manner, and

(e)       confirms that it has read, understood and taken account of the Well-being Impact Assessment submitted as part of the report.