BUDGET PROCESS UPDATE
To receive an update on the current Medium Term Financial Plan and Budget Timetable (copy attached).
The Lead Member for Finance Performance and Strategic Assets, introduced the Budget Process Update (previously circulated). The report provided members with details of the process that had been followed to set the budget and provided details of the timeline. The budget was a standing item at Cabinet and had been discussed. The Lead Member praised the transparency of the Finance team, including Lead Members and held a number of meetings with numerous teams and individuals. In her opinion she stated she was confident that members had received an opportunity to be part of the budget process.
The Head of Finance explained the summary report had included an appendix which provided a detailed update to all members following the draft settlement. The information had been what had been in the Cabinet and Council report.
Members heard the Autumn statement from the UK Government maintained the final two years of the three-year agreement for funding that was announced last year. They also announced additional funding for social care, education and the NHS.
The Welsh Government announced its budget on the 13thDecember, with the draft settlement being announced on the 14th December 2022. Members were guided through the brief summary of the settlement (appendix 1). The better settlement produced an additional £8.2m funding than what was expected. This enabled the authority to fund the budget gap of £4.8m and not use any cash reserves for the 2023/24 financial year. Officers had been made aware of an increase in energy costs, a pressure budget of £2.6m had included to cover the additional costs.
He stressed demand driven statutory services would always be met.
It was stressed to the committee the 8.2% increase was still below inflation observed. The pressures identified above amount to £25.116m. A draft settlement of around 14.5% would have been required in order to fund all these pressures. The net +8.2% settlement generated £14.231m additional revenue leaving a funding gap of £10.885m. The Head of Finance guided members through the proposals to bridge the gap details of which were included in the appendix. One of the positive proposals highlighted was the impact of the triennial actuarial review of the Clwyd Pension Fund. Which resulted in the Council finding itself in a position of a small surplus instead of a
significant deficit that required repaying. This results in a saving of £3.828m.
He informed members of the proposed timetable of Budget process as detailed:
· 17th January – Full Council Briefing
· 24th January – Cabinet Budget Report
· 31st January – Council Budget Report
· 28th February – Council – Full Council Tax Report / Approval
· Early March – Final Settlement
The Early Settlement previously used to be October for the draft settlement and December for the Final settlement. Welsh Government have agreed the time difference between the draft and final settlement would be kept to a minimum.
Members heard it was hoped a report would be made available for Cabinet in April 2023 on the revised medium term strategy followed by a Council Briefing dependant on the determination of Cabinet in April.
The Chair opened the meeting for members comments and questions. The Lead Member and officers expanded on the following areas:
· Confirmation the Council Briefing held on 17th January had been supportive of the paper and proposals. In principal Cabinet members were in support of the Council Tax level and the proposals in the paper. Cabinet had formally recommended the proposals to County Council.
· Details of the consultation with SLT, Cabinet Briefing, Group Leaders and Council Briefing meetings was included in the report. It was noted the School Budget Forum had been included in the proposals through-out the year. Trade Unions had been consulted through Local Joint Consultative Committee. Consultation had been difficult due to the uncertainty of the settlements. Members heard a press release would be issued providing details of the proposals. He informed the committee he had worked with the communications team to put together a communications plan to be presented to CET and Cabinet.
· It was stressed the difficulties reported on the findings of Betsi Cadwalader Health Board did not have an impact on the authority’s finances.
· Officers aimed to avoid any large increases in Council Tax. He stated some Welsh authorities have had to propose a large increase in Council Tax due to previous years’ having a low tax increase. Denbighshire were slightly above what Welsh Government assumed we collect in Council Tax and with the proposed increase would remain slightly above the assumptions.
· It was stressed to members it was not possible fund the gap in the authority’s finances just by increasing Council Tax. Officers felt the proposed 3.8% increase was the correct level of increase.
· It was stressed the papers had been discussed at a number of groups, political parties, committees and officer meetings. It had not been agreed by Council and could still be amended.
· It was noted by members that the challenges faced by the authority and officers would continue in to future financial years.
· It was stressed previous years had seen higher increases to Council Tax, there was no cap on the level of increase set. The financial year 2025/6 was when the UK Government funding dropped and that would cause potential difficult decisions being required.
· Members thanked the officers for the detailed report. Thanks were given to all officers for the in-depth work and coherent information.
· Strategic pressures faced by services were presented to the budget board with details and projections of the challenges to the budget board. It was difficult to assume service costs for future years.
· It was confirmed the budget mitigation reserve was still in place to support any overspends. A report was presented to Cabinet every month detailed any actions needed.
· The Head of Finance was pleased it was proposed to bring Internal Audit under the Finance service.
· It was stressed it was difficult to predict the pressures on pay. It was based on a 4% pay increase. It was confirmed the pay settlement would have to be agreed and paid. The 4% was an estimate figure.
· Members heard work in the Education and Children’s Services to review and look at ways to provide services, including joint working with partners and neighbouring authorities.
The Chair thanked the Lead Member and the Head of Finance for the responses to members questions and comments.
RESOLVED, that Members note the latest budget proposals and position for 2023/24 and 2024/25.