Agenda item

To consider a report by Councillor Gwyneth Ellis, Lead Member for Finance, Performance and Strategic Assets (copy enclosed) setting out the implications of the Provisional Local Government Settlement 2024/25 and proposals to set a balanced budget for 2024/25.

RESOLVED that Cabinet –

 

(a)      notes the impact of the Provisional Settlement 2024/25;

 

(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 set the budget for 2024/25;

 

(c)      recommends to Council the average Council Tax rise of 8.23% for council services plus an additional 1.11% for the increase in the levy to the North Wales Fire and Rescue Authority; this equates to an overall uplift of 9.34% proposed;

 

(d)      recommends to Council that authority is delegated to the Head of Finance and Audit in consultation with the Lead Member for Finance, to adjust the use of cash reserves 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;

 

(e)      supports the strategy for use of reserves as set out in paragraph 4.5 of the report and recommends to the full Council, and

 

(f)       confirms that it has read, understood and taken account of the Well-being Impact Assessment as set out in Section 7 of the report.

Councillor Gwyneth Ellis presented the report setting out the implications of Welsh Government’s Provisional Funding Settlement for Local Government 2024/25 and proposals to set a balanced budget for 2024/25, including the level of Council Tax.

 

The unprecedented financial challenges facing the council, along with all other local authorities, meant a different process to budget setting was required and it had been an extremely difficult and uncomfortable process.  Councillor Ellis thanked all involved in that process which had resulted in the submission of a balanced budget.

 

Councillor Ellis and the Head of Finance and Audit provided an overview of the budget process and latest financial position and elaborated on the proposals for consideration and recommendation to full Council in order to set the budget for 2024/25.  In brief, the provisional settlement had resulted in a cash increase of 3.6% (£6.720m) and following a council tax base adjustment was higher than the cash comparison at 3.7% (compared to the Welsh average of 3.1%) with a final settlement expected in early March. The settlement included all pay increases for teaching and non-teaching posts and responsibility to pay care workers the Real Living Wage.  Pressures amounting to £24.682m had been detailed and the provisional settlement generated £6.720m leaving a funding gap of £17.962m with proposals to bridge that gap identified in the report and further explained at the meeting.  A Council Tax rise of 8.23% plus an additional 1.11% (change to the indicative figure of 1.3% in the report) for the increase in the levy to North Wales Fire and Rescue Authority equating to an overall uplift of 9.34% was proposed to generate £7.580m additional revenue.  The proposed use of earmarked reserves was also highlighted to assist the budget setting.  The risks of not achieving a balanced budget had also been set out together with mitigation measures and further work required going forward.  The medium-term financial outlook looked equally as challenging.  Due to the lateness of the final settlement, it was recommended that authority be delegated to enable cash adjustments in the budget proposals of up to £500k.  It was important to note that if proposals in the report were not accepted, alternative proposals must be submitted so that the Council’s statutory responsibility to set a balanced budget could be met.

 

During debate Cabinet condemned the financial situation facing local government which meant severe cuts had to be made to vital services in order to set a balanced budget and called for improved and sustainable funding to deliver those services.  It was noted that recent calls had been made by MPs across the political spectrum for the UK Government to provide additional funding for local government.  Given the current financial context, Cabinet believed the budget proposals represented the best outcome to ensure social care services and school learners were protected as far as possible and to safeguard the most vulnerable in society.

 

Cabinet welcomed the higher than expected settlement from Welsh Government but noted it had been based on data which would result in higher demand for services and did not materially change the budgetary position given that service delivery in 2024/25 would cost an additional £24.682m compared to 2023/24, mainly due to inflationary pressures and major increase in demand from client services.  The risk that the demand for complex services would continue to increase with more demand for care services and more people facing homelessness was recognised.  Tribute was paid to the hard work in making savings to date, despite which, Heads of Service had been issued with a further savings target of £3m to make up the shortfall with proposals to members in March before the start of the financial year; it was noted that initiatives to assist included the voluntary exit scheme and ongoing review of fees and charges.  Schools had the largest budget which had been protected in recent years and whilst it could not be protected in its entirety due to the scale of the financial challenge there was an increase of 5.83% overall with schools making a 3% saving.  The need to protect unearmarked reserves given the increased level of risk in the budget for 2024/25 and future years was accepted together with proposals for the use of earmarked reserves to assist with the budget setting.  Cabinet was aware that the Council Tax increase would be difficult for residents but recognised that the Council Tax Reduction Scheme would safeguard the most vulnerable.  The recent changes to the North Wales Fire and Rescue Authority Levy and impact on Council Tax was noted.

 

Cabinet discussed further elements of the budget as follows –

 

·       Councillor Gill German highlighted the better settlement due to increases in population and free school meals data and the impact on Education and Children’s Services which had been recognised in the budget; she had been pleased with the invest to save project in the fostering service to reduce the reliance on external agencies, increase in-house foster carers and work to transform and improve services.  The Head of Finance set out the schools’ position with increases funded in the schools’ budget totalling £7.6m and a 3% efficiency which equated to a reduction of £2.7m which left a net increase of £5.6m; this represented a 5.8% overall increase in schools’ budget.  Councillor German felt it was right for the council to absorb many of the schools’ pressures and would continue to maximise the benefits to schools through grant allocation

·       the Head of Finance and Audit responded to questions regarding the strategy for the use of reserves which included use of the budget mitigation reserve to fund the forecasted overspend of £3.2m in the current financial year which would leave a balance of £1.5m and reassignment of the Pensions Reserve (set aside to fund potential increases in pension contributions) to fund the pay costs in 2024/25 over and above the pressure in the Medium Term Financial Plan and exit costs associated with the Voluntary Exit Scheme which would leave little left in the reserve, and to transfer the balance of the Modified Loan reserve to the budget mitigation reserve which would provide some protection against demand exceeding pressures; there was also a need for an invest to save reserve to move to transformation and pump prime projects.  It was recommended earmarked reserves be retained given the current level of risk

·       Councillor Elen Heaton highlighted the impact of social care on budgets across Wales, with 50% of in-year pressures attributed to social care reflecting the scale of the pressure, and the complexity of need and future demand increasing whilst resources were diminishing.  In response there was a focus on early intervention/prevention services going forward and there was a need to invest in those areas and continue to explore innovative and transformational solutions

·       Councillor Julie Mathews drew attention to the Community Impact Assessment which focused on a high-level aggregation of the combined budget reduction measures which would be a live document and assurances were given that the impact and effect of the budget cuts on citizens would be closely monitored by Cabinet and the Corporate Executive Team going forward and potential future collaborative working with other organisations to deliver for the most vulnerable.

 

At this point the Leader opened up the debate to non-Cabinet members.

 

Councillor Bobby Feeley voiced her opposition to the library/one stop shop savings.  She referred to Denbighshire’s last two funding settlements together with Levelling Up Funding for the Vale of Clwyd and Clwyd West and felt the Cabinet had failed to plan ahead and had failed the residents of Denbighshire.  She also felt the increase in Council Tax was unacceptable and was unable to support the budget.  Councillor Huw Hilditch-Roberts raised questions around schools’ budgets and impact on learners; the need to look at innovative solutions and transformational change before cutting services, and concerns over the £3m unidentified savings and potential call on reserves.  Councillor David Williams felt that proposals for a new National Park in North East Wales should be shelved given the high cost involved.

 

The Lead Cabinet Members and relevant officers responded to the issues raised, and subsequent follow up questions and comments, as follows –

 

·       the settlements from Welsh Government had represented a real terms cut when taking into account inflation and cost pressures; local government finances were facing severe cuts and there were calls on the UK Government for a rethink

·       Levelling Up Funding for specific capital projects was completely separate funding to the Revenue Support Grant which funded council services

·       the high increase in Council Tax reflected the unprecedented financial pressures facing the authority and need to deliver a balanced budget and the Council Tax Reduction Scheme provided some protection for the most vulnerable

·       the council had been able to set a lower Council Tax rise in 2023/24 in a cost of living crisis for the benefit of residents

·       no one wanted to raise the level of Council Tax and cut services, but it was a necessity in order to deliver a balanced budget or effectively become bankrupt

·       it would not be possible to wait for the £3m savings from Heads of Service to be identified before setting the budget due to the timescales involved but they would include savings from the Voluntary Exit Scheme

·       the cost pressure for teachers’ pensions had been included for schools but it was hoped government funding would cover that cost, and pay pressures for non-schools assumed a 5% pay award which may be higher than the pay award

·       whilst there was a risk unearmarked reserves would be needed the intention was to retain that reserve and deal with the pressures as set out in the report

·       to protect the most vulnerable and address demand increases the budget proposed an additional: £7.969m for Adult Social Care and Homelessness, £2m for Education and Children’s Services, and £5.6m overall for Schools – other services were having to find savings and experience cuts to fund those; investment in other areas included Foster Care Services and LIFT – Local Integrated Families Team in Children’s Services

·       it was accepted that funding for pay awards across all council services had been recognised and not just for schools for teaching and non-teaching pay awards.  However, the council was absorbing schools’ inflationary pressures for pay, utilities, NDR and service level agreements so that they were not being passed onto schools which was a big undertaking and not the case in all authorities

·       the National Park proposal was not a consideration for the current budget.  Natural Resources Wales would be providing an update at Council Workshop on 9 April, and members would have opportunity to debate the issue at that time.

 

Councillor Gwyneth Ellis proposed the report recommendations, with an amendment to recommendation 3.3 to reflect the revised North Wales Fire and Rescue Authority Levy of 1.11% which equated to an overall Council Tax uplift of 9.34%, seconded by Councillor Barry Mellor.

 

RESOLVED that Cabinet –

 

(a)      notes the impact of the Provisional Settlement 2024/25;

 

(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 set the budget for 2024/25;

 

(c)      recommends to Council the average Council Tax rise of 8.23% for council services plus an additional 1.11% for the increase in the levy to the North Wales Fire and Rescue Authority; this equates to an overall uplift of 9.34% proposed;

 

(d)      recommends to Council that authority is delegated to the Head of Finance and Audit in consultation with the Lead Member for Finance, to adjust the use of cash reserves 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;

 

(e)      supports the strategy for use of reserves as set out in paragraph 4.5 of the report and recommends to the full Council, and

 

(f)       confirms that it has read, understood and taken account of the Well-being Impact Assessment as set out in Section 7 of the report.

 

At this point (11.50 am) the meeting adjourned for a refreshment break.