Agenda item

To receive a verbal update from the Head of Finance on the budget process.

 

The Chair introduced the verbal update from the Head of Finance, he reminded Members it was a follow up report from the last meeting. He reminded Members it had been agreed to receive a verbal update at this meeting with a further report to be presented at the April Committee meeting.

 

Members heard that Denbighshire County Council were not the only authority facing financial challenges. Members and officers were all faced with unprecedented circumstance.

 

The Head of Finance thanked the Chair for the introduction. She informed the committee County Council met on the 30^th January 2024 to approve the budget £24.6m of pressures and that budget was balanced by a combination of £10.4m in savings which equated to 42%, the Revenue Support Grant of £6.7m at the draft settlement which equated to 27% and the council tax yield which was £7.5m for council services of 8.23% and 1.11% for the fire equating to a combined total of 9.34%.

County Council met again on the 27^th February 2024 and passed the formal Council Tax resolution. Which the committee had a duty to resolve. It also received and approved the authorities Capital Programme and the Treasury Management Strategy. That concluded all of the budgetary work formally for the 2024/25 budget round.

The £10.4m savings was split into major projects (change to delivery of service) and non-strategic savings. She reminded Members a £3m savings target had been allocated to all Heads of Service to achieve. Work had been undertaken to achieve that saving.

Members workshops were taking place over the coming weeks to provide an update to Members on all areas of savings. It was felt this was necessary as a proportion of that saving would be seen from the voluntary exit scheme. Members heard the voluntary exit scheme had now run its course which involved employees submitting an application to leave the organisation followed by Heads of Service completing a business case for each individual which assessed the impact on the team/service and provided a view if that post could be released. All of those business cases were considered by the Corporate Executive Team, there had been circa 140 applications which a decision had to be determined. That had concluded and Heads of Service with the support from HR staff were in the process of communicating with staff the decision that was reached. It was hoped the process would conclude in the coming weeks. It had been a rigorous process and a learning process for the authority.

 

Work on a tracker of how the savings would be tracked had begun. Heads of Service were in the process of completing that and would feed through in the upcoming workshops. The Head of Finance confirmed she would include in the report due in April.

Informally the Senior Leadership Team had been feeding back to Cabinet on the £3m savings target and progressing well. All service areas were confident they would meet each target. The issue may be achieving the target by the 1^st April 2024.

 

The final settlement from Welsh Government had been received on 27^th February 2024. There was a slight movement in the figures due to the transfers in for grants. It was stressed that it had no impact on the level of funding, the extra funding was grants expected by the authority. It included the consequential, this was funding that Welsh Government had received due to increased spending on social care in England. That funding was estimated at £25m across Wales. £10m had been inputted into maintaining the social care force grant. With the remaining funds transferred into the revenue support grants. That equated to £484k for Denbighshire County Council.

 

Looking forward to 2025/26, Members heard a medium term financial strategy and medium term financial plan would be presented to Cabinet in April 2024. It would form part of the report that would be presented to Governance and Audit committee in April as part of the budget update. It would include the points raised previously by Mr Nigel Rudd.

An all Member workshop was due to take place in May which would focus on transformation further details would be provided.

 

The Chair thanked the Head of Finance for the verbal update.

 

During the discussion the following areas were discussed in more detail:

·         Savings and impact assessments would form part of the workshops. Members would hear the collective impact on services. There was a commitment to work and strengthen the wellbeing assessments. Some of the major savings projects were further developed than others so monitoring was ongoing.

·         Monitoring of risks included the development of the savings tracker, it would also include the monitoring of income. Income would also be tracked through the budget monitoring reports that were presented to Cabinet.

·         Every Capital Projects had its own risk register. Each project had to undertake a number of stages of business cases prior to being constructed and it took a long time to get to the build stage.

·         Previous political decisions on previous years had taken place before the Head of Finance was in post. She reminded Members when the 2023/4 budget was set there was a need to make significant savings. The monthly savings report stated there was a need to source £8m in setting the budget. Inflation was running very high during that time. in her opinion for 2023/24 the budget setting was lower but not out of kilter. For the 2024/25 year a number of neighbouring authorities had increased Council Tax by around the 9% mark. Across the two years combined and compared to the level of inflation it did compare over the same period. Demand on services also had an impact on services.

·         The settlement received from Welsh Government was based on a formula which was based on need and rurality. The need was reflecting the deprivation of the county.

·         It was stressed that there was a political in pact in the decision making process. Although officers were aware of the predictions for future years there was always the potential these would change and it was important to balance cuts and tax rates.

·         There was a wide range of data and material that was shared with Welsh Government that fed into the settlement formula. The vast majority of data was not provided by Denbighshire County Council. The majority of the data supplied was out of control of officers and provided from other areas.

·         Members commended the Lead Member and Head of Finance for the dedication and hard work that had been put into producing a report and balancing budgets. It was acknowledged that the current Head of Finance had not been in post last year and it was difficult to have a debate on those previous decisions that had been made.

·         In respect of concerns and issues raised by Governance and Audit Committee, are heard by the Lead Member, Head of Finance and Monitoring Officer and are passed through. The committee held the power to make a formal recommendation in respect of anything to do with the process to be considered by County Council or Cabinet.

·         A calendar of meetings was proposed and presented to Council annually. Officers would take into account all the issues and concerns of the committee when the next cycle of meetings was proposed. Alterations can be made if required. Whilst special meetings were a capacity and resource concern they could be accommodated.

·         Members noted a request of City, Town and Community Councils to relieve Denbighshire County Council of some of the financial burdens. City, Town and Community Councils could not set precepts due to not knowing the cuts that may be placed upon them. It was stressed the importance of speed of decisions and dates to inform further decisions.  

·         Audit Wales representatives stated the financial sustainability work was currently in the final stages of being scoped. Audit Wales officers were meeting with Welsh society of Treasures to work together to shape the hierarchy and scope of the work. The overall question set was ‘does the council have proper arrangements to support financial sustainability?’. Historic performance and vision forward and savings would be reviewed. It was a priority of Audit Wales going forward with a hope to begin the work April/ May to be completed around June 2024.

·         Members stressed the importance of an early indication if there was any concerns the budget would not be balanced at the earliest point. The Chair stated he was happy to receive any updates outside of the meeting schedule and happy to include as urgent items on agendas if outside the reporting timescale. Members also asked to be kept informed of any savings proposals that may be inaccurate or not going to be achieved.

·         Also any events or changes that may cause a concern for the governance arrangements of the authority would need to be presented to the committee at an early stage. The Head of Finance agreed with the comments of the Committee and ensured any updates or changes would be communicated with Members.

·         Internal Audit would be monitoring the tracing process and raise any concerns regarding budget concerns with the Corporate Executive Team and relevant committees.

·         Reduced staff numbers would have an impact. Members stressed the importance of acknowledging that responses may take longer. It was stressed the importance to be open and transparent with both the public and Members when a response or action was required.

·         Members would be kept aware of any developments of collaborative working specifically in relation to the governance of the council and budget impacts.

 

The Chair thanked Members and officers for the detailed discussion.

 

RESOLVED that members note the verbal update ahead of a formal report to be presented to Governance and Audit Committee in April 2024.