Agenda item

To receive a report from the Head of Finance to provide an update to Medium Term Financial Strategy and Plan for 2025/26 – 2027/28 and Review of the Council’s Financial Resilience and Sustainability (copy attached).

 

The Head of Finance and Audit introduced the Update to the Medium Term Financial Strategy and Plan for 2025/26 – 2027/28 and review of the Council’s Financial Resilience and Sustainability report (previously circulated). 

 

Unfortunately, the Lead Member for Finance, Councillor Gwyneth Ellis, was unable to attend the meeting and had put forward her apologies.

 

The report provided an update on outstanding matters relating to 2024/25 budget, setting the scene for budget setting in the medium term (2025/26 – 2027/28), and self-assesses the council’s current level of financial resilience and sustainability.

 

The Head of Finance summarised the report and appendices.

 

During discussions, the following points were raised –

·         A risk of capacity of the Finance team was raised.  The team were currently working with Audit Wales on the audit of the 2022/23 accounts and also the closure of the 2023/24 accounts in April/May.   There has been the added complexity of a new financial system which was being introduced and that would cause disruption to all users until things settled down.  The prioritisation was the budget.  The capacity was currently being managed but was being assessed regularly.  Officers expressed their gratitude to members of the finance team for all their hard work.

·         The question was raised what would trigger a problem with the tracker.  Discussions were taking place with the Lead Member for Finance around setting some flags and some triggers around tracking.  Tracking or budget monitoring took place on a monthly basis.  The monthly reports which were presented to Cabinet were of a very high standard.   Tracking of the major proposals would be bigger in number and more details would be required on those.  As a collective, if there were a number coming forward which were not being achieved they would need to be flagged at Cabinet but could also be something Scrutiny would want to scrutinise.  If don’t achieve some of the proposals then would go to make more savings in the year or use reserves. Important when taking decisions that the implications of those decisions were made clear. 

·         Major savings of the voluntary exit scheme.  Report that over 90 people had applications refused.  The report mentioned £800k saving but there had been an opportunity to save more.   It was clarified that for each voluntary exit application, a business case had been prepared by the relevant Head of Service and that business case considered the impact on the service.  Services needed to be delivered and that was the reasoning why business cases had to be prepared.   33 applications had been accepted out of over 130 who had applied.

·         Staff briefing sessions had taken place.  3 online for office workers and 5 in person at various locations.  They had been well received for staff to have a better understanding of the current financial position of the Council.  One of the main issues was better engagement with the public around the council’s financial position and understanding how complicated local government finances are. 

 

The following questions were referred to each individual appendix –

 

Appendix 1 –

Strategic savings and non-strategic savings.  It was queried whether there was likely to be a declining curve of savings identified and achieved over a period of time.  Originally used efficiency savings and now budget reductions which turns into reductions in services and cuts.  Efficiencies had been made in the past but it had become more challenging.  It later years it would require something more transformational in order to make savings.  Change had been driven by necessity.

 

Summary of how the Council makes its money.  Within the 25% council tax funded, there was an area which was not effectively council tax funded and that was fees and charges.  It was questioned what percentage of the fees and charges would not be part of the 25% council tax income and fees.  The Head of Finance did not have the information to hand but the information would be made available.  When speaking of 25% and 75% this would be the net budget not gross budget.  It was confirmed that the income was not part of the 25%.

 

One of the work streams within the MTFS which needed doing was around opportunities to maximise income through fees and charges.  This was a piece of work which would be carried out in the next 12 months.

 

It was stated that Planning fees in England had been raised in 2023 and the question was asked whether Wales was to follow.  It was hoped that collaboration with other Planning Authorities would take place to put pressure on the Welsh Government to review fees and charges.

 

The review which was being planned would make reference to the CIPFA guidance which would be brought to the Autumn update.

 

Appendix 2 -

 

In terms of consistency of external income, the increase of fees and charges had this been applied across all services.    It was confirmed that it would be applied next year through the review of fees and charges.

 

 

Appendix 3 –

 

Item 10 – investment and priorities – where and how was the transformation budget reflected in the proposal?  It was confirmed that the investment and priorities was the impact of capital decisions.  The question around the costs of transformation, additional service pressures would be part of it but also, some would be funded possibly from reserves and capital receipts.  That was a piece of work which was yet to be carried out. 

 

Schools Demography showed being the same for 3 years and were they likely to remain the same for the future years.  It was clarified that the figures were to be refined and would be pupil numbers driven as of September, the year before the start of the financial year.  For example for financial year 24/25 would use the September 2023 pupil data.   It would be pupil numbers rather than the free school meals data as that was a measure of deprivation.

 

Appendix 4 –

 

Risks (Page 4) – was there any further information regarding the Clwyd Pension Fund Triennal Review.  No further information had been available hence why it had been included in the Risks section.

 

Council Tax Reforms – Welsh Government had plans to reform the way Council Tax  would be calculated and charged, this would have the potential to impact on how much funding the council received.  The RSG was calculated on equalisation of need based on ability to pay council tax.  The impact on Denbighshire would be a shift might move from 75%/25% to 80%/20%, therefore Denbighshire’s reliance on grants would be higher and why it was flagged as a risk.

 

it was raised whether council tax capping would be introduced in Wales?  Officers responded that they had not received any information regarding capping.

 

(Page 6) – regarding the levy to North Wales Fire and Rescue Authority, it was queried whether this was every scrutinised.  The Vice Chair confirmed he was a member of the North Wales Fire and Rescue Authority Group.  The Working Group was politically balanced and scrutinised the budget. 

 

Member Allowances - could members not agree to take the increase and therefore, deliver a saving?  The Local Government Wales Measure stated that the Independent Remuneration Panel for Wales (IRPW) set member salaries.  There were certain salaries which had to be paid and other salaries which were optional to be paid, but when paid had to be paid at the rate set by the IRPW.  It was not possible for the council to determine that salaries would be at a different level to that which was published by the IRPW.  Neither was it possible for the council to decide to forego on behalf of all members elements of their salary.  It was possible for individual members to forego all or any part of their salary but the advice from Welsh Government and the WLGA was that would be discouraged due to the agenda regarding diversity and democracy participation.

 

Reserves and balances – there could be political pressure to run down reserves.  If this were the case, were there assurances that the risk could be managed?  There were a number of safeguards, firstly having a reserves and balances strategy.  There would be wide discussion and engagement so there would be a planned use for that. 

As part of budget setting there was also a requirement on the s151 officer to give a comment at budget setting time on the adequacy of reserves and balances.  Advice from the s151 officer would be clear on the use of reserves.

 

Appendix 5 –

 

There were lessons to be learnt from the 8 English Local Authorities which had gone down the s114 route. 

 

It was commended that the view of the Chief Executive and the Monitoring Officer had been taken into account for the assessment.

 

The role of Scrutiny in the budget setting process for both Revenue and Capital was to be assessed and the s151 officer confirmed she would be attending the Scrutiny Chairs and Vice Chairs Group in May.

 

The timetable of budget activity had been presented within the report but concerns had been raised regarding the dates of some of the Governance and Audit Committees as these needed to be timetabled to best benefit Cabinet and Council. 

 

It was confirmed that the Monitoring Officer and the s151 Officer would take all the comments made during discussion of the report and assess the feedback provided.

 

RESOLVED that the Committee had considered the update to Medium Term Financial Strategy and Plan for 2025/26 – 2027/28 report and Officers would assess the feedback provided.