Agenda item

To receive a report by the Head of Finance and Audit (copy attached) to provide an update to the Medium Term Financial Strategy and Plan for 2025/26 – 2027/28.

 

The Head of Finance and Audit, Liz Thomas, introduced the Update to Medium Term Financial Strategy and Plan for 2025/26 – 2027/28 (previously circulated).

 

It was confirmed that two Budget Workshops had taken place to discuss the contents of the report and Lay Members had been invited to attend as observers. 

 

The Medium Term Financial Strategy and Plan had also been discussed at Full Council on 12 November 2024.

 

Part of the role of the Governance and Audit Committee was to seek assurance that the Council had effective and robust processes in place for setting balanced budgets.

 

During discussions, the following points were raised –

 

(i)             Without the adequate funding, schools would lack the essential resources to provide children with the adequate education, which caused concern.   Also the increase in the employers National Insurance contribution now added to the financial burden. 

 

It was confirmed that the figures within the report were pre UK Government budget so did not take into account the increase in the Employers National Insurance contribution.  Confirmation was yet to be received as to whether Local Authorities would be required to pay the additional National Insurance contribution but it was anticipated that additional resources would be provided by Government in order to fund the costs.  Indirect costs would be impacted due to this increase in National Insurance contributions also and would rise. 

 

(ii)            Members were aware that Leaders and Chief Executives of the 6 North Wales Local Authorities of North Wales had written to the First Minister and the responsible Cabinet Secretaries in Cardiff regarding the budgets and it was stressed that members of the public needed to be informed more regarding the budgets Local Authorities had and how they dealt with the same.   It was confirmed that no response had been received to date. 

 

Nigel Rudd put forward the following points –

 

(i)    All Councils in Wales were in an extremely difficult situation and needed to avoid the Section 114 bankruptcy scenario at all costs.  If Denbighshire were to enter into the Section 114 Commissioners would be appointed, decisions would be made with no consideration to democracy locally.  Members and officers would not be able to control or influence any of the decisions. 

(ii)   Across the UK there was a difference in the Council Tax between England and Wales.  In England the Council Tax was capped at either 3% or 5% increase.  In Wales, the Council Tax was not capped.  If looking to increase Council Tax to balance the books, that had to be considered as an option.  If, for example it required a 27% increase in order to balance the books for the Local Authority in year 1 that needed to be presented as an option.  If the Local Authority approved such a large increase it would be addressing some historical issues. 

(iii) To avoid a Section 114, there had to be a focus on the statutory services to the potential detriment and reduction of discretionary services.  He stated if that was not done,  and if the books were not balanced, the decisions regarding what services were supplied under Section 114 would be taken by the Commissioners.   There is a really difficult focus on the impact of non-statutory services in the budget process.  As a Governance and Audit Committee we are looking at all the options which seriously need to be considered.

(iv) The Authority had performed really well in its strategy during the last two years that everyone should be proud of but it could not continue to address matters on a “salami slicing basis”.  He needed to see evidence as a member of Governance and Audit Committee that all options were being considered including the most radicle options. 

 

In response to Nigel Rudd’s comments, the following responses were given –

(i)    Councillor Gwyneth Ellis, Lead Member for Finance confirmed she would discuss with the Head of Finance the option of the Council Tax increase. 

(ii)   Councillor Ellis also stated that to focus on statutory services would be extremely complicated as there was no definition as to what the statutory service should look like and gave the example of libraries.

(iii) Liz Thomas responded that regarding statutory services, that would be where a Commissioner would focus.  She also agreed with Councillor Ellis that the definition of statutory was not clearly defined.  It would not mean that all statutory services were protected in their entirety as they needed to be well run and efficient in the way they delivered their services also.

 

Further discussions took place as follows –

(i)    Departments were being asked to make savings, and how was the core funding element delivered to ensure the services were delivered. 

Liz Thomas clarified that tests were carried out to see the impact of any savings to the service. 

(ii)   How is the funding for the additional Employer National Insurance contributions to be dealt with?

Liz Thomas stated that the Finance Department were calculating what the costs would be and they would need to feed through to the Medium Term Financial Plan but alongside the additional income received.  It was confirmed that the costs would not be entered without the additional income. 

 

The Chair confirmed that the role of the Governance and Audit Committee was to see all options would be considered and it was his view that all options should be considered at Cabinet to keep members fully informed.

 

At this point Nigel Rudd commended the Budget Session which had recently taken place with excellent contributions from Councillor Gwyneth Ellis, Graham Boase and Liz Thomas.  He also commended the process and stated it had been one of the best budget sessions he had seen in any Local Authority. 

 

RESOLVED that the Governance and Audit Committee provides the following feedback for Cabinet –

(i)    The Council should do all it can to ensure that its focus remains on statutory services so that it meets its legal obligations and there is a clear understanding from both officers and members as to what the statutory services are

(ii)   All options in respect of Council Tax should be presented and considered however unpalatable in order that members have the full range of facts, showing the risks and benefits, when making decisions

(iii) The Council should do all it can to ensure that residents have clear understandable information in respect of the choices the council has to make and the potential implications of those choices.