Agenda item

To consider a report by the Head of Finance and Audit (copy attached) to set out the proposals to set a balanced budget for 2025/26.

 

Councillor Gwyneth Ellis, the Lead Member for Finance, Performance and Strategic Assets, and the Head of Finance and Audit introduced a report (previously circulated) on the Council Budget 2025 / 2026.

 

Members were advised that the Provisional Settlement for 2025/26 was received by the Council on 11^th December 2024 and resulted in a cash increase of £14.427m or 7% when compared with the level of funding received at the start of 2024/25. The Welsh Government had produced tables so that funding levels in 2024/25 and 2025/26 could be compared on a like for like basis across all Welsh councils. Denbighshire’s reported percentage increase at 4.6% was lower than the cash comparison above as additional funding to cover pay and pensions costs have been made during the year and the Welsh Government had adjusted for this in the 2024/25 comparator used.

 

Denbighshire’s reported increase compared favourably to the Welsh average of 4.3% and follows increases in pupil numbers and free school meals data used in the formula to distribute funding to councils.

 

Councillor Ellis explained the aim today was to present a balanced budget and advised that the process of setting a balanced budget had been challenging, with work starting a year ago immediately after setting the 2023/24 budget. She reported that the financial challenges in Denbighshire were being experienced by local authorities nationally. In addition, Councillor Ellis reported:

 

·       the budget presented today was different to the budget that was discussed at full Council in November 2024, because Denbighshire had received more funding than expected from the Welsh Government. However, the improved settlement wasn’t enough to set a balanced budget without the Council making other savings and increasing the council tax levels.

·       The Council’s draft budget had increased for a number of reasons, including salary inflation, the additional cost of employer national insurance contributions and increasing demands on essential, statutory front-line services. Demand for services continued to grow and the complexity of needs had intensified in areas such as Education and Children’s Services and Adult Social Care.

·       In order to set a balanced budget the biggest contribution had come from the Welsh Government’s funding settlement, with the remainder to be found from savings and an increase in council tax, Today’s report to Council had proposed savings of £4.2m and an increase in council tax which equating to £5.2m. A council tax increase of 5.3% plus the 0.7% required for the Fire and Rescue Authority levy brough the final figure to 6%.

·       Saving proposals focused on making efficiencies and increasing income in accordance with the fees and charges policy, and savings from the Council’s transformational projects.

·       A council tax reduction scheme was available to help the most vulnerable.

·       The budget presented had intentionally not estimated any additional income that might be received later in the year from the government to fund the increases in national insurance contributions.

 

The Head of Finance and Audit referred members to the Medium-Term Financial Plan (MTFP) in appendix one, that contained the proposals for setting a balanced budget today and the budgetary pressures that resulted in the levels of savings required.

 

Members were advised of the budgetary implications for schools, including teacher and non-teacher pay awards, increases in employer national insurance contributions and other inflationary pressures. The Head of Finance and Audit reported that these had led to an additional £5.2m being allocated to schools which equated to an increase of 5.9% overall, and was a better settlement than had previously been anticipated.

 

The Chair opened up the debate to the group leaders:

 

Councillor Huw Hilditch-Roberts, Independent Group leader, stressed his concerns over providing schools with the increased funding they needed for children’s education (above the inflationary sums), the increasing fees for residents, for example, in relation to car parking charges. He expressed his concerns over the lack of Denbighshire-based transformational projects and asked for assurances that other savings that were not included in the budget would not be sought part way through the year.

 

In addition, Councillor Huw Hilditch-Roberts sought clarification on whether the budget included an allocation for public toilet provision, whether the budget would allow for a return to normal library opening hours, and whether the heads of services were committed to the savings required of them.

 

The Head of Finance and Audit confirmed that the senior leadership team were familiar with and committed to the savings identified for their services. She reported that it was not possible to always accurately project how costs and pressures would change over the year and gave examples of circumstances that could require reactionary measures if they arose. The budget for 2024/25 for public conveniences had been reduced and the future plans for public conveniences had yet to be decided and a working group had been established to consider library opening hours.

 

Councillor Brian Jones, Conservative Group leader, endorsed the points raised by the Independent Group leader with Councillor Jones also intending to raise public convenience closure proposals and library hours as concerns for a Council that looked after its residents. In identifying future savings, Councillor Jones asked for a transparent process for thoroughly reviewing all the Council’s services and expenditure.

 

Councillor Ellis reported the on-going work by the heads of services in reviewing their budgets and services and the new focus on achieving transformational changes. The Head of Finance and Audit agreed that she could support attendance at the political group level of heads of services in order for departmental budgets, services and staffing structures to be scrutinised.

 

Councillor Martyn Hogg, Green Group leader, reported that there was no enthusiasm amongst members for above inflation council tax rises, reducing services, raising fees, reducing staffing levels or keeping posts vacant but the budget setting process had been robust and balanced and had clearly demonstrated the gap between the Council’s income and necessary expenditure. He highlighted the importance of the impact assessment process for service and budget proposals. Councillor Hogg voiced his hopes that national fiscal policies would move towards providing better support for public services and that the Council’s transformation programme would be successful. Councillor Hogg recognised the modest increase in climate change programme funding and he hoped that the Council would see a positive return on the investment.

 

Councillor Delyth Jones, Plaid Cymru Group leader, acknowledged that the previous speakers had covered elements of interest to her and she praised the budget setting process. Councillor Jones endorsed the proposal by the Conservative Group leader, for the engagement between the political groups and the heads of services in scrutinising together departmental services, structures and expenditure. Councillor Jones expressed her disappointment that government funding levels was shared with councils only a short while before the start for the financial year, when they should be given over a longer term. Councillor Jones reported that the proposed budget was prudent and appropriate, it addressed important inflationary and education demands and she supported the focus on the transformation programme.

 

Councillor Ellis and the Head of Finance and Audit agreed to Councillor Jones’ request for an inclusive process with all members for the allocation of any national insurance funding.

 

Councillor Jason McLellan, Leader of the Council and Labour Group leader, gave his thanks to the Lead Member for Finance, the Head of Finance and their teams for engaging on and producing this budget which, in agreement with the Plaid Cymru Group leader, he viewed as a fair and prudent budget, which protected services for residents, protected education and was a better budget than had been expected. Councillor McLellan endorsed this budget for not containing the major cuts that had been required in some previous years when the Council’s settlement had been less favourable, and noted it would result in Denbighshire having the lowest council tax in North Wales.

 

The Chair opened the discussion to other members.

 

Councillor Mark Young referred to the recent positive Estyn education inspection but he was concerned with the number of schools facing financial deficits and that these were not as a result of poor financial management on the part of the schools and their governing bodies. He stated that schools’ core budgets needed to be reviewed.

 

Councillor Young declared a personal interest in this item from his position as a chair of a school governing body and his membership of the North Wales Fire and Rescue Authority.

 

Councillor Ellis confirmed that the proposed budget had prudently not included the receipt of any funding for national insurance contributions.

 

Councillor Young outlined a link between high levels of school non-attendance and poverty, and he urged attention to be given to improving attendance at school. He referred to the proposed budget’s allocation of £500k for reserves and to the likely receipt in the year of additional national insurance funding. Councillor Young proposed an amendment to the budget to use the £500k allocated for reserves to be allocated to education in order to improve learner well-being and attendance initiatives.

 

Councillor Diane King, Lead Member for Education, agreed that high levels of absenteeism were unacceptable and that she and the education service were focusing on attendance and school support issues and she endorsed Councillor Young’s initiatives.

 

Councillor McLellan, as Leader of the Council, stated that the amendment would not unbalance the budget nor require a higher council tax level so he was minded to support and second the amendment. Councillor Ellis, as Lead Member for Finance also supported the amendment.

 

The Head of Finance and Audit advised members of the different levels of reserves proposed in the draft budget.

 

Councillor Emrys Wynne requested a recorded vote on the amendment which Council duly agreed.

 

In favour of the amendment were:

Councillors Blakely-Walker, Butterfield, Chamberlain-Jones, Chard, Clewett, Davies, Karen Edwards, Pauline Edwards, Ellis, Elson, Chris Evans, Hugh Evans, Justine Evans, Feeley, Harland, Heaton, Hilditch-Roberts, Hogg, Holliday, Hughes, James, Brian Jones, Delyth Jones, Keddie, King, Matthews, May, McLellan, Mellor, Metri, Parry, Price, Roberts, Sampson, Sandilands, Scott, Thomas, Tomlin, Cheryl Williams, Eryl Williams, Wynne and Young.

 

Against the amendment were:

Councillors Irving and Mendies.

 

Abstaining were:

None.

 

The amendment was therefore carried.

 

Councillor Huw Hilditch-Roberts proposed an amendment to include in the budget a £560k pressure for libraries and public conveniences to be funded by a credit from national insurance contributions, seconded by Councillor Brian Jones.

 

A recorded vote was agreed.

 

In favour of the amendment were:

Councillors Chamberlain-Jones, Davies, Karen Edwards, Pauline Edwards, Elson, Chris Evans, Hugh Evans, Justine Evans, Feeley, Hilditch-Roberts, Brian Jones, Keddie, Mendies, Parry, Price, Sampson, Scott, Tomlin, and Young.

 

Against the amendment were:

Councillors Blakely-Walker, Butterfield, Chard, Clewett, Ellis, Harland, Heaton, Hogg, Holliday, Hughes, Irving, James, Delyth Jones, King, Matthews, May, McLellan, Mellor, Metri, Roberts, Sandilands, Thomas, Cheryl Williams, Eryl Williams, and Wynne.

 

Abstaining were:

None.

 

The amendment therefore was not carried.

 

Members agreed to hold a recorded vote on the recommendations as amended by Councillor Young’s amendment.

 

In favour were:

 

Councillors Blakely-Walker, Butterfield, Chamberlain-Jones, Chard, Clewett, Davies, Ellis, Elson, Feeley, Harland, Heaton, Hogg, Holliday, Hughes, James, Delyth Jones, Keddie, King, Matthews, May, McLellan, Mellor, Metri, Roberts, Sandilands, Scott, Thomas, Cheryl Williams, Eryl Williams, Wynne and Young.

 

Against were:

 

Councillors Karen Edwards, Pauline Edwards, Chris Evans, Hugh Evans, Justine Evans, Hilditch-Roberts, Irving, Brian Jones, Mendies, Parry, Price, Sampson, and Tomlin.

 

Abstaining were:

None.

 

RESOLVED - that Council

 

(i) Supports the proposals outlined in the Medium Term Financial Plan 2025/26 – 2027/28 (Appendix 1), detailed in Section 4, as recommended by Cabinet in order to set the budget for 2025/26 subject to the transfer of £500k into the Education Department budget to develop plans to improve learner well-being, attendance, behaviour and learners in poverty, contingent upon such plans being considered by Scrutiny and approved by Cabinet.

 

(ii) Approves the average Council Tax rise of 5.29% for council services plus an additional 0.71% for the increase in the levy to the North Wales Fire and Rescue Authority. This equates to an overall uplift of 6.00% proposed (paragraph 4.5).

 

(iii) Delegates authority 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.

 

(iv) Supports the strategy for use of reserves as set out in paragraph 4.6. subject to the transfer of the £500k contribution to unearmarked reserves referred to in paragraph 4.6.1 of the report to the Education Department’s budget as per resolution (i) above.

 

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