Agenda item

To consider a report by the Chief Finance Officer (copy attached) which highlights some of the funding decisions taken by Welsh Government in the last year and outlines the impact on the council’s financial planning.

                                                                             9.35 am – 10.10 am

A joint report by the Chief Finance Officer (CFO), which highlighted some of the funding decisions taken by Welsh Government in the last year, and outlined the impact on the Council’s financial planning, had been circulated with the papers for the meeting.

The Lead Member for Finance, Corporate Plan and Performance highlighted some of the Welsh Government’s (WG) funding decisions in the last year and their impact on the Council’s financial planning.  The Chair welcomed the Welsh Local Government Association’s (WLGA) Director of Resources, Mr Jon Rae, to the meeting for the discussion on the report.  He explained that an invitation had been extended to the WG’s Minister for Public Services to attend the meeting for this discussion, however he had declined and suggested that a representative from the WLGA be invited to attend.  Examples of unplanned changes, positive or negative, affecting grant funded activity had been included in Appendix 1.

It was explained that during austere times the financial planning difficulties encountered by Denbighshire had resulted from the level of uncertainty attached to the Welsh Government’s (WG) indicative Revenue Support Grant (RSG) estimates, and the lateness of some grant funding notifications severely impacted on its ability to plan and manage its budget as effectively as it would like.  This problem was not unique to Denbighshire, similar concerns had been raised by all Welsh Local Authorities (LAs).

The late notification of grant allocations could potentially have wide ranging implications on LA’s, dependent upon the purpose of the grant, the audit/monitoring requirements attached to it, or whether the employment of staff members were dependent upon knowing whether that funding stream was continuing i.e. the Animal Licensing Movement Recording Grant listed in the Appendix to the report.  A number of grants in recent years had been awarded within weeks of the end of the financial year with a requirement that the monies be spent by the end of the financial year, such a short timescale for the tendering and procurement of works etc. did not equate to effective and efficient use of valuable resources.

The inconsistencies of the audit regime governing various grants was also a concern as the value of some of the grants were not cohesive with the audit requirements stipulated for them.  The WLGA had on numerous occasions made representations to the WG, via the Partnership Council for Wales’ Finance Sub-Group, on the predicament faced by Welsh LAs due to the late notification of RSG and grant funding.  It was estimated that the administration of the grant funding in total could equate to circa 10% of its actual value which in effect meant that one tenth of the grant monies was spent on administration costs.

The Finance Sub Group had, on the 9^th July, 2015, reiterated its concerns to the WG.  The WLGA continued to lobby the WG on the basis  that grant regimes elsewhere in the UK had been relaxed considerably whereas in Wales over 50 grant schemes remained part of a centralised system, e.g. Scotland had abolished all but two of its annually allocated grants, and in England a dozen or so grants remained.

Recently WG Ministers had indicated a willingness to consolidate the number of grants they awarded.   Whilst this was a positive move it did carry the risk that consolidation comes hand in hand with drastic reductions in the financial value of future grants. 

With regard to the timing of the next settlement, the outlook for the 2016/17 appeared to be very tight as it now seemed likely that the UK Chancellor would not be making his Comprehensive Spending Review (CSR) statement until the 25^th November.  This would delay the WG’s announcement on its budget until at least Christmas or the new year with the final RSG announcement likely to be early in 2016, approximately three months later than usual.  This would further impact on LA budget setting for the next financial year;

It was explained that it would be useful for different levels of governments to work closely together to build a high level of mutual trust and respect with a view to unhypothecating a number of the grants, and include them in the overall RSG settlement with an expected assurance that the monies would be used for their intended purposes.  It would also be extremely useful if Wales could adopt a national outcomes framework model, similar to the one used in Scotland, where the national government permitted LAs to set their own priorities and utilise the RSG for the purpose of delivering those as long as they contributed towards the delivery of the national outcomes in due course.

The WLGA was currently working on influencing the political parties’ manifestos ahead of next year’s Welsh Assembly elections on the basis that devolution does not stop with the devolvement of power from the UK Government to the WG, but that it also included the ‘double devolution’ of powers and flexibilities to LAs and to Town and Community Councils.

Members were keen that representations be made to all local Assembly Members on the cost of administering individual grants in comparison to the actual outcomes achieved from awarding them, and the fact that better value for money could be achieved if the value of these grants could be included in the RSG. 

Following detailed discussion the Committee:-

RESOLVED – that:-

(a)    the Welsh Local Government Association convey the Committee’s observations above to the Welsh Government via the Partnership Council for Wales’ Finance Sub-Group; and

(b)   a letter be sent to all local Assembly Members registering the Committee’s concerns as outlined above.