Agenda item

(a)       That completion of Stages One and Two of the budget be noted with the exception of the Stage Two options for schools funding, car parking charges and Council Tax  levels, and the three requests made to Welsh Government which are under negotiation;

(b)       That the final forecast for 2018/19 be noted and approved taking into account the review of in-year cost pressures and their predicted impact on the following year;

(c)        That the arrangements for the third and closing stage of the budget setting process be noted; and

(d)       That the concerns be brought to the attention of the Cabinet Minister to immediately respond and assist a Council that was standing up against austerity in support of local services, and in particular schools.  There must be further assistance from Welsh Government for this Council.

The Chief Executive introduced the Stages One and Two of the Council Fund Budget 2018/19 and Planning for the Closing Stage Three report.  Appended to the report were Stage One efficiency options, Stage Two efficiency options confirmed, impact assessment summary and new cost pressures and efficiencies.  An amended version of appendix 3, impact assessment summary, was handed out.

An update on Stage One budget proposals was provided and covered garden waste charges and the integration of the music Service and Arts Development Team with Theatr Clwyd. The remaining items to be resolved from Stage Two budget proposals were schools funding, public car parking charges and the Council Tax increase.  One a potential efficiency from the GwE budget of 3%, he explained that the best collective outcome that had been negotiated was a 1% reduction in contributions.  However, with inflationary pressures the 1% reduction did not save the Council any funding in real terms.  The longer term budget for GwE was now subject to a review prior to 2019/20.

Details were also provided on three requests for support that had been submitted to Welsh Government (WG) which were on the maximum charge for domiciliary care costs, guaranteed continuation of the Intermediate Care Fund funding and retention of a proportion of Apprentice Tax Levy contributions.

The Corporate Finance Manager summarised the impact of the known outcomes from Stages One and Two which resulted in a remaining working gap of £5.9m.

On Council Tax, the Chief Executive explained that options had been shared with Members ranging from an increase of between 3% and 5%.  The Final Settlement from WG had set the Standard Spending Assessment (SSA) for Flintshire at £264.333m; for Flintshire to be funded at SSA and to maximise its local taxation income against that notional target would require an increase in Council Tax of 6.71%.  WG had confirmed that councils had the local flexibility to go above the previous annual ‘cap’ of a 5% increase if they had a strong local case.

The Council had limited useable reserves and a number of earmarked reserves which included some service balances carried forward to fund specific expenditure in year, and some reserves with terms and conditions attached to them which limited their use.  Work was underway to review all earmarked reserves and to challenge those that had not been used within the timeframe originally specified.  Any use of reserves to balance the 2018/19 budget would need to be repaid in a later year.

The Chief Executive highlighted one of the risks facing the Council which was the national pay award; the Council had budgeted for a 1% annual pay award in its forecast but Trade Unions were driving potentially higher awards.  WG had made it clear that it had no funding to meet higher than forecast national pay awards and expected the UK Government to make additional funding available for it to meet any difference in cost.

Councillor Aaron Shotton expressed his concern on the limited information on specific grants from WG with proposed reductions and changes which posed a significant risk.  In particular he referred to the Education Improvement Grant (EIG) and the Single Environment Grant which were of particular concern.  He said the remaining gap of £5.9m was not a true figure as it did not take into account the pressures on grants and where those grants underpinned service delivery.  The £5.9m gap assumed a cash flat settlement for schools and an increase in car parking charges however that had not yet been agreed.  The only options available to the Council were raising the Council Tax and the use of reserves.  He commented on the funding formula which assumed the Council had a greater opportunity to yield from Council Tax however the increase to meet SSA would need to be 6.71% but that would still not close the gap. 

A document had been handed out by head teachers from primary schools in the County which asked Councillors to consider the following:

·         the use of reserves to fund a ‘true cash flat’ budget;

·         efficiency savings from other areas; and

·         setting a deficit budget for 2018/19 to raise the issue and highlight Flintshire’s continued status as one of the worst funded authorities in Wales and therefore the UK.

He said that to set a deficit budget was illegal but that message needed to be conveyed adding that WG had never known such a statement before. 

Following the document that had been handed out, he proposed an additional recommendation in recognition that the Council cared about all of its services and its communities and it was a Council of principles and beliefs.  The additional recommendation was as follows, and was seconded by Councillor Attridge:

“That the concerns be brought to the attention of the Cabinet Minister to immediately respond and assist a Council that was standing up against austerity in support of local services, and in particular schools.  There must be further assistance from WG for this Council”. 

He also added that a response was needed on the three requests as referred to by the Chief Executive.  The Chief Executive added that in addition to those three requests, WG had also been asked for supplementary general funding specifically for schools and social care funding.

Councillor Sharps expressed concern on the funding situation for schools and social care, the Council not reaching the Standard Spending Assessment (SSA) and the potential rise in Council Tax to 5% or over.  He commented that the following year would be more difficult.  The Chief Executive explained that the report to County Council on 20^th February would outline all of the options for a rise in Council Tax from 3% upwards.

Councillor Peers commented on the limited options available for funding the gap adding that he could not support the Council setting a deficit budget as had been requested by the head teachers, however education needed to be supported as a main priority.  On the predicted income generation from garden waste collections, he felt that this was a risk as the take up was not guaranteed.  He commented on the number of job vacancies in the Council and the number of positions advertised and asked if there could be a freeze on recruitment and also asked about the possible amalgamation of some of the Chief Officers posts.  The Chief Executive said the income from garden waste collections had been carefully calculated and forecast based on the uptake at other local authorities.  On staffing, he said Flintshire had the leanest management structure in Wales and that structure would be looked at again given the impending departure of one of the Chief Officers.  On the recruitment freeze, there was already a process of assumptions built into the recruitment procedure for all posts and when a vacancy arose, filling of that vacancy was rigorously challenged as to whether it was needed.

Councillor Richard Jones said he had hoped to receive a written document on consequences and an evaluation of them.  He commented on the earmarked reserves which he felt were not reserves but service balances that had been put aside the previous year and not utilised for the purposes they had been earmarked for.  He felt this sum of £2.45m could be brought back into the budget with a business case to be provided for any of the funds that were still required.  The Chief Executive said some things were unknown such as the number of residents who wanted to use and pay for the garden waste collection service.  Another area was the pay award and the need to keep reserves if the award was not funded nationally.  The consequences of things that had not yet happened could not be predicted.

The Corporate Finance Manager urged caution on the use of reserves, which at the end of March was projected to be £4.2m but this could change and he said affordability and sustainability needed to be considered.  Unearmarked reserves needed to be protected as much as possible and he also commented on the significant risk on the pay award.

The Chief Executive said the situation was dire and saw inflationary costs for schools not able to be met.  At the meeting of Organisational Change Overview and Scrutiny Committee the previous day assets had been discussed and he explained that Phases 3 and 4 of County Hall were empty and were to be demolished.  Options were being reviewed for the sale of parts of the whole site to generate capital receipts.

Councillor Ellis expressed her concern on the situation for schools and social care and said the future of County Hall needed to be explored with capital receipts being put into the capital programme.  The only things schools could now do was approach WG.  The Corporate Finance Manager explained that any money from the sale of assets had to go into the capital programme and not the revenue budget.

Councillor Bithell said a legal budget had to be set.  He said the problem needed to be attacked at its source which was UK Government. 

On being put to the vote, the recommendations including the additional recommendation were carried.

RESOLVED:

(a)       That completion of Stages One and Two of the budget be noted with the exception of the Stage Two options for schools funding, car parking charges and Council Tax  levels, and the three requests made to Welsh Government which are under negotiation;

(b)       That the final forecast for 2018/19 be noted and approved taking into account the review of in-year cost pressures and their predicted impact on the following year;

(c)        That the arrangements for the third and closing stage of the budget setting process be noted; and

(d)       That the concerns be brought to the attention of the Cabinet Minister to immediately respond and assist a Council that was standing up against austerity in support of local services, and in particular schools.  There must be further assistance from Welsh Government for this Council.