Agenda item

To receive a verbal update.

(a)       That the verbal update be noted; and

(b)       That the Cabinet Member and officers be thanked for their open contributions.

The Chief Executive provided a verbal update on the latest financial position following the Welsh Government (WG) announcement on the Local Government Provisional Settlement for 2019/20 which was subject to formal consultation.  Prior to the final Settlement expected on 19 December, the Chancellor’s Autumn Budget Announcement on 29 October would be crucial in establishing any consequentials for Wales.  This was due to the commitment given by WG that any positive new movements (for example, extra funding for education and social care) would be prioritised for local government in recognition of the additional allocation already prioritised for the Health sector.

On the Provisional Settlement figure, the Chief Executive said that in addition to Flintshire being a low-funded council, distribution variances meant that it was one of three North Wales authorities receiving the maximum reduction of 1%, which equated to a loss of £1.9m to Flintshire (including the unfunded annual teachers’ pay award).

As one of the significant risks at UK level, confirmation was awaited from WG on how additional costs for teacher pensions employer contributions would be funded.  For Flintshire, this was potentially a £3.5m additional risk in-year.  A decision was to be made by Cabinet on implementation of the teachers’ pay award in-year for which Flintshire was yet to receive its £0.409m allocation from WG which amounted to half of the total.  Representations had been made that the Settlement did not include additionality for 2019/20 which reflected a further pressure of at least £1.3m.

The Welsh Local Government Association (WLGA) had made its collective evidenced case for WG to improve the Settlement position whilst it had flexibility within its budgets at this stage.  As part of continued extensive campaigning, concerns were being raised about the impact of inadequate social care funding upon Health as the two areas should be considered alongside each other.  Following previous discussions, it was suggested that Members defer any further actions until after the impact of the Chancellor’s Statement could be established.

On the uncertainty around specific grants, the Corporate Finance Manager advised that more detail on the WG announcement of an additional £30m for social care and £15m for education was awaited.

Councillor Heesom raised strong concerns about the adequacy of the Medium Term Financial Strategy and portfolio structuring to improve the Council’s financial position.  He said that services were under significant pressure and could not be delivered in the current framework.  He went on to question the Council’s response to a series of recommendations within a report which had been shared.

On the latter point, the Chief Executive explained the background to the report by a finance professional commissioned by the Council with WLGA funding in response to the Council’s offer to share its strategies and risks to support the case for fairer funding.  The findings had validated many issues raised by the Council and demonstrated the lack of solutions beyond those already identified.  The report had been referenced previously in advocating changes to the Minimum Revenue Provision policy.  Officers agreed to circulate the report and accompanying action plan to Members.

In response to the other comments, the Chief Executive gave a reminder of key responsibilities in setting the budget and described the severe scale of the financial challenge.  A high level of information had been shared at the recent budget workshops to help Members understand risks and resilience, and officers had given an undertaking to explore further areas identified.  Whilst no new proposals to address the budget gap had come forward at the workshops, Members were able to put forward any new options at any stage.

Councillor Mullin gave a reminder that all councils were in a similar financial position and that the WAO had acknowledged Flintshire as well financially managed.  He referred to the achievements in Flintshire on implementing a leaner management structure as well as successes in Alternative Delivery Models, Community Asset Transfers and Council house building.

In response to comments on reserves, the Corporate Finance Manager gave a reminder of the need to set aside adequate levels to deal with any in-year tolerances including investment to achieve efficiencies and meeting unforeseen pay awards.  He gave an update on the projected year end balance for contingency reserves, as reported under the next agenda item.

Councillor Jones said it was important that Overview & Scrutiny Members were able to challenge information as part of their role.  In referring to the disparity in funding allocation between local government and Health, he said that WG should recognise the need for Health and social care to work together as each supports the other.  He cited Out of County Placements as an area of risk on which councils had no control and therefore should be nationally funded.  The Chief Executive said that the WLGA had opted to include this as part of social care pressures in its representations to WG, rather than a specific fund.

Following a query by Councillor McGuill on monitoring cost-effectiveness within the Council, the Chief Executive said that any suggestions should be raised directly with officers.

In response to comments from Councillor Johnson on Member input to the budget process, the Chief Executive clarified that Members were able to put forward new proposals at any stage without reversing decisions already made.

RESOLVED:

(a)       That the verbal update be noted; and

(b)       That the Cabinet Member and officers be thanked for their open contributions.