Agenda item

Council Fund Budget 2019/20

To receive a verbal update on the work being undertaken following County Council on 29 January to advise the budget setting at County Council on 19 February (noting the all Member workshop to be held after the Corporate Resources Overview & Scrutiny Committee meeting).


That the report be noted.


The Chief Executive and Corporate Finance Manager provided an update on work undertaken in response to information requested at County Council on 29 January following deferral of the budget-setting for 2019/20.  A report to Cabinet on 19 February would seek a solution on the budget to be re-recommended to County Council later that day, and prior to the formal resolution to set the Council Tax on 28 February which would follow.


All Members had been invited to attend a briefing immediately after the meeting to enable officers to report back their findings and present a briefing note on the main issues raised:

·      Alternative ways of using capital receipts to reduce the Minimum Revenue Provision (MRP) account;

·      The rationale for safeguarding the level of contingency reserves at £5.8m (year-end projection);

·      Review of earmarked reserves not expected to be used in 2019/20;

·      The technical aspects of saving money by rescheduling loans; and

·      The use of surplus cashflow for the budget.


Following the briefing, all information would be emailed to all Members to assist with the discussion on 19 February.  Councillor Richard Jones had been briefed separately on issues that he had raised, as he was not able to attend.


The Chief Executive highlighted the importance of differentiating technical advice, which should be followed, and professional opinion on risk which should be taken into account, both of which would be provided to enable Members to reach a decision on the budget.  He said that timescale was crucial not only to meet statutory requirements to set a balanced budget but to allow for process such as issuing Council Tax demands and implementing changes in payment instalment periods.


In welcoming the information given by the S151 Officer, Councillor Heesom expressed his concerns that the leadership of the Council had brought forward a deficit budget, notwithstanding legislative guidance, and that the recommendation to resolve the budget by increasing Council Tax would not be accommodated by the majority of Members.  He referred to a list of ‘options’ shared by officers at County Council and said that in the absence of options to trim the budget, the leadership must look again at expenditure to identify a balanced legal budget.


Councillor Aaron Shotton clarified that the budget had not yet been set and that it was the responsibility of the body of elected Members to do so.  He said that the setting of ‘a deficit budget’ was not a statement of fact as it would not meet the Council’s statutory duty.  The recommendations were those of officers and statutory officers and his proposal at County Council in January was to recognise the need for an increase in Council Tax if no further assistance was given by Welsh Government (WG).  At that meeting, Members had agreed to defer the item pending a cross-party delegation which had met with WG representatives to seek an improved Local Government Settlement for 2019/20.  The outcome from that visit was no intent by WG for any improvement and highlighted concerns about the position for 2020/21.  The briefing to be held later in the day would assist Members in considering the only remaining options - and risks involved - based on technical advice from officers.  Councillor Shotton went on to refer to Council Tax increases proposed by other councils in Wales in response to the financial climate.


The Chief Executive said that the information to be shared at the briefing was the result of extensive technical work incorporating the professional opinions of officers, Wales Audit Office and Treasury Management advisers.  In response to Councillor Heesom’s comments, the list provided previously did not contain recommended options but showed the discretionary services which Members may wish to re-review and re-consider (following previous scrutiny and risk assessments) for future years.  The Council could not legally set a deficit budget or reasonably defer setting a balanced budget beyond February, as reflected in the recommendations by the Constitution & Democratic Services Committee on the budget process, formally adopted at the last Annual General Meeting.  Those recommendations recognised (i) the need for an appropriate cut-off date (which had passed) after which it was not practical for officers to respond to Members’ requests for information, (ii) the need to await professional officers’ advice and (iii) that information should be risk assessed.


As Section 151 Officer, the Corporate Finance Manager explained that a deficit budget arose where a Council had agreed expenditure in excess of the budget, which was not legal practice.  This was not the case here as the Council had not yet approved the budget and the report for 19 February would set out ways in which the budget could be legally balanced.


Whilst Councillor Heesom agreed that the budget had not yet been set, he said that cuts to expenditure remained a live issue as the proposed Council Tax increase was unacceptable.  He said that there was a question of accountability on the budget gap position.


Councillor Shotton reiterated the responsibility of full Council in setting the budget following a recommendation by Cabinet, based on detailed consideration by all six Overview & Scrutiny Committees which had widely accepted that there were no further efficiencies of scale to balance the budget without detrimental impact on services.  He said that the points raised at County Council in January would be addressed in the briefing and that it was important that Members have that opportunity for discussion with professional officers.  He said that comments on ‘trimming’ the budget could not really be given without identifying specific proposals of sufficient scale.


In response to the points made, the Chief Executive said that the increase in Council Tax was not a recommendation but a necessity at this point - to meet the budget requirement - and that officers needed to advise on how to bridge the remaining budget gap.  Members had been made aware at the Provisional Local Government Settlement stage that in the absence of further assistance from WG, the budget gap indicated that Council Tax could be sized at up to 15.2%, a figure which had been reduced following an improved Final Settlement.  On timescales, the Chief Executive spoke about the risks and work involved in assessing the legalities and implications of any large scale new options or proposals at this late stage.  The process and deadlines for reviewing all budget options had been made clear stage by stage.




That the report be noted.