Agenda item

Council Fund Revenue Budget 2020/21

Decision:

(a) That the updated forecast for 2020/21 be noted. The forecast included the cost pressures which had been reviewed and endorsed by the respective Overview and Scrutiny Committees;

(b) That the completed first stage of solutions to meet the budget requirement which totalled £8.164m be noted. The specific service portfolio and corporate financing solutions had been reviewed and endorsed by the respective Overview and Scrutiny Committees (the first stage of solutions includes a provisional Council Tax rate of 5%. The level of Council Tax was a reserved matter for full Council and would not be decided until the February meeting. The recommended level of Council Tax could vary depending on the budget requirement outstanding at the final stage of the budget);

(d) That Council notes the limited range of local options which were available to reach a balanced budget alongside the outcome of the Settlement;

(e) That the timetable for the closing stages of the annual budget setting process be noted; and

(f) That thanks be expressed for the work undertaken by those involved in the Clwyd Pension Fund Committee for the tremendous achievement in bringing the funding up to the level they have.

Minutes:

The Chief Executive introduced the Council Fund Revenue Budget 2020/21 report which set out the following:

· the latest local financial forecast for 2020/21;

· the work to date to develop and agree local solutions to meet the projected ‘gap’ in the budget requirement for 2020/21 within the forecast;

· the arrangements for and expectations around the Welsh Government Budget and the Provisional Local Government Settlement which were due to be announced in tandem on 16^th December;

· the remaining local options to achieve a legally balanced budget for 2020/21 alongside the Settlement; and

· the timetable to complete budget closure by March 2020.

Since publication of the report, the final two Overview and Scrutiny Committee consultation meetings had been held and an updated appendix had been provided to Members which detailed the responses of each of the six Overview and Scrutiny Committees. Each Committee had received a breakdown of the cost pressures by service portfolio. It was emphasised that there was nothing being presented to Members, following the more recent Overview and Scrutiny Committee meetings that was different to the recommendations before Council.

Table 1 of the report provided the latest financial forecast which had been revised to take into account changes to the pressures included in the original April forecast and new pressures which were not previously known or fully understood and calculated. The impact of the changes had been to increase the budget gap by £0.181m to £16.355m at December.

The solutions available to the Council to balance the 2020/21 budget had been grouped as follows:

· National Funding;

· Portfolio Business Plans and Corporate Finance;

· Local Taxation and Income; and

· Organisational Change.

The Corporate Finance Manager commented on the annual teachers’ pay award and said it was the Council’s expectation that Welsh Government (WG) should pay for the 2020/21 pay award in full. On that basis, the forecast could be adjusted by £0.726m to a revised figure of £15.629m. Confirmation would be sought from WG on their plans for annual pay awards between now and the final stage of budget-setting.

He provided full details of portfolio business plan efficiencies and income, corporate finance efficiencies, local taxation and income and organisational change.

A combination of corporate finance portfolio efficiencies and income, the income derived from an indicative level of Council Tax increase, and the ‘dividend’ from the actuarial review of the Clwyd Pension Fund summarised in the report would generate a significant contribution to the budget of £8.164m.

The only remaining local options which could be reviewed to build on the contribution, dependent on the outcome of the WG budget were (1) further review of the Clwyd Pension Fund employer contributions in liaison with the Fund Actuary; (2) sharing of schools cost pressures with schools themselves; (3) a limited set of other corporate finance provisions such as the Council Tax predicted yield and Single Person Discount recovery rates; (4) a reduction in the provision for the uplift in commissioning fees for social care providers as annual negotiations continued; and (5) a higher level of Council Tax than the working assumption of 5%.

Un-earmarked Council reserves were at a low level and no further contribution could be safely drawn down to assist with budget setting.

The Chief Executive added that efficiencies of £92M had been found over the last 9 years with the support of Members, with a further target for 2020/21 of over £16M. The figures included an illustrative Council Tax increase of 5%. Schools were aware of the position on possible cost sharing – a position of last resort. Despite expectations of an improved Settlement, the Council still required additional funding to help ring fence against in year pressures that would happen, and to help bring reserves back up to a safe level.

If the Council could get through 2020/21, there then needed to be a focus on the medium term.

A good degree of detail was expected this year in the Settlement compared to previous years and those details would be available the following Monday. Information would be sent out to Members as soon as possible with an assessment of the implications for Flintshire.

He re-iterated that no further service efficiencies could be found without making services unsafe, a position which had been supported throughout all of the Overview and Scrutiny Committees.

He commented on the remarkable impact on the performance of the Clwyd Pension Fund and the actuarial review, which took place every three years, which would see at least £2m being used to add as a contribution to the budget gap.

The Chief Executive thanked Group Leaders for being signatories to the letter to the Minister for Housing and Local Government in October, which outlined the impact on Council Tax if an improved Settlement wasn’t received, and that if the Council was unable to balance the budget safely, it would have no option other than to call upon WG to make a financial intervention.

The Chief Executive said that an improved Settlement was expected for 2020/21 but questioned whether there would be sufficient uplift on the current levels of funding for local government for Flintshire and other councils to be able to set safe and legally balanced budgets for next year. The impacts of the annual Formula Distribution changes were also of concern. Under the latest distribution analysis, Flintshire was set to be a significant net loser. Discussions were underway with the Welsh Local Government Association (WLGA) and WG to set a ‘floor’, which was a way to cap the levels of loss to councils with a negative distribution impact, as in previous years.

The timetable for the closing stages of the annual budget setting process was outlined in the report.

Councillor Roberts commented on the astonishing £92M efficiencies that had been found over the last 9 years. He thanked Members across the Chamber for the work undertaken by the cross party working group which culminated in a jointly signed letter to WG which showed that working cross party could unite the Council. In his capacity as Leader of the Council, he had also signed a letter from all six Leaders of North Wales Councils, expressing the concerns of them all on the budget position.

It has been a challenging time and he also thanked officers for the work undertaken on the budget, and the advice provided. He also expressed his thanks to all involved in the work on the Clwyd Pension Fund Committee which had seen remarkable achievements.

Following Cabinet the next week, information would be sent to Members on the implications of the Settlement.

He moved the recommendations in the report, and proposed an additional recommendation of “to thank the work of those involved in the Clwyd Pension Fund Committee for the tremendous achievement in bringing the funding up to the level they have”.

Councillor Banks seconded the recommendations in the report, including the additional recommendation as proposed by Councillor Roberts. He reiterated all of the words expressed by Councillor Roberts, in particular the thanks to the cross party working group and officers.

Councillor Richard Jones felt options should be kept open until the details of the Settlement had been received on 16^th December. He commented on the additional £593m that WG would be receiving, of which Flintshire would expect to receive 2%. On the reference to the Council’s expectation that WG should pay for the 2020/21 teachers pay award in full, he asked the Corporate Finance Manager why he considered that to be safe, and suggested it would be more prudent to wait for the details of the Settlement first.

Further to the Leaders’ comments, he asked if a meeting had taken place between the leaders of the six Leaders of North Wales Councils and the Minister for Housing and Local Government.

He asked if consideration could be given to not repaying the earmarked reserves portion this year, which would add some value, and on the annual formula distribution, was there an estimate of what the financial impact could be to Flintshire.

On recommendation number 4, he felt the words ‘and accepts’ should be removed as he said it would enable the Council to keep options open.

The Corporate Finance Manager explained it was also the view of the WLGA that teachers’ pay should be awarded in full by WG on an annual basis. The advice this year was consistent with that of previous years.

On not repaying earmarked reserves this year, the adjustments in the paper was the funding from reserves the previous year so the funding needed to be found from somewhere; that could only be from the contingency reserve or earmarked reserves. Contingency reserves were at an all-time low and half of what they were the previous year.

The Chief Executive said the Minister for Housing and Local Government had not met with the six Leaders of North Wales Councils. A response letter to the one signed and submitted by Group Leaders had not been received, although it was noted that WG would communicate collectively through the WLGA once the budget had been settled.

He echoed his earlier advice that there were no other options that could be explored which would be safe – this had been agreed by each Overview and Scrutiny Committee. Even if something was put forward now, any savings would not be made in time for the 2020/21 budget.

On the funding formula, the Corporate Finance Manager explained that it was made up of a combination of population and changes to data sets and the information was that the population element would be phased, but the other element may not. Population was a very small part of where the Council would lose out – based on the latest information, the total amount was £858k and that could rise. WLGA had requested that Ministers set at Floor at 0.5% so that no Council would lose any more than 0.5% of their Revenue Support Grant (RSG).

Councillor Richard Jones said that depending on the final gap, and assuming the worst, the Council could be looking to at a Council Tax rise of between 11% and 14%. Whilst he accepted that was unlikely to happen, he felt that given the Notice of Motion debated at County Council in June 2019, he felt it would be unwise for Members to say it was accepted, which was the point he made earlier in relation to recommendation number 4. The Chief Executive said it was for Members to determine the wording, but the advice from officers needed to be understood and would stand.

Councillors Roberts and Banks, as mover and seconder of the recommendations, accepted that the words “and accepts” should be removed, as suggested by Councillor Richard Jones.

Councillor Heesom thanked Members for the change to recommendation number 4. He was pleased to see that officers had come closer to the concept of Council Tax being under the 5% cap. On portfolio efficiencies, he felt the debate on expenditure was not the end of the matter and that there were times when there might be options available, citing an example of a discussion that had taken place earlier that day in Environment Overview and Scrutiny Committee on the frequency of black bin general waste collections. He felt there were areas within each portfolio budget where Members may need to consider cuts. He would not support the gap being funded through Council Tax and felt it would be incumbent on Members to consider service cuts.

The Chief Executive said significant modernisation had taken place across the Council and to do any further would be complex. He advised again, that levels were where they would become unsafe if any further reductions were implemented, including mandatory duties of the Council and none of the Overview and Scrutiny Committees had identified anything of any scale for review.

Councillor Peers thanked the officers for all of their work, and again, the excellent work undertaken by the Clwyd Pension Fund Committee. He said under the leadership of Councillor Roberts, different political groups and Group Leaders had been brought together and budget discussions had been amicable. If the outcome was to be positive, he hoped that was due to the contribution that all Councillors had made. He thanked Councillor Richard Jones for his proposal on recommendation number 4, as it kept things open and flexible as the situation the Council was in, was still unknown until the Settlement was received. He was grateful that the figures in the report worked on a provisional Council Tax rise of 5%. He was encouraged by some of the options in the report, the financial value range being £1m-£2.9m, and asked that if at some point a breakdown of those figures could be provided and what potential there was of them being achieved. In the spirit of working together, he hoped that the Council could focus on a Council Tax rise of 5%, and endeavour to work together for the benefit of the Council and the Council taxpayers.

The Chief Executive said the figures requested by Councillor Peers were available and would be made available the following week once the Settlement had been received.

Councillor Ellis commented on the five remaining local options as detailed in the report, and asked if number (4) “a reduction in the provision for the uplift in commissioning fees for social care providers as annual negotiations continued” would include nursing homes? If it did, provision could then be lost. On the limited set of other corporate finance provisions, such as the Council Tax and predicted yield, she asked for further information on the single person discount recovery rates i.e. could it include reducing the single persons rates, because if so, it could then result in an increase in homelessness. She would not support a Council Tax rise of over 5%.

The Chief Executive clarified the reference to up to £2.9M in the range of options only covered options 1-4, and not the option on Council Tax. There was no intention to do anything new in relation to single person discount recovery rates. On commissioning fees, what the Council was offering based on the assessment made, if the Council negotiated well with care providers there could be a small amount available, and no provider would be at risk.

On being put to the vote the recommendations, including the amendment to recommendation number 4 and the additional recommendation, were carried.

RESOLVED:

(a) That the updated forecast for 2020/21 be noted. The forecast included the cost pressures which had been reviewed and endorsed by the respective Overview and Scrutiny Committees;

(d) That Council notes the limited range of local options which were available to reach a balanced budget alongside the outcome of the Settlement;

(e) That the timetable for the closing stages of the annual budget setting process be noted; and

(f) That thanks be expressed for the work undertaken by those involved in the Clwyd Pension Fund Committee for the tremendous achievement in bringing the funding up to the level they have.

Supporting documents: