Agenda item

(a)       That the budget forecast for 2020/21 be re-noted, and the open risks which need to be taken into account in setting the budget be noted;

(b)       That the impacts and the implications of the Provisional Local Government Budget Settlement be noted;

(c)        That the work in hand on the remaining local options to contribute to reaching a balanced budget for 2020/21 be noted;

(d)       That the professional advice that, based on the financial strategy we have been working to be noted, and that there is a high degree of confidence that a legal and balanced budget can be recommended to Council on 18^th February; and

(e)       That a full and final report with recommendations to set a legal and balanced budget be reported to the Council meeting on 18^th February.

The Chief Executive introduced the Council Fund Revenue Budget 2020/21 Stage Two report which set out the strategy for reaching a legal and balanced budget.  The Provisional Settlement was out for public consultation and would be finalised on 25^th February prior to the approval of the Welsh Government (WG) Budget for all public services.

            The report covered:

·         The latest local financial forecast for 2020/21;

·         A summary of the stage one work on the budget;

·         An assessment of the Provisional Settlement and the impacts and implications for the Council;

·         The work in hand on the limited range of local options at stage two to contribute to reaching a balanced budget for 2020/21;

·         The open risks which needed to be taken into account in setting the budget; and

·         The steps to close the budget and ongoing work for the medium-term.

The report advised that there was a high degree of confidence that a legal and balanced budget could be recommended to Council at the meeting on 18^th February. A special meeting of Group Leaders was scheduled to take place prior to that Council meeting.

Since the last meeting in December, the impact of the latest changes had been to increase the budget gap to meet the expenditure requirement for 2020/21 by £0.181M to £16.355M.

The Corporate Finance Manager provided full details on the Provisional Settlement, as detailed in the report.  He explained that the provisional AEF (Revenue Support Grant and share of National Rates Pool) for 2020/21 was £199.386M which, when compared to the adjusted 2019/20 figure of £192.212M represented an increase of 3.7%.  The all Wales average increase was 4.3%.  The provisional allocation represented a cash uplift of £10.406M over the 2019/20 allocation of £188.980M.

There were three transfers into the Settlement:

·         Teacher Pension Grant (£1.978M);

·         Nursing Care (£0.081M); and

·         Teacher Pay (£0.608M).

There was no additional funding confirmed at this stage to support a funding ‘floor’.  A funding floor was a guaranteed level of funding for councils who came under the all-Wales average change in the annual Settlement. A floor had been a feature of the Settlement for many years.  Given the variations in the annual uplift from council to council, a floor had been called for by a number of councils.  If granted, it would be funded by WG over and above the quantum it had committed to invest in the Settlement for 2020/21 thus far.  The group of North Wales Leaders had made the case for a floor to be set at 4%.  If granted, that would improve Flintshire’s position by 0.3%.  The Welsh Local Government Association (WLGA) had also supported the call for a floor.  A decision was awaited and there could be no assumption at this stage, prior to the finalisation and approval of the WG budget.

Details on specific grants awarded were outlined in the report.  Most grants would be at the same level as 2019/20 or would be increased for indexation.  There would be several significant uplifts to specific grants within Education and Social Care.  The precise allocations for Flintshire were unknown, including whether the terms and conditions of grant would be sufficiently flexible for the Council to be able to allocate the funds against planned budget expenditure to assist in the closure of the remaining budget gap – further details would be made available at the Council meeting on 18^th February.

The full year impact of the Teacher Pensions Employer Contributions was an increase of £3.391M and would need to be included in the budget calculations and met from the uplift in funding received in the Settlement.  That cost pressure had not been funded at source with the base budgets of Governments as requested.  On teacher pay, the additional costs incurred in 2019/20 from the annual pay award effective from September 2018 had been part-funded by a one-off specific grant from WG.  That grant was made for the current financial year only and was not set to be continued into 2020/21.  The additional cost of £0.375M would need to be included in the budget calculations and also met from the uplift.  This cost pressure had also not been funded at source from within the base budgets of Governments.  The option remained to share cost burden with schools, as the employers of teachers, as a fall-back position.  An amount of £0.081M for Funded Nursing Care had been transferred into the Settlement for funded nursing care which was previously the responsibility of the Health Board but had transferred to the Council.

Details were also provided on the work that was ongoing on a limited range of local solutions to contribute to closing the remaining budget gap alongside the contribution to be made by an improved Local Government Settlement.  These included employer pension contributions, social care commissioning and single person discount – review of entitlement.

The Chief Executive said there could be some additional benefits in the Settlement but they would need to be added to the reserve to cover the in-year risks as outlined.   He provided details of the timetable for the closing stages of the annual budget setting process as outlined in the report.  He also added that a full review of the Council’s Medium Term Financial Strategy was underway which would set out the budget forecast and the requirements for 2022/22 – 2023/24.  The update would be reported to Members early in the summer with early engagement planned in a series of workshops.

Councillor Roberts moved the recommendations and thanked all Members of the Council for the way in which the budget had been approached, including the work of the cross party working group which formed the basis of a lot of the WLGA submission to WG. The budget had been reported to each Overview and Scrutiny Committee and no further proposals had been put forward following those meetings.  He also thanked officers for their work on the budget and the continuing work on the local solutions; he also thanked everybody involved in the work undertaken on the Clwyd Pension Fund actuarial review.  He thanked WG for the improved Settlement, and UK Government for providing WG with an improved Settlement.  He supported the request for a funding ‘floor’ which was also supported by North Wales Leaders and the Welsh Local Government Association (WLGA).  There were still substantial risks in the budget, particularly teachers’ pension’s contributions and teachers’ pay and he said that who announced the rise, should fund the rise.

It was Cabinet’s intention to propose a Council Tax rise at below 5%.

Councillor Banks seconded the recommendations.  He paid tribute to the Council Tax payers of Flintshire who had stood by the Council in its battle to protect frontline services.  However, they could not continually be expected to make up the shortfall from the Settlement from UK Government funding.  He called for a three year forecast from WG to help provide stability and assist the Council with long term planning. 

Councillor Peers welcomed the joint working that had taken place on the budget.  He commented on the report where it stated ‘WG might fully fund the next annual teachers’ pay award’ and reiterated the remarks of the Leader in that WG announced the award, but do not provide the funding for it.  On the additional £10.406M that Flintshire would receive, once the total cost of teachers’ pay and teachers’ pension employer contributions had been taken out of that figure, it reduced by £3.76M to an actual increase of £6.54M so it was not an uplift of 3.7%.  It had been expected that teachers’ pay and teachers’ pension employer contributions would have been fully funded by WG.  He commented on the section of the report which stated that the Council had no choice in recent past but to set Council Tax at a higher level than had been planned in the previous two years and said this was the only way in which the budget could be balanced due to the lack of funding from WG. 

On Council Tax, he said the WG had set a guideline of an average increase of 7.1% across Wales as part of its budget calculations for a sufficiency of funding for local government and questioned whether the strategy of WG was to put additional burden onto the tax payer.  He also welcomed the funding as a result of the actuarial review of the Clwyd Pension Fund.

Councillor Richard Jones said UK Government had provided WG with £592M and Flintshire had expected 2% which would have equated to almost £12M, not £10.406M.  He reiterated the earlier comments that WG had been expected to pay for the teachers’ pay and teachers’ pension employer contributions which had not happened.  He also said there had been no formal meeting between the North Wales Leaders and the Minister, and no changes had been made to the funding formula.  It was his opinion that UK Government had done what was expected, but WG had not. 

He commented on the resolutions on the budget item from the County Council meeting in December where the Leader of the Council stated he did not wish to see a Council Tax rise above 5% and did not want cost pressures to be shared with schools for teachers’ pay and pension contributions.  In response to a comment on the amount of new funds available to help balance the budget being £6.54M, the Corporate Finance Manager confirmed the figure should read £6.646M.  Councillor Jones asked for confirmation that the additional 0.3% on the funding floor for Flintshire’s position would see an improvement of £580K, which was given.  He concurred with previous views that local residents could not continue to be expected to fund the budget gap by large increases in Council Tax.

The Chief Executive said that Council Tax analysis data would be provided at the next meeting of County Council, including comparisons with other local authorities.

On being put to the vote the recommendations were carried.

RESOLVED:

(a)       That the budget forecast for 2020/21 be re-noted, and the open risks which need to be taken into account in setting the budget be noted;

(b)       That the impacts and the implications of the Provisional Local Government Budget Settlement be noted;

(c)        That the work in hand on the remaining local options to contribute to reaching a balanced budget for 2020/21 be noted;

(d)       That the professional advice that, based on the financial strategy we have been working to be noted, and that there is a high degree of confidence that a legal and balanced budget can be recommended to Council on 18^th February; and

(e)       That a full and final report with recommendations to set a legal and balanced budget be reported to the Council meeting on 18^th February.