Agenda item

That having considered the Medium Term Financial Strategy and Budget 2022/23 report, the Committee wishes to feedback to Cabinet its acknowledgement of the indicative allocations and disappointment at Welsh Government not considering a supplementary allocation towards national pay awards and the Real Living Wage.

The Corporate Finance Manager introduced a report to update the Committee on the key headlines and financial impacts of the Welsh Local Government Provisional Settlement announced in December, in advance of the Council’s formal budget setting process in February.

The provisional aggregate external finance (AEF) for 2022/23 was a 9.2% increase on the adjusted AEF for 2021/22 - slightly below the all Wales average increase of 9.4%.  This represented a cash uplift of £25.396m from 2021/22 but did not take account of the North Wales Regional Waste Treatment Project gate fees and Social Care Workforce Grant, both of which were previously received via specific grants.  In addition, there was an expectation to meet in full the impacts of all pay awards and the Real Living Wage as well as ongoing risks such as Out of County Placements and continued extra costs and lost income arising from the pandemic following the cessation of the Welsh Government (WG) Hardship Fund at the end of this financial year.

These additional pressures would significantly increase the overall additional budget requirement previously reported, which had been based on the minimum level and below in-year demand levels.  Once work was complete on reviewing all additional cost pressures, a legal and balanced budget for 2022/23 would need to be recommended by Cabinet to Council in February.  Building resilience into reserves would be a key consideration of budget setting for 2022/23 and for the Medium Term Finance Strategy, particularly given the challenging indicative allocations for the next two years.

In thanking officers for the report, Councillor Paul Shotton welcomed the increased Settlement but recognised that indicative future allocations, rising living costs and Flintshire’s funding position in Wales reinforced the importance of continued discussions with the Welsh Local Government Association (WLGA) to make the case for fairer funding.

In response, the Chief Executive said that Flintshire’s allocation below the Welsh average and its ranking as 20^th out of 22 Councils in Wales on funding per capita was an ongoing concern.  On the removal of the additional funding floor, which aimed to protect Councils falling well below the Welsh average, the Corporate Finance Manager said that the decision by WG had possibly been influenced by the Settlement.

Councillor Ian Roberts also welcomed the increase in the Settlement but said that the Council’s current budget projections would need to take account of a number of significant pressures that had not yet been concluded.  He referred to the wider impact of outcomes on teachers’ pay awards and the Real Living Wage and reiterated the need for national pay agreements to be fully funded.

When asked by Councillor Sean Bibby about comparison of allocations given to neighbouring authorities, officers explained that the report was based on the average across North Wales which was similar to the national average and that the inequality of funding in Wales was being raised at Ministerial level.

Councillor Paul Johnson spoke about the wider impacts of inflation and the need for careful consideration of the 2022/23 budget in the context of future years.

The Chief Executive spoke about the need for the Council to strengthen financial resilience particularly given the influence of inflationary pressures as an ongoing risk.

Councillor Richard Jones said that whilst the indicative settlements for the next two years were welcomed, they were lower than expected.  In response to questions, the Corporate Finance Manager said that detailed work was being undertaken to review key cost pressures and changes to grants so that an updated position could be reported in February.

The Corporate Manager, People and Organisational Development provided clarification on the current financial impact of implementing the Real Living Wage on which the outcome for 2022/23 was awaited.  She also said that challenges in recruitment and retention across all sectors - which had been widely acknowledged - would form part of the People Strategy later on the agenda.

Councillor Jones proposed that the Committee acknowledge the indicative allocations but express disappointment for WG not considering a supplementary allocation towards national pay awards and the Real Living Wage.  He was seconded by Councillor Mared Eastwood.

RESOLVED:

That having considered the Medium Term Financial Strategy and Budget 2022/23 report, the Committee wishes to feedback to Cabinet its acknowledgement of the indicative allocations and disappointment at Welsh Government not considering a supplementary allocation towards national pay awards and the Real Living Wage.