Agenda item

As detailed in the recommendations.

The Leader and Cabinet Member for Finance advised that the report would be dealt with in two sections.  Firstly to consider the formal response to Welsh Government (WG) on the Provisional Settlement.  Secondly to consider the impacts on Flintshire. 

The Head of Finance introduced the first part of the report which provided details of the Provisional Welsh Local Government Settlement 2014/15 which had been announced by WG on 16 October 2013.  The consultation period on the Provisional Settlement was open until 20 November 2013. 

Full details were provided on the aggregate external finance (AEF), the damping mechanism (Floors), the Standard Spending Assessment (SSA), transfers into the Settlement, Council Tax Reduction Scheme (CTRS), highways improvement – local government borrowing initiative, protection for schools and social care, specific grants, unhypothicated grants, capital settlement and the consultation period.

The Leader and Cabinet Member for Finance proposed the following key points be included in the formal response to WG:

·         The financial challenges affecting public finances were recognised

·         Recognised that WG’s resources had reduced and WG had made policy choices about how to allocate across public services in Wales

·         The settlement was not going to change; the intention was to work with the Settlement rather than against it

·         The financial plans for local government had been changed drastically in a short period of time

·         Proactive and realistic national public relations were needed on the gravity and impacts.  WG needed to share responsibility for the local impacts which would follow

·         Longer term budget planning was needed at a national level.  Unlike Health who had 3 year plans, local government had one year of actual budget certainty and one further year with a broad outline which meant that the authority could not realistically plan in that operating environment

·         There needed to be a rounded and collective review of the sustainability of the Welsh budget as a whole (including the affordability and benefits of the universal services), not at individual sub-sector level which made thinking for the public services as a whole disjointed and could bring unintended consequences

·         Any further changes to the Settlement needed to be transparent and communicated from the outset as some of the detail had not met expectations e.g. Council Tax Reduction Scheme and prudential borrowing for highways

·         The need for the availability of capitalisation was high for local government to meet the costs of easing workforce reductions

·         The need to be creative over income generation, charging and new models of working with the best practice advocated by peer organisations

·         The proposed review of specific grants had to be ambitious and concluded quicker than proposed.  There should be a presumption that all specific grants were withdrawn and included in the Settlement unless there was a proven case for their retention as an exemption.  Local government should be judged on its performance outcomes and not constrained through tight financial controls

Following a question, the Head of Finance explained that at the time of writing the report it was believed that the Settlement included protection for education funding equivalent to 1% above the uplift for the WG’s revenue funding allocation from the UK Government which equated to 0.9% and that uplift could include the Pupil Deprivation Grant. 

The Leader and Cabinet Member for Finance, in response to a question, explained that because of the ‘damping mechanism’, the reduction in the Settlement for Flintshire was a reduction of approximately £200k.

The Head of Finance and Chief Executive presented the second part of the report which dealt with the impact on the 2014/15 budget position for Flintshire.

Although the Settlement was broadly in line with the assumptions contained within the Medium Term Financial Plan (MTFP) as at 30 September 2013, there were some direct impacts which were detailed in the report.  The overall impact for 2014/15 was that the projected budget gap reduced from £16.5m to £16.1m.

A further review had taken place on new pressures, including items from the previous year and it was anticipated that this would contribute some £0.600m which would reduce the budget gap to £15.5m.

The second revision of the MTFP 2014/15 to 2018/19 set an outline of the Organisational Change and Re-Design Plan to further modernise the organisation and secure major efficiencies in costs and overheads through the four Strategic Change Programmes of: Corporate Efficiency; Functional Efficiency; Organisational Design – Structure and Operating Model and Organisational Design – Workforce.

The Chief Executive explained that the overall strategy for 2014/15 was to seek to maximise internal cost reductions as much as possible, in order to enable time for more detailed and thoughtful consideration to be given to longer term planning and service choices from 2015/16 onwards.  The organisational plan fell broadly into two areas.  Firstly, identifying areas for Value for Money review through greater reduction of procurement spend, internal systems and practice etc, and Functional Efficiencies.  Secondly, through sensitive and carefully planned workforce changes.  Current planning assumptions were that the £15.5m budget gap would be met broadly from value for money and workforce in equal parts, accepting that workforce changes were likely to take longer to implement and were only likely to be effective for a part year in 2014/15.

November 2013 was a critical month in developing detailed proposals for full engagement with Members through December 2013.  Inevitably, a strategy for dealing with such a substantial budget gap provided a significant risk challenge for the council.  However, the aim continued to be to maximise savings, efficiencies and acceptable service reforms with a view to protecting services.  Full details of the budget proposals would be available in January 2014 leading to the budget debate in mid February.

The Leader and Cabinet Member for Finance read out a press statement which is attached as an appendix to the minutes.

The Chief Executive thanked Cabinet Members and senior managers for the work that had been undertaken in the previous weeks.  A sizeable gap of £5/6m would need to be met through workforce reductions and he expressed his concern that there could be a similar need in 2015/16. 

RESOLVED:

(a)       That the details of the Provisional Settlement be noted;

(b)       That the impact on the budget for 2014/15, current position and plans for Member engagement be noted; and

(c)        That a formal response be submitted to WG on the Provisional Settlement in line with points made by the Leader detailed above.