Agenda item

To consider the report of the Chief Officer Resources.

Consideration was given to the report of the Chief Officer Resources.

 

The Chief Officer Resources spoke to the report which had been presented to Members to:

 

·        Provide an update on the positive provisional local government settlement for 2021/2022 and the impact upon the Council’s budget.

 

·        Consider and agree the detailed budget for 2021/2022.

 

·        Agree the level of Council Tax increase for the 2021/2022 financial year.

 

The following salient points were, thereupon, highlighted in further detail:

 

 

Scope and Background:

 

·        Section 2 of the report provided an overview of the structure of the report and highlighted the various elements of funding received from Welsh Government.

 

·        Subject to the recommendation within the report being agreed, the positive provisional settlement combined with the opportunities identified in the Bridging the Gap Programme meant that the Council was able to invest in key priorities, avoid cuts to services and enhance its financial resilience.

 

National Position (All Wales)

 

·        The Chief Officer Resources advised that following the Welsh Government Budget Announcement on 2^nd March, 2021 there had been no change to local government settlements and therefore, the information contained in the report would not change.  Welsh Government had also announced continuation of the COVID related funding and £680m had been set aside, the majority of which had been earmarked for the NHS and local government. The information provided indicated that £200m had been set aside for COVID related costs for local government for the period April – September 2021.  Therefore, the assumptions that had been made around COVID related funding still stood.

 

·        The overall headline increase in the Aggregate External Finance (AEF) quoted by Welsh Government was 3.8%, after taking into account transfers into the settlement.  Compared to the Welsh average, the 3.7% increase for Blaenau Gwent placed the authority in the bottom third of the all-Wales table.

 

·        There had been two transfers into the settlement as follows:

 

·        £3.98m for the teachers’ pay grant.

·        £1.1m for the Coastal Risk Management Programme (no impact for this Council).

 

·        Certain Specific Revenue Grants data had only been published on an all-Wales basis, totalling £968m, therefore, the full impact of this was not yet known for Blaenau Gwent.

 

·        With the exception of the NHS and for those on the lowest pay, the UK Government’s decision to pause public sector pay increases had meant that Welsh Government had not received additional funding to provide for the wider public sector pay awards.  As a consequence, any financial impact arising from pay increases/awards would, therefore, need to be accommodated within the overall funding settlement.

 

Councillor T. Sharrem joined the meeting at this juncture.

 

Blaenau Gwent Position

 

·        The headline increase for BGCBC after allowing for transfers was 3.6% (£4.2m),compared to the all Wales increase of 3.8%.  This would place Blaenau Gwent in the bottom third of the league table of the all-Wales table. 

 

·        Details of the Standard Spending Assessment (SSA) – the formula on which Welsh Government based the distribution of funding was provided in paragraphs 2.22 – 2.24 of the report. 

 

·        The Authority remained the highest receiver of Aggregate External Finance (AEG) on a per capita basis.

 

·        It was noted that the General Capital Funding had reduced slightly by £54,000 from 2020/2021 to £3.8m. Blaenau Gwent’s allocation of the Public Highways refurbishment grant was expected to be in the region of £370,000.

 

Table 1 – Medium Term Financial Strategy (MTFS) Funding Gap (as at December, 2020)

 

The figures included within Table 1 of the report were based upon a number of assumptions including a:

 

·        Cash flat level of funding from Welsh Government.

·        Council Tax increase of 4% per annum.

·        Cost pressures arising as a direct response to COVID-19 would continue to be funded by Welsh Government during 2021/2022.

·        Contribution to General Reserve of £200,000.

 

Service Cost Pressures and Growth Items

 

ØThe unadjusted settlement increase in funding of £4.3m (3.7%) for 2021/2022 for Blaenau Gwent was better than the MTFS modelled position. As a result, the original funding gap could now be revised.

 

ØExisting, new service cost pressures and growth items totalling £2.819m for 2021/2022, had been included in the MTFS and the funding gap identified in table 1 in the report.  £1m per annum had been assumed for 2022/2023 onwards.

 

ØIn addition to the cost pressures identified at Appendix 3, cost pressures had been identified relating to the COVID-19 pandemic. Currently these were estimated to be in the region of £445,000 per month and reflected additional costs incurred and lost income. It had been assumed that Welsh Government would continue to fund these costs into the next financial year as funding had been set aside as part of the Budget announcement.

 

ØIt was proposed that the revised cost pressures and growth items totalling £2.074m be agreed and built into the Council’s budget from 2021/22.

 

 

 

 

 

 

Individual Schools Budget (ISB)

 

ØGiven that the Council would receive an uplift of 3.6% (after adjusting for the transfer of grant for the Teachers pay award), it was proposed to also uplift the ISB by 3.6%.  The financial impact would increase the ISB by £1.472m after taking into account a reduction in pupil demographics of £150,000 (net increase of 3.3%).  The increase would be inclusive of the transfer of the pay award grant into the settlement of £84,000.

 

ØTable 2 provided details of the financial impact on the funding gap should the cost pressures and growth of £2.074m and the increase in the Individual Schools Budget (ISB) of £1.472m be approved.  It was noted that the cost pressures and growth items would be reviewed and updated on a regular basis.  For 2021/22 this would result in a funding surplus of £584,000 and would forecast deficits for the following 4 years.

 

Bridging the Gap Strategic Reviews

 

ØTable 4 provided a summary of the estimated achievement of the Strategic Business Reviews, details of the individual strategic reviews were provided at Appendix 4.

 

ØFor 2021/22 the most recent estimate against Bridging the Gap indicated that achievement would surpass the low estimate and reach £755,000.  When factoring in the achievement of Bridging the Gap for 2021/2022, there was a budget surplus of £1.3m.

 

Transfer to Earmarked Reserves

 

Ø It was proposed that the achievement of Bridging the Gap which exceeded the budget requirement, of £1.3m, be transferred into an earmarked reserve to support medium term financial planning, specifically for the later years of the Medium Term Financial Strategy – a similar proposal had been agreed by Council the previous year.

 

 

 

Risk including Mitigating Actions

 

Ø It was noted that the remainder of the report highlighted some of the risks associated with the budget and the Medium Term Financial Strategy (MTFS) particularly if MTFS outcomes were not delivered as expected and provided information around the Revenue Budget 2020/21 and General Revenue Reserves 2020/21 half year position.

 

Involvement (Consultation, Engagement, Participation)

 

ØAs part of the budget process, engagement had taken place with residents of Blaenau Gwent.  There had been 194 responses received to the consultation and those respondents had identified schools, children’s social services and infrastructure (transport and highways) as their top three priorities.

 

Ø57% of respondents agreed that schools should receive an uplift to their budgets as recommended and the vast majority of respondents had indicated that the proposed council tax increase of 4% was either unacceptable or totally unacceptable.

 

The Leader of the Council commenced by placing on record his appreciation to the Chief Officer Resources and the whole of the Resources Team for the tremendous amount of work that they undertook throughout the year and particularly, around the arduous task of the budget preparation process.  Appreciation was also expressed to the Managing Director and her team who worked alongside Resources officers and who had also played a significant role in positioning the Council in a stronger and a more stable financial position.  Also, the Leader personally placed on record appreciation and acknowledgement to Welsh Government for the positive financial settlement that local government had received again this year, which had enabled a balanced budget to be produced and this had provided a greater opportunity to further strengthen financial resilience as the Council moved forward.

 

The Leader continued by focusing on the 2021/2022 Revenue Budget and indicated that he would be proposing that paragraphs 3.1.1. – 3.1.6. be approved en bloc at the appropriate time and in doing so wished to reiterate the comments of the Chief Officer Resources regarding the positive financial position and referred to the significant uplift to the Individual Schools Budget (ISB) details of which were captured in paragraph 3.1.5 of the report and advised that this uplift had been welcomed across the school estate.

 

In terms of paragraph 3.1.7 of the report and the council tax increase, an alternative to the Medium Term Financial Strategy assumption of 4% would be proposed i.e. a council tax increase of 3.3% for 2021/2022. If this proposal was agreed, it would necessitate some adjustments being made to the budget papers as presented, namely the funding surplus reported in Table 2 would reduce to £300,000 and likewise when taking into account the Bridging the Gap achievements, which were undoubtedly building the financial strength of the organisation to a large extent, the final funding surplus figure would alter to £1,055,000.  If agreed, it would be recommended that the sum of £1,055,000 be transferred into a specific earmarked reserve to support the financial planning particularly, in the future years of the Medium Term Financial Strategy.

 

The Leader continued by stating that if this course of action was followed he believed that going forward importantly the long term position would result in no cuts to services, there would be an opportunity to invest where appropriate within current and emerging key priorities that the Council may have and of utmost importance, the Council’s financial resilience would be significantly strengthened and would enable the future challenges to be addressed with some confidence.  He concluded by advising that he would formally propose the amendments to the report once the debate had concluded.

 

The Leader of the Labour Group echoed the comments made relating to the Chief Officer Resources and her team and said that he would like to personally thank the Chief Officer and others for attending the Joint Group Meetings.  He continued by advising that he would also be proposing an alternative recommendation at the appropriate juncture, which would be seconded by the Leader of the Minority Independent Group.  He noted the comments made regarding the Welsh Government settlement, which he believed was extremely generous and said he would pass on these comments when he met the Labour Minister for Local Government that evening.

 

The Leader of the Minority Independent Group also echoed the sentiments made regarding the Chief Officer Resources and her team for the excellent work undertaken.  He continued by stating that it was pleasing to hear that a lower council tax increase of 3.3% from that which was originally published was being proposed but felt that the administration had not grasped the problems being experienced in the community with COVID-19, unemployment and people being furloughed and felt that this did not go far enough.

 

The views of Members were sought and these concerns/comments were summarised below:

 

-      Concern was expressed that in the middle of a pandemic the Council would be taking more money out of people’s pockets.  The Member gave particular examples in his ward were residents were struggling financially and said it was immoral and he totally disagreed with an increase in council tax above the level of inflation.

 

-      Residents who had been furloughed were only receiving 80% of their wages but were still expected to pay their bills.  Blaenau Gwent was a deprived area and residents were already paying more council tax than some other local authority areas.  The Member was, therefore, unable to support an increase of 3.3% in council tax.

 

-      Another Member wished to place on record his support for ward colleague who had spoken earlier - residents in the ward had approached him, expressing concerns going forward.  Whilst the Council had received a positive settlement and would end up with surplus funding, during the pandemic bills had continued to increase and said that any proposal above the rate of inflation was unacceptable.  Many had seen the increase usage in foodbanks over the last year and said that the Council should try and help the communities wherever possible.  He concluded by stating that a 3.3% increase was unacceptable.

 

-      So many people had been furloughed and were really struggling financially due to the pandemic.  Utility costs were increasing and additional expenses and financial costs had been incurred by some who had to purchase or upgrade I.T. equipment for children being home schooled.  An increase of 3.3% was not fair particularly when the Council had received such a positive (windfall) settlement.

 

The Member continued by referring to the Audit Committee that had taken place on 2^nd March, 2021 and alluded to the additional £600,000 which had been transferred into reserves, which had not been reflected within the budget paperwork and pointed out that this additional funding coupled with the positive settlement would further increase the level of surplus.

 

The Chief Officer Resources acknowledged that the information regarding the £600,000 increase in reserves as of 31^st March, 2020 had not been reflected in papers before Members and explained that this was because at the time the report had been produced, the audit of the 2019/2020 accounts had not been completed and, therefore, the full impact of the adjustments that had to be made had not been appreciated.  However, this information would be reflected in future reports to Members going forward.

 

The Member referred to the £600,000 and acknowledged this could help the Council going forward but pointed out that this funding could be used to save residents from the impact of a 3.3% increase and this information needed to be factored into any decision being made.

 

-      Many people had suffered financially throughout the pandemic and some had even lost their homes.  The Council should have the best interests of residents at heart and should reduce the increase to reflect an inflation only increase.

 

-      During these unprecedented times the Council was expecting residents who were already struggling financially to top up the reserves.  3.3% was an unacceptable increase – reserves were meant to be used on a rainy day and currently it was pouring down.

 

-      The Council had received a positive settlement from Welsh Government and this had made the work of officers that much easier to balance the accounts.  Blaenau Gwent was more expensive area to live than other neighbouring local authority areas. Residents deserved to be supported, COVID had hit them hard and to increase the council tax on top of the current problems being faced was unreasonable. The Member indicated that he was unable to support an increase of 3.3%.

 

In reply to a question regarding the recent UK Government announcement that an additional £740m would be received by Welsh Government and whether further funding would be allocated to local authorities, the Chief Officer Resources advised that there would be further consequential funding coming to Wales as a result of UK Government Budget but it would be then a matter for Welsh Government to allocate that funding in line with priorities. Whilst it was assumed that additional funding would be received, the Chief Officer was unable to provide an indication at this present time based on the information received as to what specific areas this funding would be used for.

 

-      These were unprecedented times and at the time the budget had been set the previous year, no-one had known the financial difficulties that residents would be facing through losing jobs or businesses or being furloughed one year on.  Concern was expressed that residents were going to be asked to pay more council tax even though some were just trying to exist and living on benefits of £74 per week.  The Member concluded by stating that he could never support an increase of 3.3%.

 

The Leader of the Labour Group commenced by stating it was heart-warming to hear the comments of Members who cared about their communities and said it had been a difficult year.  Blaenau Gwent’s council tax base was pound for pound the dearest in Wales.  Whilst in previous year’s higher council tax levels had been forced due to austerity, this year the Council had a chance to give relief to residents and said that Members should take that opportunity.  He continued by pointing out that additional funding would be received by the Council i.e. the £600,000 alluded to and he had been advised that the Transformation Budget was still substantially available – it was noted that this fund use to feature in the budget up until 2 years ago.

 

The Leader of the Labour Group, thereupon, proposed the following amendments:

 

·        The funding surplus identified in the report amounting to £1,303,000 be added to the residual amount of £446,000 within the Transformation Fund to provide a total surplus of £1,749,000.

 

·        Council Tax be reduced to 0.7% in line with the current rate of inflation, which would cost a total of £1,168,200.

 

·        £300,000 (be added to the £80,000 already built be into the budget) be set aside to improve the Council’s CCTV Service with assistance from the Police.

 

·        This above would total £1,468,200.

 

·        The final surplus of £280,800 be added to the £600,000 reserve identified at Audit Committee on 2^nd March, 2021.  This final surplus would total £880,800. 

 

·        The £880,800 be set aside to ease the Minimum Revenue Provision (MRP) cost pressure of £1.8m in 2022/2023.

 

The amended proposal above was seconded.

 

The Leader of the Council expressed his appreciation to Members for their contributions and stressed that no-one was undermining or disrespecting the impact that COVID had had on the borough, neighbouring boroughs and throughout Wales.  He referred to comments made regarding a ‘windfall’ being received from Welsh Government, he stated that this was not a ‘windfall’ in many respects as with last year’s settlement, there was a new found respect and better working relationship between local government and Welsh Government, and he felt that this should be reflected in the settlements.

 

With regard to the council tax level, whilst it would be politically prudent to keep council tax levels low - Blaenau Gwent was not out of kilter with other authorities – other authorities were facing similar problems but no other authority was going to the extent that was being proposed i.e. 0.7%.  There were only 5 authorities proposing an increase under 3% and the other 17 authorities were proposing increase in the 3% range and Blaenau Gwent was the lowest in this category.  Whilst he had sympathy with the comments made, a budget was not set just for one year, a budget was set with the implications for future years.  In December he had been criticised for not mitigating the potential impact that the loss of the MRP would have and that the next administration post 2022 would be put in a difficult financial position with use of reserves.  The Leader advised that this was not true, last year a financial resilience reserve had been established and it would be proposed that this year’s funding surplus be added to that again this year and he was equally confident actions through Bridging the Gap would also mitigate the MRP.  However, he reminded Members that if the MRP had not been activated, the Council would have had to identify a minimum of £15m additional cuts to the budget over that period of time. 

 

The Leader of the Council said that the level of council tax that was being proposed was pragmatic.  With regard to the use of reserves, Blaenau Gwent was 2^nd bottom in Wales regarding the level held so there was also a long term responsibility to address this. He concluded by stating that he was more than content to explain to the public the rationale and reasoning to increase council tax by 3.3% and indeed for building up and increase the reserves which would place the Council in a stronger position going forward.

 

The Leader of the Labour Group pointed out that he had made the comments regarding the MRP back in December which he still had grave concerns about and had also discussed at that meeting the Consultative Joint Committees and the fragility of the Council which had required the change to the MRP policy to sustain the Council.  It was noted that back dating changes to MRP policies were no longer permitted.

 

He continued by advising back in 2012 his Group had inherited difficult circumstances but the Party had agreed to maintain council tax levels as low as possible – in 2016 in the middle of austerity, council tax was only increased by 2.6%.  However, today there was an option either supplement the reserves or support the residents who were currently suffering financially with a 0.7% increase in line with inflation.

 

The Leader of the Council said that the impact of an extremely low council tax base going forwarded needed to be considered and if the Council was in a position of financial resilience this would help modify the council tax and keep it at sensible levels.  The year referred to by the Leader of the Labour Group had seen a heavy usage of reserves and the following years had seen a council tax increase of 3.6% and 3.5% respectively. The proposal would allow the Council to safeguard the frontline services for public moving forward.

 

The Leader of the Labour Group pointed out that during years of austerity funding had been put into reserves and in the early 2000’s there were some extremely high increases in the level of council tax and concluded by stating that Blaenau Gwent was pound for pound more expensive than any other local authority area.

 

Councillor W. Hodgins left the meeting prior to the vote taking place.

 

Following a lengthy discussion, the Leader of the Labour Group, thereupon, proposed the following amendment to the preferred option:

 

Amended Proposal:

 

·        Paragraphs 3.1.1 – 3.1.5 (inclusive) be approved.

 

·        The funding surplus identified in the report amounting to £1,303,000 be added to the residual amount of £446,000 within the Transformation Fund to provide a total surplus of £1,749,000.

 

·        Council Tax be reduced to 0.7% in line with the current rate of inflation, which would cost a total of £1,168,200.

 

·        £300,000 be added to the £80,000 already built be into the budget be set aside to improve the Council’s CCTV Service.

 

·        This would total of the above was £1,468,200.

 

·        The final surplus of £280,800 be added to the £600,000 reserve identified at Audit Committee on 2^nd March, 2021.  This final surplus would total £880,800. 

 

·        The £880,800 be set aside to ease the Minimum Revenue Provision (MRP) cost pressure of £1.8m in 2022/2023.

 

This amended proposal was seconded.

 

A recorded vote was, therefore, requested.

 

In Favour of the amendment – Councillors P. Baldwin, D. Bevan, M. Cross, P. Edwards, L. Elias, K. Hayden, H. McCarthy, J. Millard, J. C. Morgan, K. Pritchard, T. Sharrem, T. Smith, S. Thomas, D. Wilkshire, B. Willis, L. Winnett.

 

Against the amendment – Councillors J. Collins, M. Cook, N. Daniels, D. Davies, G. A. Davies, G. L. Davies, M. Day, D. Hancock, S. Healy, J. Hill, J. Holt, J. Mason, C. Meredith, M. Moore, J. P. Morgan, L. Parsons, G. Paulsen, K. Rowson, B. Summers, B. Thomas, G. Thomas, J. Wilkins.

 

The vote on the amendment was not carried.

 

The Leader of the Council proposed that Option 1 (preferred option) be endorsed with the exception of 3.1.7, which should be amended to read a Council Tax increase of 3.3%. 

 

This would result in a £1,055,000 surplus and as agreed would be transferred to the Financial Resilience Reserve to support medium term financial planning specifically for the later years of the Medium Term Financial Strategy.

 

This proposal was seconded.

 

A recorded vote was, therefore, requested.

 

In Favour – Councillors J. Collins, M. Cook, N. Daniels, D. Davies, G. A. Davies, G. L. Davies, M. Day, D. Hancock, S. Healy, J. Hill, J. Holt, J. Mason, C. Meredith, M. Moore, J. P. Morgan, L. Parsons, G. Paulsen, K. Rowson, B. Summers, B. Thomas, G. Thomas, J. Wilkins.

 

Against - Councillors P. Baldwin, D. Bevan, M. Cross, P. Edwards, L. Elias, K. Hayden, H. McCarthy, J. Millard, J. C. Morgan, K. Pritchard, T. Sharrem, T. Smith, S. Thomas, D. Wilkshire, B. Willis, L. Winnett.

 

The vote in respect of Option 1 and a proposed Council Tax increase of 3.3% was carried.

 

RESOLVED, subject to the foregoing, that the report be accepted and Option 1 be endorsed, namely that:

 

·        Paragraph 3.1.1 - The 2021/20222 revenue budget as shown in paragraph in table 2, paragraph 5.1.14 of the report, be agreed.

 

·        Paragraph 3.1.2 - The outcomes within the BGCBG provisional Revenue Support Grant (RSG) Settlement and the potential further change in the Final Revenue Support Grant be noted.

 

·        Paragraph 3.1.3 - The outcomes within the BGCBC provisional RSG Settlement and its impact upon the Medium Term Financial Strategy be noted.

 

·        Paragraph 3.1.4 - The updated cost pressures and growth items (£2.074m in total) identified in Appendix 3 of the report for inclusion in the Council’s budget be agreed. 

 

·        Paragraph 3.1.5 - An uplift of £1.472m be agreed, which equated to a net 3.3% increase to the Individual Schools Budget (ISB). This reflected a gross uplift of 3.6% (which incorporated the Teachers pay grant transferring into the settlement of £84,000) adjusted for a £150,000 reduction in demographics.

 

·        Paragraph 3.1.6 - Any achievement of the Bridging the Gap proposals which exceeded the in-year budget requirement be transferred into an earmarked reserve to support medium term financial planning, specifically for the later years of the Medium Term Financial Strategy, be approved.

 

·        Paragraph 3.1.7 - A Council Tax increase of 3.3% for 2021/2022 be approved.