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Agenda item
Draft Budget proposals for 2023/24.
Minutes:
The Cabinet Member for Finance and
Performance presented the report, which asked the
Joint Scrutiny Committee to consider and comment upon the draft budget
proposals for the 2023/24 financial year as part of the consultation process
prior to a final decision by Council on 23rd February 2023. It was noted that the Draft Budget Proposals
for 2023/24 had been presented to the meeting of Cabinet on 18th January 2023.
The report provided details of draft budget proposals based
on the Welsh Government (WG) Provisional Local Government Financial Settlement
for 2023/24. The report also provided details of a range of cost and service
pressures that require funding, details of proposed savings and the use of
reserves, along with a proposed increase of 7.90% in Council Tax to enable the
Council to set a balanced budget for the 2023/24 financial year. An updated indicative Medium-Term Financial
Plan (MTFP) was also appended to the report showing a potential savings
requirement of £48.047m for the two-year period 2024/25 to 2025/26.
In cash terms, the 6.9% increase in the Provisional
Settlement for Caerphilly CBC
provides additional funding of £22.152m for 2023/24, which
is of course welcomed, but is well below the current unprecedented levels of
inflation and the Council faces cost pressures totalling £55.771m for 2023/24
alone through a combination of pay and non-pay inflationary pressures and a
range of inescapable service pressures.
Whilst the proposals in the report present a balanced financial position
for 2023/24, a significant element of this is being achieved through one-off
measures including £6.862m of temporary savings and £15.051m through the use of
reserves. These temporary one-off measures totalling £29.913m will only support
the budget for 2023/24, but they do provide some essential breathing space to
identify, agree and implement permanent savings. The 2024/25 financial year will be a
significant challenge for the Council and it is vital that an early start is
made to identify proposals to address the financial shortfall.
The draft budget proposals also include a proposed increase
of 7.9% in Council Tax for the 2023/24 financial year, which will result in a
Band C annual increase of £99.06 or weekly increase of £1.91. It was emphasised that even with this level
of increase, Caerphilly Council is likely to have the second lowest level of
Council Tax in the whole of Wales.
Due to the unprecedented levels of inflation, the current
economic outlook, and the range of temporary measures that are proposed for the
2024 2324 financial year, it is clear that the Council will continue to face
significant challenges moving forward.
With this in mind, the Medium-Term Financial Plan has been updated based
on a range of assumptions, resulting in a potential savings requirement of
£48.047m for the two-year period 2024/25 to 2025/26. Given the scale of the challenges being
faced, a salami-slicing approach to services is not sustainable or appropriate,
especially when the demands upon services are far higher than ever. To ensure that the needs of communities are
met by operating with reduced finances, a whole council and a whole county
borough holistic approach will be needed.
The Team Caerphilly operating model, which has proven to be even more
relevant when considering the context of the current financial challenges and
the emerging corporate plan, has recently been revised, and will offer the
strategic framework to develop a new operating model for the Council to enable
services to be delivered differently and more efficiently.
A public
consultation has been launched on the draft budget proposals for 2023/24,
comprising extensive face-to-face engagement, a survey and targeted stakeholder
engagement, and the Cabinet Member encouraged as many people as possible to
have their say on these draft proposals.
The Leader of
Council emphasised that although the approaches taken to address the budget
pressures, including the use of reserves, can smooth the path to major changes
in the way the Council operates, the Authority is still faced with a starting
deficit of £21m for the 2024/25 budget and so transformation is key in
delivering services for the next year.
£5.6m of permanent savings have been identified to date and so the
Council will need to make an additional £21 million of further permanent
savings, which can only be achieved by changing the way that the Council
operates.
The Leader
explained that a holistic approach to transformation is needed and that the
Council wishes to avoid the prospect of compulsory redundancies and the cutting
of key services being faced by other authorities. Although the Council does have some usable
reserves, they will need to use the next few months to transform to a more
modern Authority, by working smarter and asking staff to adopt new approaches
to service delivery. The period of
learning experienced during the Covid-19 pandemic has allowed the Council to
rethink the Transformation Programme and make use of modern technologies to
deliver its services in a more efficient manner. The Workforce Development Review and Service
Review will maximise the continuation and efficiency of services and the
Placeshaping Investment Programme will allow the use of Council monies and
reserves to leverage and match fund money from the UK Government, Welsh
Government and private investment. The
Council will use reserves to attract more funding to deliver significant health
and well-being benefits to residents, new schools, new council housing and
increased access to health and well-being activities. The draft budget proposals will deliver on
these areas without utilising compulsory redundancies, cutting key services, or
asking staff to take on unmanageable workloads.
The Scrutiny Committee discussed the report and a Member asked about the
long-term goals for tourism venues in the county borough, citing the example of
St David’s Hall Cardiff being sold to an external organisation, and asked if
this is a model that is being considered for Caerphilly-owned venues. It was confirmed that alternative operating
options are being examined and a review is currently underway, with a long-term
tourism strategy due to be launched. The
recent reduction in the subsidy to Blackwood Miners Institute was also
highlighted, which is due to the increased programme of events at the
venue. Members were reminded that the
Council’s tourism venues will also need to change the way they operate in line
with the Authority’s plans to change the way it delivers services.
Members asked if there were plans to change the grass-cutting regime in
terms of the
number of cuts
per year, and if it would take into account biodiversity considerations, such
as a wildflower seeding programme. The
Committee were advised that a Grass Cutting report is scheduled for consideration
by the Environment and Sustainability Scrutiny Committee on Grass Cutting which
will set out these proposals but will need to take into account the impact on
climate change in view of the Council having declared a Climate Emergency.
Members raised
concerns regarding the proposed reduction in the caretaker subsidy for
community centres and were of the view that this could have a significant
impact on the operating viability of some centres. The Committee were advised that an Equality
Impact Assessment has been carried out in respect of this savings proposal, and
at present the Council funds 11 hours of caretaking costs for each centre,
which is fully utilised by some centres but not by others, depending on their
needs. Therefore some centres are
underused and need to become more proactive in their approach, and the Council
is willing to work with these community centres to help them become more
self-sufficient, as the Council cannot afford to fund caretaking hours and
maintain buildings that are only used for a few hours per week.
A Member
highlighted the reported underspends of £38m in the 2022/23 budget, together
with the level of funds held in reserves, and enquired whether these could be
used to fund the budget deficit for 2023/24.
Mr Steve Harris (Head of Financial Services and S151 Officer) explained
that underspends over the past two years were due to services not running at
full capacity during the Covid-19 pandemic, together with additional funding
from Welsh Government that was made available at the time. However, these underspends have been reported
to Cabinet and Council and have been ringfenced for specific purposes,
including £14.3m from the General Fund being released for purposes such as the
pay awards impact, the cost-of-living hardship fund and the cost-of-living
crisis fund.
In relation to
the reserves totalling £233m, a substantial portion has been allocated or
ringfenced for specific purposes including the Housing Revenue Account, the
21st Century Schools Programme, a new respite facility, the highways
programmes, and funding to support the wellbeing and placeshaping
framework. It was also clarified that a
large proportion of reserves cannot be reallocated elsewhere as they have already
been agreed for a specific purpose.
During the
meeting, reference was also made to the proposed use of reserves totalling
£15m, with assurances sought that the Council is able to release those
particular reserves relating to £5m of Covid-19 earmarked reserves and £2.098m
for the Cost-of-Living Crisis Contingency.
Mr Harris explained that the proposed release of such reserves has been
reviewed in detail, and as the impact of Covid-19 and cost of living is now
being managed within departmental budgets, these reserves can now be released
to help balance the budget.
Several Members
raised concerns throughout the meeting in relation to the proposed 7.9% Council
Tax increase and highlighted the impact of this increase on local residents,
particularly in view of the cost-of-living crisis and the additional financial burden
this would place on them. The Scrutiny
Committee were reminded that 75.81% of households are in Bands A-C, and that
the most vulnerable residents are supported through the Council Tax Reduction
Scheme, with 15,999 households (19.89%) receiving some level of support and
8,253 of these households receiving a 100% reduction. One Member suggested alternative budget
proposals, such as a one-off reduction against the General Fund balance to 2%
which would release £3.9m to be offset against Council Tax, reducing this to a
2.1% increase.
A number of
Members highlighted concerns around the creation of a new multi-purpose state
of the art leisure centre in Caerphilly which has received £20m in Levelling Up
funding but will require the Council to fund the remaining costs of
£13.6m. Members highlighted the public
perception around this project and asked how the project could be justified in
view of the proposed council tax increase of 7.9%. Some Members welcomed the regeneration opportunities
in the area but expressed the need for Levelling Up funding to be spread over
the whole of the borough and not just Caerphilly town. It was explained that the criteria for the
Levelling Up fund does not allow for individual projects in every town and that
there are a number of regeneration projects right across the county borough
that have been funded in alternative ways.
One Member also suggested that it would be prudent to put the new Caerphilly
leisure centre scheme on hold until the Council can consider whether it can
afford this particular project. It was
confirmed that these comments would be taken on board but it was emphasised
that the Council needs to make the best use of these reserves, including the
continuation of its regeneration projects, and that the existing leisure
facility is extremely outdated and cost-inefficient in terms of overheads and
so this is a much-needed investment which will be for the benefit of service
users across the whole of the county borough
A Member
questioned the need for additional staff as set out in the report when balanced
against the proposed budget cuts. Mrs
Christina Harrhy (Chief Executive) advised the Scrutiny Committee that she has
a statutory responsibility as Head of Paid Service to ensure that the Authority
has the appropriate staff and skills to deliver the services that the Council
is being asked to deliver, with some service areas extremely stretched and so
the proposals seek to fill these gaps.
Members were asked to note the vacant posts being deleted as part of the
saving proposals, together with the significant programme of change being
embarked upon by the Authority, with it emphasised that to manage a programme
of this scale, additional capacity with these particular management skills needs
to be secured in order to lead and implement the required changes. One Member also queried the proposals to make
some staffing positions permanent in nature, and Mr Richard Edmunds (Corporate
Director Education and Corporate Services) explained that the Council has
recognised the value of these posts, in particular those which will help
deliver the Transformation Strategy, together with those at the forefront of IT
service delivery, and that given the current challenges around recruitment,
offering permanent positions will increase the chances of attracting high
quality candidates.
A Member raised
concerns around the proposed cuts to Service Level Agreements for the Voluntary
Sector and it was explained that although the Council are greatly appreciative
of the value of this particular sector, the Council are faced with the
alternative of making cuts to key services in order to meet the £35m funding
deficit, and that the voluntary sector are still able to secure funding through
alternative streams. Members also
referenced the proposal deletion of the Community Empowerment Fund and felt
that this proposal was premature given that many local organisations did not
have the opportunity to use their allocation during the pandemic, and they
sought clarification on the funding assistance available to these organisations
in the future. Officers confirmed that
these comments would be taken on board and considered as part of the
consultation process around the draft budget proposals.
Clarification was
sought on the proposed budget realignment across Social Services, particularly
in relation to the support around Children with Disabilities and domiciliary
care, with a Member expressing concern around whether demand is being met, and
also suggested that these underspends could be used to recruit additional
foster carers to help address the overspend across Children’s Services in
relation to independent/residential home provision. The Committee were assured that demand is
being fully met, and that there has been a reduction in demand across these
particular services, hence the proposed budget realignments, and in some cases
the needs of service users has changed which had led to the health board taking
on provision of this service in place of the
local authority, as the level of need has changed from social care to
health care. Members were also assured
that foster care recruitment is the focus of a very active and successful
campaign at both local and national level, and that this area does not require
additional investment.
A Member sought
clarification on the impact of inflation on the proposed cuts and the budget as
a whole, together with the impact of a sharp inflationary drop on next year’s
budget. Members were reminded that the
Authority is facing unprecedented cost pressures of £55.8m for 2023/24 alone,
with £36m of this due to inflationary increases, including £17.4m for the pay
award, £9.9m in energy costs and £8.9m for other non-pay inflation impacts
across other budgets. It was
acknowledged that if inflation were to reduce, that might affect the amount
needed to be set aside, but however there are concerns around the devaluation
of reserves, plus the impact of inflation around the increased costs of some
projects (such as the 21st Century Schools Programme) which may
impact on what the Council is able to deliver moving forward.
Reference was
made to the £1.747m set aside for temporary accommodation and a Member asked if
consideration had been given towards recycling multiple units into alternative
provision to offset the costs used for private provision. Members were advised that this inescapable
service pressure is representative of the demands faced by all local
authorities in Wales in terms of temporary accommodation, and all alternatives
are being looked at, including construction methods, use of pods, bed and
breakfast accommodation, and bringing empty properties back into use, and
pressure is being put on Welsh Government in this regard.
During the course
of the meeting, Members expressed concerns around the proposals for increased
pitch fees, stating that many of the local sports clubs and local users will
find a 20% increase difficult to absorb.
Queries were also received around the proposed MOT fees increase,
together with a query on community asset transfer, with clarification on both
queries provided by Officers.
In closing the debate, the Chair thanked Members and Officers for their
attendance and contributions in light of the level of savings required and the
difficult decisions that need to be made.
It was noted that the comments on the Draft
Budget proposals for 2023/24 would now be reported to Cabinet and Council as part of the consultation process.
The meeting closed at 7.00 p.m.
Supporting documents:
- Draft Budget Proposal for 2023-2024, item 3. PDF 94 KB
- Appendix 1 - Draft Budget Proposals for 2023/24 (Cabinet Report 18.01.2023), item 3. PDF 757 KB
- Appendix 1, item 3. PDF 88 KB
- Appendix 2, item 3. PDF 54 KB
- Appendix 3, item 3. PDF 24 KB
- Appendix 4, item 3. PDF 22 KB