Cabinet

The Cabinet Member for Finance, Revenue and Benefits provided information to Members about the financial activity at the end of the third quarter on the total capital programme for the Council for 2022/23. The total capital programme now stood at £144.984m. This was made-up of the £144.836m, as set out in the 22 November 2022 Cabinet report, and £0.148m (net) in amendments to the capital programme since the last report. The amendments to be approved and the associated funding were set out in Appendix 1 of the report. Appendix 2 of the report provided a summary of and the detail of each scheme per service and the actual spend to 31 December 2022. Approval was sought for revisions to the overall capital programme since the last report to Members, detailed in Appendix 1. Due to their nature, a number of larger schemes were profiled over more than one financial year. As a result the overall programme was split between the 2022/2023 programme of £58.582m and future year’s activity of £86.402m as per Appendix 2. The Finance and Resources Overview and Scrutiny Committee considered the report on 20 February 2023 and supported the recommendations. RESOLVED- (a) That the net additions of £0.148m, and sources of funding, to the total capital programme, as set out in Appendix 1, be approved. (b) That the total capital programme of £144.984m, detailed in Appendix 2, which is split into the 2022/2023 programme of £58.582m and £86.402m for future years be noted. (c) That the end of Quarter 3 capital outturn position for 2022/2023 be noted.

The Cabinet Member for Finance, Revenue and Benefits advised Members that the revenue budget 2022/2023 was approved by Council on 3 March 2022. The report provided details of the revenue activity for the third quarter of the financial year, a forecast to the year end, as well as other relevant information available at this time. The report indicated that the Council was still facing significant budgetary pressure in the current financial year, which was as a result of the significant increase in pay and price inflationary pressure, as well as other increasing demands on services. The position had improved since the second quarter, as a result of some gains in relation to treasury management costs and other central budgets. Following the second quarter outturn budget holders were instructed to consider a number of measures to contain spend within budget. Whilst there had been comparatively limited impact in reducing overspending, with the exception of the Environment, Roads and Facilities service (ERF), it was positive that service pressure had been contained and that the position had not, therefore, worsened. The Finance and Resources Overview and Scrutiny Committee considered the report on 20 February 2023 and supported the recommendations. Discussion ensued as follows:- · Most Councils had built-up reserves to reduce the Council Tax increase, but this was not an option in Conwy with low reserves of £15m. · There were other earmarked reserves but these would be used to support the projected overspend in some services. · Costs had risen across the board with inflation running at 10%, which had increased the cost of capital borrowing. · Heads of Service and staff were thanked for their continued hard work. · It was noted that, at one point, the Council had faced a Section 114 Notice, which would have resulted in the Council being unable to make any new spending commitments. This situation was as a result of external pressures of rising inflation, pay increases and increased energy costs. Through the hard work of staff and Members this situation had been avoided. RESOLVED- (a) That the latest financial assessment of the estimated budgetary position for 2022/2023 be noted. (b) That the additional cost of the part-year effect of the teachers’ pay award (£292,000), as a result of a higher pay award (5%) than budgeted for (4%), be funded centrally by the Council and added to the schools budget. (c) That the virement to disaggregate the centrally held pay award budget across services, net of the recovery of the national insurance budget, with the shortfall of £3.365m being funded from the pay pressures earmarked reserve (including schools), be approved. (d) That the significant uncertainties underpinning the financial assessment and the potential implications for future years’ budgets be noted.

The Cabinet Member for Finance, Revenue and Benefits presented the Draft Capital Programme 2023/2024. Appendix 1 of the report provided details of the draft capital programme for 2023/2024, following the announcement of the Local Government Provisional Settlement on 14 December 2022. The information in Appendix 1 of the report, together with supporting appendices, including the detailed capital business cases were included for Members to consider. The recommendations arising from the report would form the basis of the recommended capital programme 2023/2024, which would be presented to Council for approval in March 2023. The Welsh Government, as part of the Local Government settlement, included an element of general capital funding and for 2023/2024 the provisional sum announced was £6.923m for Conwy, an increase of just over £1m on the previous year allocation. The total of the business cases submitted required internal funding of £26.838m, which was significantly higher that the £6.923m supported in the provisional settlement. As a consequence of concerns over the affordability of the capital programme, an exercise had been undertaken to review the existing 2022/23 capital programme to identify those scheme that have yet to be committed. These schemes required internal funding of £24.700m. The original business cases for the uncommitted existing 2022/2023 schemes had been considered alongside the new business cases for 2023/2024 in determining the capital programme for 2023/2024. The Cabinet Member for Finance, Revenue and Benefits asked the Strategic Director – Finance and Resources to provide a summary of the process for the scoring of the capital programme as follows:- · Following the realisation that the capital programme was unaffordable, a Member led Capital Scoring Day was held to assess and prioritise each project and these were then ranked (Appendix 6 of the report). · Some projects had been split over 2 years, as it was unlikely that they would be completed in 2023/2024, so had been included in 2024/2025. · An allocation of £2m had been included for the Sustainability Communities for Learning Programme. The Finance and Resources Overview and Scrutiny Committee considered the report on 20 February 2023 and supported the recommendations. Discussion ensued as follows:- · Many of the projects were essential and brought widespread investment into the County Borough. · It was acknowledged that delivery of the capital programme would be difficult, especially in the current financial climate with the rise in interest rates. · Further to the above, the prediction for interest rates were that they may increase in the short-term but then decrease in 2024. · The priorities of the Sustainable Communities for Learning Programme would be considered in a future report to Cabinet. · It was noted that future grants could be identified to support capital projects. · As part of his Roads Review and National Transport Delivery Plan announcement, the Deputy Climate Change Minister, Lee Waters MS, had advised that he may look at improving existing infrastructure, which could mean future grants for Local Authorities. RESOLVED- (a) That it be recommend to Council that the uncommitted capital schemes included in the current 2022/2023 capital programme (requiring internal resource of £24.700m) be removed. (b) That, as part of the capital programme, £2m for works associated with the Sustainable Communities for Learning programme, to be spent in accordance with a revised Strategic Outline Plan, and funded from existing revenue funding set aside for the programme be approved. (c) That a capital programme, requiring internal funding of £20.615m for 2023/2024, which includes a forward commitment of £5.781m, to be a first call on capital funds in 2024/2025 be recommended to Council for approval.

lumThe Cabinet Member for Finance, Revenue and Benefits advised that the report built on the previous reports provided to Members to date relating to the budgetary process for 2023/2024. It consolidated the detailed information previously considered and approved by Cabinet in relation to the way in which a balanced budget could be recommended to Council. The report included a range of proposed Council Tax increases for 2023/2024, as part of the overall budgetary equation. The detailed information supporting the draft revenue budget and Council Tax increase was included in Appendix 1 of the report supported by Appendices 2 to 8 for approval by Members. The recommendations flowing from the report would represent the recommendations made to Council from Cabinet. The Finance and Resources Overview and Scrutiny Committee considered the report on 20 February 2023 and made the following recommendations to Cabinet:- (a) That the Domiciliary Care Revenue Business Case (Option B) and Residential / Nursing Care Fees Revenue Business Case (Option B) be approved. (b) That an indicative 9.5% Council Tax increase be considered. In relation to the above, a balanced budget could not be achieved with a 9.5% Council Tax rise. The best case scenario would be a 9.9% Council Tax rise. In order to achieve that 9.9% there would need to be cuts of around £1.5m, which may be possible by cutting business cases by £544k, the budget for energy costs by £550k, as the future predictions were that energy costs would decrease and the anticipated £465k in grant funding, which could all create future risks. Discussion ensued as follows:- · The situation was a difficult one and there would be difficult choices to make. · Work on the budget for 2024/2025 would begin on 1 April 2023. · In order to support the decision on domiciliary and residential care costs, there would need to be substantial savings in other areas. · It was noted that Denbighshire County Council received an additional 15% from Welsh Government and Gwynedd County Council received an additional 10% of funding. · The Council Tax rise would be to protect those vital services that supported the most vulnerable residents in the County Borough. · Residents could opt to pay their Council Tax over a 12 month period, instead of a 10 month period. · It was important that Members understood that budget cuts could impact the delivery of smaller services and a decrease in service provision across all services. · The Chief Executive advised that the last 6 months had been challenging and the delivery of the budget cuts would be difficult. There were plans to deal with pressure in the future and these would need to be delivered. 2024/2025 would continue to be a challenge. Services would continue to work to ensure that they were in the best possible financial situation for next year. · The Cabinet Member for Education provided the feedback that schools had given on their finances. Schools were looking towards redundancies, reducing staffing, reducing supplies and using balances. · Some schools had advised that they may need to approach the Council for a loan. The loan scheme was being reviewed in order to streamline the process for schools. · The risks associated with reducing budgets to all services was acknowledged, including Environment, Roads and Facilities and in relation to supporting vulnerable children and adults. · Work was ongoing to develop in-house projects, such as a children’s placements in Conwy, which would benefit the wellbeing of young people and reduce out-of-county costs. · Accelerating the Housing Programme to deliver affordable housing would reduce the burden on the homelessness budget. · It was noted that the North Wales Fire and Rescue Authority (NWFRA) had increased its levy to 9.9%, this equated to an increase in Council Tax of 1.5% to fund that levy. · There had been further pressures on Social Care as a result of the decision of the Home Office to locate a number of asylum seekers that had subsequently been recognised as children in a hotel in the local area. · Ideally any further grant funding that was issued before the Council considered the budget on 1 March 2023 should be used to support services, rather than reduce the Council Tax rise. · Council must set a balanced budget on 1 March 2023. Any alternative budget that was proposed would have to be balanced and reviewed before it was considered. · The Strategic Director – Finance and Resources reiterated previous risks in relation to using reserves to support a decrease in the Council Tax rise. The reserve was required to support any future financial risks, such as an increase in the teachers’ pay award. · Members agreed with putting forward a 9.9% Council Tax increase, with the acknowledgement that it could create risk through decreasing budgets in other areas. Thanks were extended to the Leader, Cabinet Members, the Strategic Leadership Team, Heads of Service and staff for all the work undertaken to realise a balanced budget for 2023/2024. RESOLVED- (a) That Council be requested to approve the Domiciliary Care Revenue Business Case (Option B) and Residential / Nursing Care Fees Revenue Business Case (Option B). (b) That Council be requested to consider an indicative 9.9% Council Tax increase, with the proviso that it would result in a cut of £544k from business cases, a cut of £550k from the energy budget and an anticipated £465k of grant funding, which could create future risks.