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Apologies for absence were received from Panel Members, County Councillors: E. Vaughan, C Kenyon Wade, J Pugh, A Jones. Cabinet Members, County Councillors: D Thomas, Cllr Jake Berriman, Cllr Matthew Dorrance, Cllr Glyn Preston, Cllr James Gibson-Watt, Cllr Raiff Devlin Officers: Jane Thomas, Clive Pinney, Richard Jones, Matt Perry, Anne Phillips, Daniel Burgess, Gwilym Davies, John Forsey, Andy Thompson, Paul Bradshaw, Graham Evans, Helen Dolman, Jackie Pugh. Lynne Hamilton Observer – Chair of Governance and Audit Committee.
There were no Declarations of Interest from Members relating to items to be considered on the agenda.
The minutes of the meeting held on the 10th of October 2025 were proposed by Cllr Pete Lewington and seconded by Cllr Chris Walsh as a true reflection of the meeting, with unanimous agreement from Panel members.
Background The Head of Service reported that, as at 30th September, the Council was forecasting a modest overall underspend of approximately £0.8 million, rising to £1.2 million when ring-fenced budgets were excluded. This represented an improvement compared to the same period in the previous year, although the margin remained slim and required continued rigorous budget management. The reduction in underspend since Quarter 1 was attributed to increased costs within schools and the Housing Revenue Account, which had been offset by savings in Children’s Services, Planning and Regulatory Services, and Highways, Transport and Recycling. The achievement and assurance of planned savings for 2025–26 had improved, and the Head of Service emphasised that delivering these cost reductions was critical to maintaining financial resilience. Members were advised of several virements requiring approval, including transfers of fleet depreciation underspends and income from plant and vehicle sales into the vehicle replacement reserve, the reallocation of car parking income overachievement to highways operations, and adjustments linked to Extended Producer Responsibility (EPR) funding. The £3 million risk budget established at the start of the year continued to support in-year uncertainties, with approximately £2 million remaining. The report also sought approval for a debt write-off of £149,000 following agreement with the Hereford and Worcestershire Integrated Care Board, which would be covered by the existing bad debt provision. The Head of Service highlighted ongoing efforts to reduce aged debt and reiterated that significant financial risks persisted in achieving a balanced budget over the next five years. Robust financial management, limiting the use of reserves, and realigning service delivery were identified as essential measures. Finally, the Head of Service noted that additional in-year grants had been received, some of which were not anticipated at budget-setting. These were incorporated into updated forecasts, and transparency improvements were proposed for future reporting. Points raised by the Panel: Responses received from Officers or Cabinet Members. Robustness and Assurance of Forecast • Members asked how robust the financial position was, given the volatility of demand-led services and the remaining two quarters of the financial year. • They queried the level of assurance around savings categorised as “not yet delivered but assured” and sought clarity on contingency plans if these savings were not achieved. • Questions were raised about lessons learned from previous years to avoid surprises late in the financial year and whether these were being applied to current planning. The Head of Service explained that the financial position was considered as robust as possible given the circumstances. It was noted that the most significant improvement between Quarter 1 and Quarter 2 had been the assurance around savings, which had strengthened the overall forecast. Confirmation given that services were expected to deliver agreed savings or identify alternative mitigations, and where this was not possible, savings would be rolled forward into future years. Lessons from previous years were acknowledged, and assured members that governance processes and regular monitoring were in place to minimise the risk of late surprises. Transparency and Presentation of Financial Information • Members highlighted inconsistencies in the presentation of Table 1 compared to Quarter 1 and requested a more consistent approach for clarity. • They asked why additional grant funding did not appear clearly in the summary tables and suggested that the sums should be explicitly stated in future reports. • Concerns were expressed about transparency in how grants were used to offset pressures within services, and whether this masked poor budget management. In response to concerns about the presentation of Table 1, the Head of Service accepted that consistency was important and agreed to review the format for future reports. It was clarified that grants were incorporated within the most recent budget column rather than shown separately, which explained why they were not visible in the summary tables. The Head of Service undertook to include clearer figures for grants in future reports to improve transparency. Grants and In-Year Adjustments • Members questioned whether grants received during the year were known at the time of budget setting and whether their late inclusion misrepresented the original budget position. • They sought assurance that grant terms and conditions were being adhered to and asked for clarity on how these grants impacted service delivery and savings targets. The Head of Service confirmed that some grants were anticipated at budget-setting, but detailed amounts often became known only during the financial year. Emphasised that all grants were used in accordance with their terms and conditions and explained that, while grants could not be diverted from their intended purpose, they sometimes freed up other resources within service budgets. Assurance given to members that compliance with grant conditions was monitored closely. Risk Budget and Contingency Planning • Members asked for a schedule showing movements in and out of the £3 million risk budget and queried how remaining funds would be prioritised. • They questioned whether reliance on the risk budget and temporary virements could be reduced through structural changes and better planning. The Head of Service explained that the £3 million risk budget was designed to manage uncertainties identified during the budget process. It was agreed that a schedule showing movements in and out of the risk budget would be helpful and undertook to include this in future reports. Acknowledged that reliance on the risk budget was sometimes unavoidable but stressed that structural changes and improved planning were being pursued to reduce this dependency over time. Service-Specific Issues • Questions were raised about the deliverability of savings in Highways, Transport and Recycling, particularly those linked to planning delays and Extended Producer Responsibility (EPR) funding. • Members queried overspends in school delegated budgets, why these had increased between quarters, and whether recovery plans were realistic. • Concerns were expressed about recurring overspends in Additional Learning Needs (ALN) transport and whether future budgets would better anticipate these costs. Regarding Highways, Transport and Recycling, the Head of Service confirmed that virements were proposed to offset savings that could not be achieved this year, largely due to planning delays and the timing of Extended Producer Responsibility funding. Assurance given that these virements would reduce the unachieved savings figure significantly. On school delegated budgets, officers explained that recovery plans had been submitted and were under review, and statutory powers were being used where necessary to manage deficits. Concerning Additional Learning Needs transport, the portfolio holder acknowledged the recurring overspend and confirmed that work was underway with the Education Department to improve forecasting and budgeting for these costs. Broader Financial Strategy • Members asked what structural changes were being considered to avoid reliance on temporary underspends and risk funding. • They queried how lessons learned could be incorporated into the five-year rolling business planning process to improve forecasting and reduce budget gaps. The Head of Service stated that structural changes were being considered to reduce reliance on temporary measures and risk funding. Highlighted that the introduction of a five-year rolling financial planning process had already strengthened medium-term forecasting and allowed for more strategic decision-making. Assured members that lessons learned from previous years were being applied to improve the robustness of future budgets.
Panel made the following observations in relation to the Q2 Revenue 2024/25 Report: The Panel endorsed that: • The overall forecast position showed a modest underspend of £0.8 million, rising to £1.2 million when ring-fenced budgets were excluded, which was considered positive compared to the same period last year. • Achieving agreed cost reductions and savings was fundamental to maintaining financial resilience, and the improvement in assured savings by the end of Quarter 2 was noted as encouraging. • Governance processes, including fortnightly senior leadership meetings, monthly portfolio holder reviews, and quarterly scrutiny, were in place to monitor budgets and efficiency plans. The Panel welcomed that: • Close working relationships between finance teams and heads of service had strengthened assurance around savings delivery. • Positive progress had been made in Children’s Services, with previous rolled-forward savings now delivered and an improved financial position reported. • Additional grants had been secured during the year to support service delivery, and officers confirmed compliance with grant conditions. • The introduction of a more robust five-year financial planning approach was expected to improve medium-term budget sustainability. The Panel requested that: • Future reports should provide clearer transparency on grants received, including total amounts, timing, and their impact on service budgets, rather than absorbing them into net figures. • A summary of virements and risk budget utilisation should be included in quarterly reports, showing the opening balance, allocations, and remaining funds. • Detailed contingency plans should be provided for savings categorised as “not yet achieved but assured,” particularly in high-risk areas such as Adult Services (£3.2m) and Children’s Services (£811k). • Commentary in Appendix B should include more nuanced explanations of variances and mitigation actions where savings were delayed or reprofiled. • Lessons learned from previous years should be documented and shared to avoid late-year surprises and repeated roll-forward of savings. The Panel remained unconvinced of: • The robustness of assurances around savings marked as “not yet achieved but assured,” given the significant sums involved and the reliance on rolling forward savings into future years as a contingency. • The clarity of reporting in Table 1 and Table 2, particularly the presentation of base budgets and the lack of visibility on how grants offset service overspends. • Whether structural changes were sufficient to reduce reliance on the £3 million risk budget and temporary virements. The Panel expressed concern of: • The increasing overspend in schools delegated budgets (approximately £400k between Q1 and Q2) and the £300k drawn from the risk budget for Estyn improvement plans, questioning whether initial school budgets were realistic. • The potential for grants to mask underlying budget management issues, creating a risk of misrepresentation of the original budget position. • The recurring overspend on ALN transport and the lack of clarity on long-term solutions to manage this pressure. • The absence of a clear contingency plan beyond rolling forward savings, which could perpetuate financial risk into future years. • The complexity and volatility of demand-led services, which continued to pose a significant challenge to delivering a balanced budget. Q2 REVENUE FORECAST 2024/25 1 Future reports to provide greater transparency on grants received, including the total amounts. Amend Table 1 to include a summary of virements, grants and risk budget utilisation in quarterly reports. Accept provision of greater transparency on grants received, including providing an overall total. Partially accept amending Table 1 – We will explore how to provide greater transparency in relation to Table 1, including virements, grants and risk budget utilisation, although it may be in addition to Table 1 rather than expanding it. 2. An additional table required to demonstrate the risk budget movements, to improve transparency. Accept – for Quarter 3 reports 3 Detailed contingency plans be provided for savings categorised as “not yet achieved but assured,” particularly in high-risk areas such as Adult Services (£3.2m) and Children’s Services (£811k) Accept – this can be incorporated within the HoS commentary in Appendix B – for Quarter 3 reports 4. Future reports should include figures on overachievement and its projected impact with individual service areas, ensuring that both positive and negative variances are presented for balance. This will help clarify where overperformance in some areas may mask underperformance in others. Appendix B should provide this clarity. Accept – this can be incorporated within the HoS commentary in Appendix B – For Quarter 3 reports
Background: Head of Service gave a brief synopsis of the report as follows: The report set out the capital position as at the end of September, showing an increase in the budget from £86 million to approximately £114 million due to year-end roll-forwards and new grant awards. Expenditure at that point was just under £20 million, representing 17% of the total budget, which was considered typical for mid-year, as higher levels of spending were expected later in the financial year. Borrowing requirements were forecast at £44 million, with costs charged to the revenue account. Efforts were being made to minimise borrowing through the use of external resources and by delaying borrowing until cash was required. Reprofiling of schemes had occurred to align budgets with actual delivery timescales, particularly within the schools’ programme, where planning processes, consultations, and cost engineering had caused delays. Capital receipts achieved to date were just under £800,000, with further sales agreed but unlikely to exceed £2.7 million by year-end. The moratorium on county farm sales continued to restrict the ability to generate significant receipts, resulting in greater reliance on borrowing. Risks associated with inflation and supply chain pressures were acknowledged, and mitigation measures included revised designs and contingency allowances within cost estimates. Levelling Up Fund projects were confirmed as secure following an extension of the delivery deadline to March 2028, reducing the risk of grant clawback. Adjustments had been made to project scope, including scaling back from three reservoirs to two, to manage costs and address site viability issues. The Section 151 Officer emphasised the importance of managing cash flow and maintaining flexibility in borrowing strategies to limit interest costs, noting that the Council remained under-borrowed and continued to use short-term borrowing where advantageous. Points raised by the Panel: Responses received from Officers or Cabinet Members. Capital Receipts and Funding • Members asked what the position on capital receipts would have been at the same point last year and whether the current moratorium on county farm sales had significantly impacted the ability to fund the capital programme. • They queried the financial consequences of reduced asset disposals, particularly the additional cost of borrowing required to compensate for the shortfall in receipts. • Questions were raised about the potential for non-farm asset disposals over the next few years and whether the £10 million target was achievable without county farm sales. • Members sought clarification on what an appropriate target for capital receipts would be if county farms were excluded from the disposal programme. Officers explained that the moratorium on county farm sales had significantly reduced the level of capital receipts available to fund the programme. They confirmed that, without these disposals, the £10 million target was not achievable. The Head of Finance stated that most corporate assets suitable for disposal had already been sold, and remaining assets such as small schools or offices would only generate modest receipts, typically in the region of £250,000. In contrast, farm sales could yield around £1 million per property. It was noted that, as a result of the shortfall, the Council had been forced to reprofile receipts and increase reliance on borrowing, which would add approximately £150,000 in annual costs once the full-year effect of the additional borrowing was realised. Officers indicated that, if county farms were excluded, a realistic annual target for capital receipts would be closer to £2 million rather than £10 million. Reprofiling and Delivery Performance • Members questioned the reasons for delays and reprofiling within the capital programme and asked what actions were being taken to improve delivery performance. • They queried whether there was any incentive to delay expenditure to ease the Council’s cash flow and how this aligned with service demand for new facilities. • Concerns were expressed about the impact of reprofiling £9.54 million from 2025/26 and whether this would affect the Council’s ability to meet its priorities. The Chief Accountant explained that delays and reprofiling were caused by a range of factors, including planning processes, consultations, cost engineering, and contractor availability. He stressed that these were not deliberate attempts to ease cash flow but were largely due to external dependencies and the complexity of major schemes such as school construction. Officers confirmed that budgets were being realigned to reflect actual delivery timescales, ensuring that borrowing was not undertaken earlier than necessary. They assured members that improvements had been introduced, including contracting with a multidisciplinary company to provide additional project management and procurement support, aimed at accelerating delivery and reducing slippage. Risks and Inflationary Pressures • Members asked how inflationary pressures and supply chain issues were being addressed within the capital programme and what measures were in place to manage these risks. • They queried whether project prioritisation processes were robust enough to mitigate the impact of rising costs and delays. In response to concerns about inflation and supply chain risks, officers stated that these were factored into project costings through allowances for inflation based on expected delivery dates. They explained that the business case process included risk assessments and contingency planning to manage cost pressures. Officers acknowledged that inflation remained a challenge but emphasised that the Council was actively reviewing designs and specifications to ensure schemes remained affordable without compromising essential outcomes. Specific Projects and Levelling Up Funding • Questions were raised about flagship projects such as the Montgomery Canal restoration and green energy initiatives, including whether these were at risk of failing to meet delivery milestones. • Members asked whether additional sources of funding would be sought to cover inflationary cost increases or whether project ambitions would be scaled back. • They queried whether the revised timescales for Levelling Up Fund projects would ensure compliance with funding conditions and prevent clawback of grants. Officers confirmed that Levelling Up Fund projects, including the Montgomery Canal restoration, were not at risk of losing funding. They reported that the UK Government had extended the deadline for completion to March 2028, which provided assurance that projects could be delivered within the revised timescales. While acknowledging that inflation had increased costs, officers explained that adjustments had been made, including scaling back from three reservoirs to two, partly due to site viability issues and partly to manage costs. They assured members that revised plans were in place and that procurement processes were ongoing to keep projects within budget. Borrowing and Financial Management • Members sought assurance on the timing of borrowing for capital projects and asked whether interest costs were already being incurred or if borrowing was deferred until required. • They queried how the Council managed its cash flow to minimise borrowing costs and whether short-term borrowing strategies were being used to take advantage of expected interest rate reductions. Officers clarified that borrowing was not undertaken until cash was required, and the Council continued to operate in an under-borrowed position to minimise interest costs. It was explained that short-term borrowing strategies were being used where appropriate, as interest rates were expected to fall. Officers confirmed that this approach had saved significant revenue costs and would continue to be applied to manage the financial impact of the capital programme.
Panel made the following observations in relation to the Q2 Capital 2024/25 Report: The Panel endorsed that: • The capital budget had increased from the original £86 million to £114 million by the end of Quarter 2 due to roll-forwards and new grant awards. • The approach of delaying borrowing until cash was required had been effective in minimising interest costs and supporting prudent treasury management. • The use of the 5-case business model and staged approvals for major schemes had provided a structured framework for managing risks and cost pressures. The Panel welcomed that: • The Levelling Up Fund projects had been granted an extension until March 2028, reducing the risk of grant clawback and allowing delivery within revised timescales. • Additional support had been secured through a multidisciplinary consultancy to strengthen project management, procurement, and cost control for the schools programme. • Officers had confirmed that inflationary allowances and risk contingencies were factored into capital cost estimates to mitigate future cost escalation. The Panel requested that: • Future reports should provide clearer commentary on variances between planned and actual expenditure, including reasons for delays and reprofiling. • A transparent summary of capital receipts should be included, showing progress against targets and the impact of the county farms moratorium on funding availability. • Greater clarity should be provided on the implications of policy decisions affecting asset disposals and the consequential impact on borrowing requirements. • A forward-looking assessment of risks to major projects, including inflationary pressures and supply chain constraints, should be incorporated into quarterly reporting. The Panel remained unconvinced of: • The ability to deliver the full £113 million capital programme within the financial year, given that only 17% of the budget had been spent by the end of Quarter 2. • Whether the current level of capital receipts (forecast at £2.7 million) was sufficient to offset borrowing requirements, particularly in light of the moratorium on farm sales. • The robustness of mitigation measures for delays in major school projects and whether reprofiling alone would prevent future cost escalation. The Panel expressed concern of: • The significant reliance on borrowing (£44 million) to fund the capital programme and the potential impact on future revenue budgets through Minimum Revenue Provision (MRP) and interest costs. • The risk that delays in project delivery could lead to inflationary cost increases and reduced scope for achieving planned outcomes. • The limited potential for non-farm asset disposals to generate substantial capital receipts, raising questions about the achievability of the £10 million target without lifting the moratorium. • The need for clearer communication to the wider Council on the financial consequences of asset disposal policies and their link to long-term capital financing strategy. Q2 CAPITAL REPORT 1. Future capital reports to provide clearer commentary on variances between planned and actual expenditure, including reasons for delays and reprofiling of budgets. Amend Remaining Budget % column to include RAG rating, which would demonstrate if spend was on track. Accept– this can be incorporated within Table 1 & within the HoS commentary in Appendix A – For Quarter 3 reports 2. Monitoring of slippage and reprofiling of expenditure be strengthened, with mitigation plans included where delivery risks were identified Accept – this can be incorporated within the HoS commentary in Appendix A – For Quarter 3 reports 3. Transparency on funding sources be improved, including a clear breakdown of grants, borrowing, and capital receipts, and any changes since the original budget approval. Accept - a table will be added showing how the funding has changed since the original budget
Paper presented for information purposes only. Points raised by the Panel: Responses received from Officers or Cabinet Members. Impact on Revenue Support Grant (RSG) and Funding • Members asked how the increase in the council tax base figure would affect the Revenue Support Grant allocation from Welsh Government and whether a larger tax base was advantageous or disadvantageous for the authority. • They queried whether the higher average property banding in Powys compared to other authorities had a negative impact on the RSG formula. Officers explained that an increase in the council tax base generally reduced the Revenue Support Grant allocation because the Welsh Government formula assumed that authorities with a higher tax base had greater capacity to raise income locally. It was confirmed that while a larger tax base provided additional council tax revenue-raising potential, it could negatively affect the RSG calculation. Officers also clarified that Powys’ higher average property banding compared to other authorities did have an adverse impact on the funding formula. Premiums and Self-Catering Units • Members questioned the effect of council tax premiums on the tax base calculation and whether these were included in the figures submitted to Welsh Government. • They asked about the risk posed by self-catering units that had moved from business rates to council tax but were under appeal, and what financial impact this could have if appeals were successful. • Members sought clarification on the level of provision set aside to cover potential reversals of these changes and whether this represented the full amount at risk or a percentage Officers confirmed that premiums applied to second homes and long-term empty properties were excluded from the tax base figure submitted to Welsh Government for RSG purposes. They explained that approximately 250 self-catering units had moved from business rates to council tax following changes in eligibility criteria, and appeals were ongoing. A cautious approach had been adopted in forecasting income, with a provision set aside to cover potential reversals. This provision represented roughly half of the additional revenue at risk, reflecting the uncertainty surrounding appeals and the likelihood of some properties reverting to business rates. Future Changes and Revaluation • Members raised questions about Welsh Government proposals to reform local taxation and the potential impact of the planned council tax revaluation in April 2028. • They asked whether any modelling had been undertaken to assess the effect of changes to band ratios and the introduction of new bands on Powys households and the Council’s funding position. Officers advised that a national council tax revaluation was scheduled for April 2028 and would include changes to band ratios and the possible introduction of new bands. Initial modelling had been undertaken based on proposals currently under discussion, but detailed impacts could not yet be confirmed. It was noted that higher-value properties could see proportionately larger increases under the revised ratios, and further modelling would be shared when more information became available. Collection Rates and Assumptions • Members queried the assumptions used for the council tax collection rate within the tax base calculation and whether these reflected current collection performance. • They asked what actions were being taken to manage the challenges of collecting large, backdated bills for properties that had switched from business rates to council tax. Officers confirmed that the tax base calculation used a collection rate assumption of 98.5%, which reflected the ultimate collection rate rather than in-year performance. They acknowledged that collection of large, backdated bills for properties switching from business rates to council tax was challenging and explained that flexible repayment plans were being offered to ensure realistic recovery. It was noted that some of this additional revenue would not be collected within the current financial year and could be subject to change if appeals were successful.
Noted.
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