Agenda item

Scrutiny of the draft Capital and Revenue proposals for 2020-21 within the context of the 4 year Medium Term Financial Plan.

Given that the context for the budget proposals had been set in the Month 7 Budget Monitoring Report, the chair advised that it would be useful for officers to present the headlines prior to moving into questions.

The Finance Manager explained that the budget setting process for each year begins with an assessment of the baseline budget, the known pressures, the Welsh Government settlement and the Council Tax input and then try to bridge the gap between this with saving proposals.  Officers highlighted that we’ve had to reduce the budget over several years, so with £9.7 million pressures and then payroll pressures, the position has amounted to £11.25 million pressures. They advised that whilst we have had the teachers’ pay awards funded by Welsh Government, this has not gone far against the £11.2 million. The Cabinet Member explained that we have more costs to bear and are having to propose savings that are unpopular as a last resort and that this results in the need to increase council tax.

The key areas of pressure within the committee’s remit were discussed, in particular the £3 million pressure for LAC, the £5 million pressure for children with additional learning needs, which are the same pressures carried through each time.

Challenge:

• Are there hidden costs in these figures that would justify the need for a special school?

You rightly identify there is a pressure for a rural county ‘home to school transport’, but the argument for a special school is well rehearsed and whether you could one that had efficiency of scope and scale for Monmouthshire is questionable.  Even transporting from north to south is costly and we have agreed to bring forward proposals to support children with additional learning needs.

·           The Cabinet Member has mentioned holding discussions with Welsh Government on the funding formula and our request for a funding floor’. Can you update on progress please? And can you give us an assurance if additional funds were to be received, that you would consider withdrawing the 2% cut to individual school’s budgets (ISB’s)?

The amount of additional funding if a funding floor were to be agreed would amount to £833k and if we were able to secure these monies, we would revisit the 2% cut to ISB’s. I cannot give a concrete answer, as it depends upon whether we receive any additional funding, but in terms of the progress, we are aware that the Welsh Local Government Association (WLGA) is putting the pressure on Welsh Government. 

·           So if we don’t receive any additional funding, how are schools supposed to take a 2% cut to funding, as surely we are now talking about staffing costs?

This is a difficult question to answer because staffing decisions are made by the governing body.  In many of our schools, the staffing is very expensive as experienced staff are on top of their paygrades, but the core message from head teachers is that it will result in staffing reductions. We will continue to support schools to find alternatives.

Cabinet Member ~ We have made all the major savings we can.  We are as lean as we can be, so if we don’t spread the burden across the whole authority, it will be disproportionate to the rest of the authority. What isn’t fair is the low level of funding we receive.  If we receive additional funding, we can make different decisions.

• Please can you explain how the loan system operates?

We recognise that under current fair funding arrangements, schools only have 3 years to repay deficits, which is very challenging. This system allows for the deficit to be paid back over a longer term to minimise the impact.

• The loans are interest free at the moment, but that is on the basis of interest rates being low.  If they were to rise, this will surely have an impact.  My preference would be that the loan never becomes interest bearing.

Unfortunately, we don’t have this money to lend, we have to borrow it, so we are paying the interest on it. The proposal at the moment is that we absorb it and keep it off schools and that schools still try to clear these deficits early.

• Does this mean that a school could take out a loan now for a period of 10 years and pay back more than they are borrowing?

This situation would be unlikely as the loan is at a fixed rate.

·           Please can you explain any mitigations to the children’s services overspend, accepting that it is a very difficult position?

The expansion of the MIST team structure will initially require an investment, but it should save money over the longer term by reducing the work that needs to be provided to external solicitors. Just for the committee’s information, the average cost of responsibility for a looked after child is £40k, so 10 children each year would amount to £400k, which we cannot hide from.

Chairs conclusion:

We’ve discussed the headline pressures, the mitigations put in place by officers and the possibility of the funding floor, which would benefit the council significantly and particularly our children’s services.  We support the cabinet member on this and request to be kept updated on progress.  We have concerns in respect of the 2% cuts to schools and we recognise the schools’ concerns. We also have some concerns around the loan system structure, in terms of inflation.  We acknowledge there are possible savings in legal costs through implementing the MIST project in children’s services.