Agenda item

Scrutiny of the budgetary position (revenue and capital) for services falling within the committee’s remit at Month 9.

Jonathan Davies and Dave Loder presented the report and answered the members’ questions.

Challenge:

You have indicated a budgetary underspend of £3m; if so, it will go into the prudential reserves. You indicated that our reserves aren’t as healthy as in other authorities. What does WLGA advise that the amount of prudentiary reserves should be? Before the £3m goes in, what are our percentage reserves compared to the prudent amount?

We recently took a report through the Governance and Audit committee regarding our reserves levels, which went into detail about our earmarked reserves and council fund reserve. There is guidance that our council fund should be between 4-6% of our net revenue budget. Our council fund, as it stands, is just over 5%. When talking about comparative levels across Wales, the report indicated that we sit at around 19^th in terms of our overall levels of reserves. So, we are near the bottom of that spectrum despite us being able to replenish reserves in the last two financial years. Replenishment is a positive but we still have a way to go. While comparisons can be useful, we also have to bear in mind that authorities will be in different places in their investment cycles i.e. some will have invested heavily from reserves and will look to bear the fruit of that now, whereas others will be at the start of that journey.

So, we are in the middle of the 4-6% of the advised reserves and are going to put the underspend into it, while at the same time asking the population to pay more council tax at 2.95%. Do you think the public would be happy if they realised that?

Any in-year underspend will have to be carried over regardless, so will go to reserves by default. We also have to bear in mind that a lot of this late notification has come through in the past 4-6 weeks; while it’s always welcomed, it makes it very hard for robust service delivery when it’s so late. It would be much easier if it came in within the original budget settlement for the year. In terms of replenishing reserves, the council (in the new administration) will need to make the decision as to the use of that money and the ability for that to be targeted towards service efficiencies or reducing costs over the medium term. So, there will be further options in the future. It is important to make the distinction between the council fund and earmarked reserves: the 4-6% level refers solely to the council fund.

How much notice do you get to apply for grants?

It varies. The majority of grants that have come through recently are unhypothecated, which means that we don’t have to apply – it doesn’t go through that process, as with others. What we are seeing is probably the result of some underspends in Welsh Government’s budget, the result of which is that they are looking to put that money into local authorities and health, so there’s very little administrative burden on us. There are some smaller grants that need to go through an application process but in this round of notifications it has been a low administrative burden on finance.

Could the figures relating to waste and street services be clarified?

The Waste outturn is split between Covid-related and non-Covid-related costs. £236k has formed part of the Covid-related expenditure, down to having to bring on more vehicles because of social distancing, staff self-isolating, etc. Being a frontline service agency staff have to come in to cover the losses, to ensure the rounds are completed. Those costs are claimable from Welsh Government, so have been separated out, then the remaining non-Covid underspend is made up of contract savings etc.

Are staff vacancies intentional? Are they due to the calibre of applicants or the rate of pay that we offer?

It is probably a mixture. We are struggling to fill posts in certain areas because we aren’t paying enough but some will have been held vacant because of the spending freeze mentioned earlier. Other underspends are due to restructures in which we have built the budget to include new posts that then haven’t been filled for various reasons. So, it is a multitude of factors. There are a lot of vacancies – there will always be some – but we wouldn’t expect to have as many next year.

It seems to be a waste of time and energy to build a budget that we then can’t comply with. should we not build a budget based around what we can actually afford?

A lot of this comes off the back of the pandemic conditions – the emergency response that we had to make. Things haven’t returned to the pre-pandemic picture as fast as we would have liked.

Chair’s Summary:

We noted at the outset of the discussion on this item that the report being brought to us is not as timely as usual and why, so our observations have taken this into account. The report has been taken to other scrutiny committees, so some members will have scrutinised this several times, however, we have asked questions around underspends and also our levels of reserves and comparative levels across Wales and had adequate responses from officers on this. Future scrutiny of budget monitoring will be undertaken by the new Performance and Overview Scrutiny Committee when the new council administration is established. Members wished to express thanks and admiration for the team’s hard work over the years.

Councillor Easson requested that in the next administration, a report comes back to members about the levelling up fund for Monmouth and Caldicot.