Agenda item

Cabinet Member Ben Callard introduced the report with Jonathan Davies and answered the members’ questions with Nicola Wellington, Jane Rodgers and Will McLean:

What is the impact of higher-than-expected interest rates on council finances, noting projections that rates may decrease soon, and how significant might any changes be over the next few months?

Any changes in interest rates in the coming months would have minimal effect on the current financial year, as most forecasts already account for expected reductions. The main concern is the cost of borrowing, which is linked to gilt yields rather than directly to the Bank rate. Most of the council's borrowing is at fixed long-term rates, so only a small portion is exposed to short-term rate changes. The approach is balanced to manage risk, not overly cautious or exposed.

What specific interventions are being taken with the most at-risk schools in deficit, and when is the number of schools in deficit expected to decrease?

The council is working with schools to address both in-year and cumulative deficits, prioritizing stabilizing annual budgets before reducing the overall deficit. The largest pressures are in the Abergavenny cluster and the Pupil Referral Service, with recovery plans in place and ongoing collaboration. Funding increases and savings are being pursued, but changes will be gradual to avoid negative educational impacts. Officers added that deficits may worsen before improving due to the academic year structure, but recovery plans are being monitored monthly, and last year's £1 million investment is helping.

How is the council addressing structural deficits versus in-year overspends, and what is considered the minimum safe level of usable reserves for financial resilience?

The council aims to keep emergency reserves at 5% of the net revenue budget, which is the minimum safe level, and is working to rebuild earmarked reserves for medium-term resilience.

Which budget modelling category is highest risk and what mitigation plans exist if risks worsen?

The highest risk in budget modelling is service demand, especially in social care, homelessness, and additional learning needs, which have been more volatile than traditional risks like pay or inflation. The council remains flexible in its modelling to adapt to changing assumptions.

Is the Welsh Government's Pathways of Care Transformation Grant expected to fund additional services or simply cover shortfalls to maintain current service levels, and what expectations do ministers and civil servants have for additionality?

The grant is intended to support system-wide capacity, with an emphasis on hospital discharge, but recognizes that maintaining whole-system capacity is necessary. The grant supports both increased discharge and broader system needs, with quarterly monitoring and reporting to Welsh Government.

What is the plan and timeline for robustly evidencing savings from the social care practice change programme, and what will be done if the full savings cannot be achieved?

Reviews are ongoing and savings are being made, but the specific savings from practice change have not yet been separately identified; they are reflected in the overall adult social care position.

What are the "red line" triggers for the council to intervene directly in a school's financial management, beyond supporting and monitoring recovery plans, and are any schools close to these thresholds?

Intervention would occur if a school lost budgetary control or failed to execute agreed recovery plans, potentially leading to a warning notice and withdrawal of budget delegation. This has happened once before, but currently no schools are at that threshold, though close monitoring is ongoing for the Pupil Referral Service and King Henry VIII School.

What will be the impact of school deficit recovery plans in the classroom, are the issues due to management or unavoidable needs like pupil referral services, and what about increasing behavioural and emotional needs among students i.e. there being a more proactive, preventative support?

The Pupil Referral Service is addressing increased and more complex needs post-pandemic, with three main service areas (PRU, EOTAS, ALN bespoke). Emotional literacy support (ELSA) remains important, but the level of need is unlikely to return to pre-pandemic levels. Budget recovery may sometimes result in staff reductions, but decisions are made by governing bodies. It is agreed that more preventative work is needed to address root causes before students require intensive support; the broader societal challenge is acknowledged.

Is the passenger transport overspend entirely due to unsafe routes, and can you clarify other areas contributing to the overspend?

The overspend is indeed mainly due to identifying more unsafe routes to school and reinstating passenger transport as committed during the review process.

Regarding street lighting being on budget, what is the role of dimmable technology – has it provided savings, and is it to be rolled out across the county? Why are lights no longer turned off at midnight, given dark skies initiatives?

The lights-off policy was reversed for safety reasons. A written response will need to be provided on  dimmable technology – ACTION: to provide a written response

Does the National Insurance shortfall exclude schools or is it purely for MCC non-schools?

The shortfall includes schools, with additional costs forecast for the year and a funding gap that will be carried as a pressure moving forward.

Is it possible to have a ‘ballpark’ figure for the council's dependency on grants?

The council budgets for a level of specific grants, noting the nuance that many grants are directly passed to other agencies, such as acting as an agent for Welsh Government for certain services. – ACTION: Officers to clarify and provide a ‘ballpark’ figure for the Council's dependency on grants, including breakdowns of core funding, at-risk funding, and agent-distributed grants.

Chair’s Summary:

The Chair thanked the Cabinet Member and officers for their continuing work and their responses to the members’ questions. The report was moved.