Agenda item

             Councillor Rowland Rees-Evans, Committee Chair, outlined the meeting

           procedure and welcomed the Leader of the Council, Councillor Ellen ap Gwynn,

           Cabinet Members and Officers to the meeting.

 

           The Leader of the Council, Councillor Ellen ap Gwynn, presented the report on the

           draft budget for 2022/2023 including the three year capital programme, explaining

           that this is a provisional settlement, and that the final settlement is due on the

           1^st March, 2022. The total revenue settlement, known as the Aggregate External

           Finance (AEF) allocated to Ceredigion for 2022/23 is £119.419m.  This 

           compares with 2021/22 allocation of £110.006m (adjusted for transfers),and is

       an increase of 8.6%. Wales as a whole has seen an average increase of 9.4% with

       Ceredigion ranked at 19^th. The Leader advised Committee Members that since her

       appointment in 2012, £50 million savings had been made.

 

         Ceredigion’s Settlement reflects a range of less financially favourable

       re-distributional movements seen in population and Secondary School pupil

       number indicators. Standard Spending Assessments (SSA) are notional

       calculations of what each Council needs to spend to provide a standard level of

       service. The SSA for 2022/23 is £166.372m which is a 7.2% increase from the

       previous year (2021/22 £155.153m). The most significant service increase being

       personal social services at 12.2%.

 

        The budget model has been drafted to include the adjustments with regard to the

       provisional settlement. Any adjustments required that arise in the final settlement

       will require consideration and appropriate incorporation into the budget.

 

       The detailed assessment work carried out to identify the unavoidable cost pressures  

       faced by Services has been finalised and identified a net total amount of £13.1m, which

       is summarised in Appendix 1 of the agenda papers. This amount is almost double the

       previous years and is £3.8m more than the increased sum available in the settlement

       and this would equate to the need to increase Council Tax by close to 8%, however

       some savings are available to the budget setting process.

 

       The Rising costs of Care alone totals £7m, including:

·         UK £9.90 Real Living Wage and 1.25% Employers National Insurance – impacts on most if not all Care related Commissioned Services (results in provisional inflation factors of 8.87% for Domiciliary Care / Supported Living, 9.13% for Residential Care and 11.15% for Direct Payments);

·         Residential Homes – Fees setting review currently in progress;

·         Direct Payments;

·         Looked after Children; and;

·         Domiciliary Care.

 

       The Leader also advised the Committee that the provision for pay inflation is a

       significant factor estimated at £3.4m and that there is no formal agreement yet on

       the main 2021/22 pay award. After taking into account the potential funding

       available, a balanced budget is achievable.

 

       A Corporate approach has been taken to dealing with the Covid-19 net costs and

       losses, as opposed to each service having to incur sums attributable to relevant

       services. This approach has ensured that financial management of the 2021/22

       budgets and business as usual activity remained strong. Total hardship costs and

       lost income are currently forecast at a gross total of just under £7m with as much as

       possible being recovered and reclaimed through Welsh Government (WG)

       grants/funding.

 

       Additional Covid-19 costs and some lost income will continue into the 2022/23 year

       and beyond. A corporate budget of £750k is therefore required in the Leadership

       Group budget, as well as utilising the earmarked contingency including Covid-19  

       Reserve estimated at £1.25m. No grant claims are due next year as the Hardship

Fund will close and the Settlement now allows for this. WG have also committed to continue to supply free PPE for Health and Social Care for as long as it is required and to continue to provide funding for Test, Trace & Protect.

 

Council Tax needs to increase to fund fully the Budget position and a 6% increase would be ideal.  An extra 4.75% of Council Tax raises a gross £2.1m, which equates to a net £1.8m after allowing for the additional budget requirement placed on the Council Tax Reduction scheme. The Council’s income and cost recovery policy means that services are continuing to recover their inflationary costs relevant to chargeable services from service users, although the current issue in the near term is ensuring the recovery of income streams to pre Covid-19 levels.

 

Members were advised to raise concerns regarding specific service areas at the

relevant Scrutiny Committee meetings next week.

 

The Leader explained that as this is a draft budget proposal, based on the Provisional settlement, and subject to any adjustments that may be required once the Final Settlement is known. Any necessary adjustments would be made in accordance with the following:

1. the value of any specific grants transferred into RSG will be passported through to the relevant Service’s budget;

2. any other specific changes to be directly targeted to the affected Service(s), if appropriate; and;

3. any other change to the RSG will be dealt with by an adjustment to the Leadership Group Corporate revenue budget.

 

The Fire Authority Levy is subject to formal confirmation and is anticipated to result in a £104k cost pressure, which will require top slice funding.

 

The Leader concluded her presentation with a summary of cost pressures across all/most services and re-iterated that this budget report deals with the provisional settlement announcement with a recommendation to Council on the level of Council Tax for 2022/23. Council is due to consider the final budget on the 3rd March 2022 following scrutiny of the budget papers and draft proposals.

 

Committee Members were then given the opportunity to ask questions which were answered in turn by the Leader and/or Officers. Main points which arose are:

1.    In response to a question regarding the rising cost of National Insurance and whether the Local Authority need to cover these costs, it was confirmed that they would be covered nationally;

2.    That the new WG Social Care staff payment for care just announced would not impact on the budget setting process for next year and should be covered via grant funding;

3.    In response to a question regarding funding Corporate Joint Committees, it was confirmed that the funding has not been finalised between Powys and Ceredigion as yet;

4.    In response to a question whether Growing Mid Wales are part of the Corporate Joint Committee it was confirmed that it is currently separate;

5.    A question was asked regarding Cost Pressures, whether they are included within the balanced Budget?  It was confirmed that if a 5% increase of Council Tax is agreed then this would cover the existing cost pressures. If, 4.75% is agreed, then further funds would need to be allocated;

6.    It was confirmed that the Leadership Group Budget has responsibility for the emergency Covid-19 fund, the cost of Out of County Care Placements and a contingency for potential Pay awards being higher than the 2.5% being allocated to Services;

7.    A question was raised regarding costs associated with the temporary morgues, which were established during the first wave of the pandemic. It was confirmed that  100% of the costs have been recovered;

8.    A question was raised regarding empty properties in villages, particularly schools and when these will be sold. It was confirmed that the Assets Panel have a process to follow in such cases and only offer surplus properties on the open market when it is deemed appropriate to do so.  It was confirmed that all empty School sales monies are ring-fenced to support the 21st Century School Programme;

9.    In response to a question in relation to the sale of the former Bodlondeb Residential Home, Penparcau, Aberystwyth, it was confirmed that the property will be available for purchase on the open market in the next few weeks; and;

10. It was suggested that sales of Social Care assets should be treated the same way as School assets, the receipts of which are ring-fenced for the 21^st Century School Programme.  It was agreed this would be discussed and considered further post-election.

         

Following discussion, Members agreed to consider the overall budget position as shown in the budget report to Cabinet, to assist with the preparation of a balanced budget for next year.

 

The Chairman thanked the Leader of the Council for presenting the information and thanked Stephen Johnson, Duncan Hall and Justin Davies and their team of Officers for their hard work in preparing the reports for the Committee’s consideration at this afternoon’s meeting.