The Interim Section 151 Officer presented the Medium Term Financial Strategy 2020-21 to 2023-24, which included a financial forecast for 2020-24, a detailed revenue budget for 2020-21and a Capital Programme for 2019-20 to 2029-30.   

She informed Cabinet that the MTFS has been significantly guided by the Council’s well-being objectives and while there had been previous year-on-year reductions in Aggregate External Finance (AEF) which had necessitated budget reductions across service areas, the Council still plays a very significant role in the local economy, responsible for annual gross expenditure of around £420M and is the largest employer in the County Borough.  The Interim Section 151 Officer informed Cabinet that the Corporate Plan is being presented to Council for approval alongside the MTFS 2020-24, which includes more re-focused well-being objectives and are aligned to each other, enabling explicit links to be made between the Council’s priorities and the resources directed to support them. 

The Interim Section 151 Officer provided Cabinet with a Corporate Financial Overview and over the last 10 years the Council has made £68M of budget reductions.  The Council’s gross budget will be around £420m while the net revenue budget is planned for 2020-21 at £286.885M.  She stated that around £175M of this expenditure is spent on the Council’s staff, including teachers and school support staff.  Much of the cost of the services provided by external organisations is also wage related, including waste collection operatives, domiciliary care workers, leisure staff and foster carers.  The Council faces having less income to fund services, as well as legislative and demographic changes.  The Council has adopted a corporate plan that sets out the approaches that it will take to manage these pressures whilst continuing to ensure that, as far as possible, services can be provided that meet the needs of the community.    

The Interim Section 151 Officer informed Cabinet that the Council is proposing to spend £121m on services delivered by Education in 2020-21, supporting 59 schools and one pupil referral unit.  Spending on schools are the biggest single area of spend in the Council.  After Education, the largest area of Council spend is on Social Care, which includes social care for children and for adults who are vulnerable or at risk, the Council is proposing to spend £71m on social care and wellbeing services.  She stated that the Council’s work on the public realm has a more direct and visible impact within the community, with the Council proposing to spend £21.8m on these services.  One of the Council’s priorities is in Supporting the Economy and the Council will increasingly work collaboratively with the other nine councils which make up the Cardiff Capital Region City Deal, which is creating a £1.2 billion fund for investment in the region over the next 20 years.  The investment will be targeted on raising economic prosperity, increasing job prospects and improving digital and transport connectivity.  The Interim Section 151 Officer informed Cabinet of the proposed spend on Other Services, the most significant areas being Regulatory Services; Registrars and Council Tax and Benefits.  In addition, there are a number of services the Council does to support the delivery of those services, which are Property and Building Maintenance; Finance; Legal Services; ICT and Internal Audit.

The Interim Section 151 Officer reported on the Strategic Financial Context and informed Cabinet that the MTFS is set within the context of UK economic and public expenditure plans, Welsh Government priorities and legislative programme.  The Interim Section 151 Officer informed Cabinet that in response to the Chancellor of the Exchequer’s announcement in September 2019 of a fast-tracked one-year Spending Round for 2020-21, which included an additional £600m to the Welsh Government’s budget in 2020-21, the Minister for Finance and Trefnydd announced that the Welsh Government’s budget would increase by 2.3% or £593m.  As a result of the General Election, the Welsh Government delayed the announcement of the provisional local government settlement until 16 December 2019, delaying the final budget and local government settlement until 25 February 2020.  The MTFS and budget for 2020-21 was based on the provisional settlement, being an increase in Aggregate External Funding of 4.7%, no significant changes were anticipated between the provisional and final settlement. 

The Interim Section 151 Officer reported that the 2020-21 final revenue budget included a Council Tax increase of 4.5%, which was lower than the options included in the public budget consultation of 6.5%.  She explained that the scale of the financial challenge remained considerable once external pressures and risks have been taken into consideration and an assumed annual increase of 4.5% would continue to be included for 2021-24.         

The Interim Section 151 Officer reported on a comparison of budget against projected outturn at 31 December 2019, which had a projected under spend of £798k, comprising  £85k net over spend on directorates and a £5.274m net under spend on council wide budgets, offset by net appropriation to earmarked reserves of £4.391m.  She explained that the main reason for the under spend of £4.154m on Other Council Budgets due to the Welsh Government advising local authorities of additional grant funding of £2.622m to meet the increased cost of teachers’ and fire service pensions and teachers’ pay increase, all of which were originally funded in full through the MTFS. 

The Interim Section 151 Officer summarised the main headlines arising from the public consultation, of which the 7,427 interactions were received, being an increase of 40.6% interactions from last year.  She also thanked the Budget Research and Evaluation Panel in assisting facilitating the budget planning process and the Overview and Scrutiny Committees which resulted in a series of recommendations being made by the Corporate Overview and Scrutiny Committee for consideration by Cabinet.

The Interim Section 151 Officer outlined the MTFS principles and reported on the most likely budget scenarios, which for 2020-24 was predicated on budget reductions of £29.293m.  The Interim Section 151 Officer highlighted the current progress on identifying budget reduction proposals together with the risk status of these proposals.  The Interim Section 151 Officer informed Cabinet of the net budget requirement to fulfill the Council’s functions, the financing of the net budget comes from the Welsh Government settlement and Council Tax income.  The Interim Section 151 Officer also informed Cabinet of the net revenue budget for 2020-21 and how it would be funded through Revenue Support grant, Non Domestic Rates and Council Tax income, requiring an increase in Council tax of 4.5%.  The Interim Section 151 Officer outlined the pressures of pay, prices and demographics, non-teachers’ pensions and schools’ budgets.  The number of recurrent pressures total £6.683m, while budget reduction proposals amount to £2.413m.    

The Interim Section 151 Officer informed Cabinet of the position of the Council’s Reserves, which has been maintained at a minimum of £7m and at 31 March 2019 was £8.776m.  The forecast movement in reserves to 31 March 2020 is an overall reduction of £4.250m.  

The Interim Section 151 Officer reported on the proposed capital programme for 2019-20 to 2029-30, which has been developed in line with the MTFS principles and capital financing strategy. The provisional capital funding for 2020-21 is £7.983m, of which £3.986m is provided through un hypothecated supported borrowing and the remainder £3.997m as general capital grant.  She stated that Council had approved a capital programme in February 2019, which has been revised during the year to incorporate budgets brought forward and new schemes and grant approvals. 

The Interim Section 151 Officer also reported that Prudential Borrowing taken out as at 1 April 2019 was £43.998m, of which £27.796m was outstanding.  It was estimated that the total borrowed will increase to £44.95m by the end of this financial year.

The Leader thanked all members of the authority in helping shape the budget and hoped all members would support the proposals at Council.  He stated that the Council had received a better than anticipated settlement this year and hoped that austerity measures had been brought to an end, but the Council would need to plan to make savings in future years.  He informed Cabinet that the largest proportion of the budget would be spent on schools and due to the better than anticipated settlement it had been possible to protect schools from making the proposed 1% annual efficiency savings.  He also stated that the Council proposed to increase funding for the Special Educational Needs, whilst the Council would continue its commitment to apprenticeship opportunities to replace specialist staff and to grow its own.  The Council would also be investing in the public realm and the highway infrastructure and the planting of trees to prevent flooding due to the effects of climate change.  He stated that the views of the public had been listened to in retaining CCTV services and adult community learning.

The Cabinet Member Social Services and Early Help stated that austerity was continuing and the authority was still having to make difficult cuts to services, however there needed to be investment in services.  The Cabinet Member Wellbeing and Future Generations stated that the views of the public had been listened to and she commended the investment being made in the schemes included in the capital programme and was pleased to see the Council supporting citizens by providing digital and personal budgeting support to assist in new claims for Universal Credit.  The Leader stated that the Council is proposing significant investment in renewable energy in the Caerau Heat Network scheme and by investing in its schools and older buildings.  The Council will also be working sustainably with the Valleys Taskforce. 

The Leader questioned whether the cost of living rise for care packages would be allocated into the budget.  The Interim Section 151 Officer stated that the money will be transferred into the budget.  The Leader also questioned the impact on the budget of the reduction in employer’s contributions in non-teachers’ pensions.  The Chief Officer Legal, HR and Regulatory Services stated that Payroll is looking at the calculations, prior to a decision being made on the way forward. 

RESOLVED:            That Cabinet approved the MTFS 2020-21 to 2023-24, including the 2020-21 revenue budget and the Capital Programme 2019-20 to 2029-30, and recommended them to Council for adoption. In particular Cabinet approved the following specific elements Council for approval:

• The MTFS 2020-21 to 2023-24 (Annex 3).

• The Net Budget Requirement of £286,885,169 in 2020-21.

• A Band D Council Tax for Bridgend County Borough Council of £1,537.06 for 2020-21 (Table 11 of the MTFS).

 • The 2020-21 budgets as allocated in accordance with Table 9 in paragraph 3.3 of the MTFS.

 • The Capital Programme 2019-20 to 2029-30, attached at Appendix G of the MTFS.