The Interim Chief Officer – Finance, Performance and Change presented a report, the purpose of which, was to present Cabinet with the draft Medium Term Financial Strategy 2021-22 to 2024-25, which sets out the spending priorities of the Council, key investment objectives and budget areas targeted for necessary savings. The strategy includes a financial forecast for 2021-2025 and a detailed draft revenue budget for 2021-22.
She advised that, the quarterly reports to Cabinet on the revenue position for 2020-21 have outlined in detail the impact on the budget of the additional cost pressures and loss of income faced by the Council throughout the year as a result of the pandemic. Welsh Government has played a significant role in mitigating the majority of these losses through their various funding streams, most notably the Covid-19 Hardship Fund.
However, Cabinet and Council now needed to consider the longer term impact of the pandemic and how it will shape the Council as part of its Recovery Programme.
The impact of the pandemic had impacted upon the levels of income the Council would have ordinarily have had, therefore setting a balanced budget for 2021-22 was even more challenging than usual, particularly on the back of 10 years already of significant budget savings since austerity.
Over the last 10 years, the Authority had made over £65m of budget reductions, as was illustrated in paragraph 4.1.1 of the report. This was almost 25% of the Council’s present budget.
In terms of council tax, the proportion of this required to balance the Council’s budget has steadily increased over recent years and it currently funded almost 30% of the budget.
The Interim Chief Officer – Finance, Performance and Change then referred to paragraphs 4.1.2 to 4.1.7 of the report, service areas of the Council where opportunities for savings were outlined and these savings proposals had been examined by both the Council’s Budget Research and Evaluation Panel (BREP) over the course of the year, as well as Overview and Scrutiny Committees.
The views of these bodies would be presented to Cabinet at its meeting in early February, prior to Cabinet then recommending the Budget to Council later in February 2021.
The MTFS of the Council is set within the context of UK economic and public expenditure plans, Welsh Government’s priorities and legislative programme. The MTFS included:
The Interim Chief Officer – Finance, Performance and Change advised, that Councils received their provisional settlements from Welsh Government on 22 December 2020. The headline figure is an overall increase, after adjusting for transfers, of 3.8%, across Wales and, for Bridgend, an increase of 4.3% in Aggregate External Finance (AEF), or £9.064 million. Though this was better than had been expected, prudent and successful management of finances would very much be still required going forward.
She then advised of the position regarding grant funding the Council had received, including those grants that had been awarded as a result of the pandemic.
Paragraph 4.7 of the report, then referred to the in-year financial position of the Authority as at 31 December 2020.
The overall projected position at 31st December 2020, was a net under spend of £691,000, comprising £1.187 million net over spend on directorates and a £7.177 million net under spend on corporate budgets, offset by net appropriation to earmarked reserves of £5.299 million, including £2.5 million to support capital investment.
Paragraph 4.8 of the report, gave details of the MTFS for the period 2021-22 to 2024-25, whilst paragraph 4.9 included details of the 13 MTFS Principles, which had been reviewed last year.
In terms of Council Tax, the 2021-22 draft Revenue Budget, shown in Table 6 of the report, assumed a Council tax increase of 3.9%. This is lower than the proposed increase of 4.5% included in the MTFS 2020-21 to 2023-24 in February 2020, due to the better than anticipated provisional settlement and as a consequence of the responses received through the budget consultation.
The next section of the report contained details of the MTFS Scenarios for its current period of 2021-22 to 2024-25 year by year, including estimated Best Scenario, Most Likely Scenario and Worst Scenario estimations.
Table 4 in paragraph 4.13.1 of the report, showed the current position in respect of addressing the most likely forecast budget reduction requirement of £22.095 million.
Table 5 of the report, then gave some budget reduction proposals identified for the period of 2021-22 to 2024-25.
As the Interim Chief Officer – Finance, Performance and Change had alluded to previously in her submission, the MTFS had been the subject of some significant analysis through the Council’s overview and scrutiny process. It had also been the subject of external consultation with the constituents of the BCB as part of the Council’s ‘Fit for the Future’ consultation.
Table 6 in the report then gave details of the Draft Revenue Budget for BCBC 2021-22 and based on the proposed budget of £298.956m, the Council Tax increase for this period would be 3.9%, which was lower than had been previously estimated.
Paragraph 4.17 then gave some details regarding Pay, Price and Demographics. The Interim Chief Officer – Finance, Performance and Change, confirmed that these were estimates at this time, as opposed to accurate details.
Information in respect of Budget Pressures were highlighted in paragraph 4.19 of the report, whilst 4.20 stated that reduction proposals of £1.760m for 2021-22 had been identified from service and corporate budgets to achieve a balanced budget.
Table 7 in the report showed the Council’s Earmarked Reserves, while information following that was shared with Members in relation to the Capital Programme and Capital Financing Strategy, as explained in further detail in an earlier agenda item that had been considered by Cabinet.
Table 8 gave details of the Annual Allocations of Capital Funding for 2020-21 and 2021-22 and the Interim Chief Officer – Finance, Performance and Change briefly explained the Council’s Capital Receipts and Prudential (Unsupported Borrowing).
She concluded her report, by confirming that as Section 151 Officer, the Authority had sufficient resource to discharge its role as required by S114 of the Local Government Act 1988.
The Deputy Leader advised that this year had been unprecedented and he commended Finance Officers therefore for the preparation and commitment that had gone into the report before Members. He added that the Council had to prepare for an uncertain future however, due to the ongoing pandemic and the pressures this would bring for the Council’s budget moving forward.
He also thanked the Budget Research and Evaluation Panel (BREP) for their input into the MTFS, which had assisted Cabinet in their deliberations and decisions on the Budget. He felt that this had all culminated in the balance of the reports proposals.
The MTFS report would now be referred to Overview and Scrutiny where their input too would also be welcomed and awaited. If there was adequate flexibility to take forward any proposals made by Members of Scrutiny and as a result of this, make any adjustments to the MTFS, then these would be given some due consideration. In terms of the Pay, Prices and Demographics section of the report, he assured that Cabinet would give a commitment to a real living wage for Council employees.
The Cabinet Member – Social Services and early Help echoed the issue regarding the real living wage being committed to for Social Service providers. She stated that both Adult and Children’s Social Care were volatile areas and therefore the budget needed to be managed carefully in these service areas. She also added some concerns over the impact of long Covid on individuals, including the younger generation, adding that packages may be needed to pave the way for the recovery of these patients from this aspect of the illness, that would come with a financial commitment.
The Leader recognised the scale of the financial pressures, particularly those within Social Care services, which had been an historical pressure not just for BCBC, but for other local authorities also. This budget service area would be monitored close going forward, as would all other service areas of the Council.
He echoed the thanks given by the Deputy Leader to Finance Officers in preparing the MTFS report, as well as BREP Members, which was a Cross-party Panel and welcomed the comments of the Joint Overview and Scrutiny Committees on the budget proposals, at the two Committee meetings convened later this week.
RESOLVED: That Cabinet submitted for consultation with Overview and Scrutiny Committees the 2021-22 annual budget and development of the MTFS 2021-22 to 2024-25, as set out in the report, prior to presenting a final version for approval by Council in February 2021.