The Chief Officer – Finance, Performance and Change submitted a report, in order to present to Cabinet the Medium Term Financial Strategy for the period 2023-24 to 2026-27. This included:

 

•           A financial forecast for 2023 to 2027;

•           A detailed revenue budget for the coming financial year; and

•           the capital programme for the period 2022-2023 to 2032 – 2033

 

The Corporate Plan and Medium Term Financial Strategy identify the Council’s service and resource priorities for the next four financial years, with particular focus on 2023-2024.

 

The MTFS outlined the principles and detailed assumptions which drive the Councils budget and spending decisions, it outlines the financial context within which the council is operating and attempts to mitigate any financial risks and pressures going forward whilst at the same time taking advantage of any opportunities arising.

 

The strategy focuses on how the council intends to respond to the increasing pressures on public sector services, which were exacerbated during the COVID-19 pandemic, and immediately following that, by the current cost of living crisis. It sets out the approaches and principles the council will follow to ensure it remains financially sustainable and delivers on the corporate well-being objectives

 

The Chief Officer – Finance, Performance and Change quarterly reports to Cabinet during this financial year on the projected revenue position for 2022/2023, outlined in detail the impact on the budget of the additional cost pressures faced by the Council throughout the year as a result of the worsening economic climate, rising inflation and interest rates. These have been reflected in rising prices, higher than anticipated pay increases and significant tender price increases for goods and services.

 

The final financial settlement for local government in Wales was not due to be announced until the end of this month. As a result, this budget is being proposed on the basis of the provisional settlement received in December 2022. Whilst we do not anticipate any significant change in funding between the provisional and final settlement, any changes will be reported back to Council at a later date.

 

The budget had been prepared following consultation with elected members, the school budget forum and service managers. Subject to the risks identified, the MTFS provided a firm basis for managing the Council's resources for the financial year 2023 / 2024 and beyond.

 

Annex 3 of the report contained the detailed Medium Term Financial Strategy.

 

Section one of the MTFS included a financial overview of the Council. The Chief Officer – Finance, Performance and Change, confirmed that Members will be aware that the Council has had to make budget reductions in previous years and Chart 1 in this part of the report, indicated that budget reductions of £73 million have been found since 2010 – 2011. These   represented almost 23% of the Council’s net budget in the current year.

 

The Council received the majority of its revenue funding from Welsh Government through the revenue support grant and a share of the non- domestic rates. It was important to note that Council tax will account for only 27% of the income received by the Council in the coming financial year.

 

For 2023 -2024, even more cost pressures were presenting themselves going forward than has been experienced in previous years and there are fewer opportunities to cut services in a climate that required more support for our older and more vulnerable members of society with substantial increase in demand being experienced for many services. In addition, there are higher expectations on the council to address homelessness more robustly and on a longer-term sustainable basis and more pressure to strengthen and support social care, which is experiencing increased demand and costs as well as more complex cases in both adults and children services

 

In section two of the MTFS further context is provided, detailing both financial and non-financial information which has shaped the financial position for the council. In real terms Welsh Government funding has fallen year on year since 2012-2013 with an increasing element of the budget having to be funded by the council tax.

 

As in previous years further efforts have been made to secure greater involvement of stakeholders in the development of this strategy and the corporate plan. This has included:

 

•           A 5 week consultation with residents of Bridgend which was undertaken. The emphasis of this was to seek views on the priority areas for residents, in order to enable the Council to review and prioritise the budget. The outcome of this consultation process was  detailed in Table 5 in the MTFS.

•           Cabinet and corporate management board have been working with the Budget Research and Evaluation Panel (BREP) over the last six months to facilitate the budget planning process.

•           The draft budget report approved by Cabinet in January 2023, had subsequently been scrutinised by the Council's overview and scrutiny committees resulting in a number of recommendations being made. Cabinet has considered these, which included recommendations from the Budget Research and Evaluation Panel, and a response to these was provided in Appendix A to the Medium Term Financial Strategy

 

The responses received from the public consultation and from discussions with, and recommendations from, BREP and Overview and Scrutiny, have been considered and the proposed budget is based on the comments and responses received.

 

In considering the financial position the following principles now underpin the final budget for the coming financial year :

 

•           The Council will seek to protect the most vulnerable people in our  communities;

•           The Council will seek to limit service growth in the coming financial year;

•           All budgets across the Council should be reviewed to identify savings for the coming year;

•           Where possible back office services will be prioritised for service reductions;

•           The Council should consider whether schools are able to contribute to the overall savings required in the coming year; and

•           In setting the budget for 2023-2024 consideration needs to be given to the anticipated budget pressures in the following financial years

 

Taking into account the above, the proposed budget :

 

•           Provides additional funding to support the most vulnerable in the BCBC areas by increasing funding to support social care and

            increasing funding to support the homeless;

•           reduces the level of service reductions required in the coming year by £600,000

•           reduces the proposed Council Tax increase from 6% to 4.9% in recognition of the impact of any rise on the residents of the County Borough.

 

In proposing this, schools have been tasked with finding budget reductions totalling 2% of their budget, to be found as far as possible from efficiency savings, in order to help balance the Council's budget. It should be noted that the council will fully fund the pay and price increases that schools will meet in the coming year and this would significantly outweigh this budget reduction. The risk on pay and prices will therefore rest with the Council during the coming year.

 

Details of the budgets for individual services were given in section 2.4 of the MTFS, while in section three of the MTFS, the current financial situation was outlined for Cabinet.

 

With regards to the provisional local government settlement the headline figure was an overall increase of 7.9% across Wales. The spread of the increase across Wales ranged from 6.5% to 9.3% and, for Bridgend, there was an increase of 7.7% for the coming financial year.

 

The settlement includes funding to enable local authorities to continue to meet the additional costs of paying the Real Living Wage to social care workers. Funding for free school meals during school holidays has ended, but there are allocations for the next two financial years to support the increased entitlement to free school meals for all primary age pupils.

 

The MTFS also models the financial position for the authority for the next four years, based on the latest information available from Welsh government. Welsh government has provided a provisional settlement for the coming financial year and then an indicative increase for the following financial year of 3.1%.

 

The Chief Officer – Finance, Performance and Change confirmed that the financial forecast for 2023 to 2027 was predicated on assumptions regarding demographic projections, inflationary uplift, the impact of new legislation and policies and increased staffing costs. In developing these estimates, the MTFS contains assumptions with regards to possible council tax increases going forward. Due to the pressures already outlined, it is proposed to increase council tax by 4.9% in 2023-2024. This is significantly below the current inflation rate in order to be able to support the citizens of Bridgend to deal with the rising cost of living, such as increased energy and food bills, other inflationary increases and mortgage interest rises. For planning purposes it has been assumed that the council tax will increase by 4.5% in 2024 – 2025 to 2026 - 2027. These figures are for planning purposes only and will be reviewed each time the Medium Term Financial Strategy is updated.

 

Together with the indicative funding from Welsh Government, it is estimated that there will be a net budget requirement of £17 million to be met over this period. These scenarios were detailed at Table 7 within the MTFS

 

Section 4 of the MTFS outlined in more detail the budget position for 2023/2024. The net budget requirement for next year is detailed at Table 10 of this report which shows a net budget of £342m.

 

In summary the key points to note include :

 

Financial pressures of over £25m are funded for the coming year, which include:

 

•           £14m to meet pay and price inflation

•           £2.4m to fund the increase in the RLW for social care workers

•           £8.6m of inescapable service cost pressures which included :

 

o          Increased funding to meet additional pressures in adult social Services, including an increase for services and support for older people;

o          Increased demand for mental health and learning disability services due to the long-term impact of the Covid-19 pandemic;

o          Additional capacity to support children services to ensure the service can meet the requirements to safeguard children;

o          Increased costs of commissioned services in the social care sector;

o          Increasing numbers of households and individuals presenting as homeless.

 

Inevitably additional pressures will arise during the year as a result of new legislative changes or unanticipated events. A provisional allocation of £1.3m has been set aside for these, whilst further work is undertaken. Funding will be allocated in-year subject to business case approval where necessary.

 

Since the draft budget proposals were considered by Cabinet and Scrutiny Committees in January, the changes in the pressures have been :

 

•           Increased allocation to meet possible pay increases ;

•           Increased allocation to meet non pay prices increases ; and

•           An increase to the Council wide allocation to meet emerging pressures

 

The Chief Officer – Finance, Performance and Change advised that it should be noted, that it has not been possible to fund all of the pressures identified by services for the coming year in balancing this budget. Of the £20m identified, only £11m were funded in the proposed budget.

 

Members can find further details regarding the cost pressures in Appendix C of the MTFS.

 

In order to balance the budget, reductions have been identified which total £2.6m. Members can find these detailed in Appendix D of the MTFS. These have been changed since the proposals were considered by Cabinet and Overview and Scrutiny Committees in January, with the savings required to be met, having been reduced by £648,000.

 

Members were aware that South Wales Fire and Rescue authority is funded by raising a levy on its constituent councils, based on population. Within the MTFS reference to is made to this at paragraph 4.1.21 of the report. The levy payable for the coming financial year was £8.5m. This is an increase of £698,000 or 9.25% above the 2022 – 2023 figure.

 

The Council raised income via fees and charges and these are reviewed on an annual basis. New charges or charges that have been included in the 2023-24 budget and are above the general increase, were shown in Appendix E to the report.

 

As well as the Revenue budget, the MTFS also dealt with the proposed Capital Programme for the period 2022-23 to 2032 - 2033. This 10 year programme has been revised during this financial year to bring it up to date and to take into account new capital schemes as they have been developed.

 

Within the Welsh Government provisional settlement for the coming financial year, £8.008 million was being made available to support capital expenditure.

 

Due to the limited capital finances available, the Chief Officer – Finance, Performance and Change confirmed that services have not been asked to submit bids for funding at this stage, although it was recognised there are a number of capital pressures that will need financing going forward, including regeneration, decarbonisation, homelessness and digitalisation. In addition, there are also financial pressures arising as a result of the impact of the war in Ukraine and cost of living crisis, which are being seen in existing tender prices and will continue to do so for some time going forward, placing pressure on the Capital Programme overall.

 

The Capital Programme contained a number of annual allocations that are met from the total general capital funding for the Council. The proposed allocation of these for 2023 – 2024, were shown at table 13 of the report.

 

Within today’s report, some changes were proposed to the current Capital Programme including new schemes to be funded, such as highways refurbishment, children’s playground refurbishment and an ICT data centre. The report also outlined some proposed amendments to existing schemes within the programme, as well as including newly approved grant funded schemes.

 

Any further new proposals for capital funding would be considered in light of, and in line with, the proposed Capital Strategy for the period to 2032 - 2033 and will be brought back to Council for approval at a later date.

 

The revised Capital Programme was shown at Appendix G of the report.

 

An overview of the Councils reserves was undertaken at the end of December 2022 in accordance with the Council's reserves and balances protocol. A breakdown of the movement on the reserves at that time was at Appendix H of the report. Further movements are already anticipated in the final quarter of this financial year and these were shown at 4.3.2 of the MTFS document.

 

In line with the reserves protocol, a further review will be undertaken at the end of the current financial year and transfers will be made at this point taking account of the overall financial position of the Council, including the final outturn, actual accrued council tax income, earmarked reserve levels, the Council Fund level and any new pressures or risks that need to be provided for.

 

With regards to Council Tax, the proposed budget of £342.047m shown in table 10 of the Medium Term Financial Strategy, can be balanced with an increase in the council tax of 4.9% for 2023 -2024. This increase is lower than the rate of inflation but is required to enable the Council to meet the significant and unprecedented budget pressures that it is facing including higher than anticipated pay, price and service pressures. It does take into account the better than anticipated settlement, but is mindful of the ongoing pressures still facing the Authority.

 

The Chief Officer – Finance, Performance and Change concluded her submission, by stating that the final section of the MTFS, provided information on the Councils longer term financial outlook. This was not intended to be a 10 year Budget Strategy due to the number of variables that impact on BCBC’s financial position. However, it did provide financial framework to reference against when preparing both annual and longer term financial plans.

 

The Cabinet Member – Resources commended the MTFS proposals and extended his thanks to the Chief Officer – Finance, Performance and Change and her Finance Officers for all the hard work they had committed, in order to provide a balanced budget. This had been in the face of years of ongoing financial restraints brought on by Brexit, Covid and the Cost of Living crisis, amongst others. This in itself came with an expediential increase in inflation of 10%. He added that, the Council Tax Reduction Scheme was available to residents on low income if they found that they were having difficulty in paying their Council Tax bills. He further added that the MTFS had carefully been put together for the last 12 months during which time, the Council had lobbied Welsh Government for increased funding at every opportunity. The Council had also looked at best practices in other Authorities he added.

 

The Leader commended the input from residents on the budget during the consultation period. He pointed out the pressures the Council faced from pay and inflation growth that were unavoidable as they were set nationally and had to be met. He acknowledged the cross-party contributions that had been made, through the likes of Overview and Scrutiny Committees and BREP, including Cabinet having taken on board some of the recommendations of the Corporate Overview and Scrutiny Committee. Unfortunately, it had not been possible to accommodate all of these recommendations he added, as this would have resulted in the budget not remaining balanced. No less than £68m had been allocated to the Council’s School Modernisation Programme as well as £2.4m in order to deliver the Real Living Wage for our carers, to protect recruitment and retention of staff in these very important jobs.

 

The Deputy Leader acknowledged the financial support given to Social Services, something that had been highlighted by residents, ie continued  essential support for older residents. She added that the budget needed to be considered when bearing in mind the cuts local authorities had continued facing since 2012, which was some considerable time ago. She assured that any further support that could be provided for schools, would be carefully looked at through any funding opportunities and/or the Council’s Capital Programme.

 

Other Cabinet Members in turn, commended support in the budget to the following key service areas:-

 

·         Waste enforcement;

·         Highway resurfacing

·         Improving play areas

·         Net Zero Carbon agenda

·         Regeneration opportunities

·         RNLI

·         Support for the homeless

·         Libraries

·         Leisure Centres (promoting health and wellbeing)

·         Increased housing

·         School improvements

 

RESOLVED:                                     That Cabinet approved the MTFS 2023-24 to 2026-27, including the 2023-24 revenue budget and the Capital Programme 2022-23 to 2032-33 and recommended these to Council for adoption. It also approved that the following specific elements be forwarded to Council for approval:

 

• The MTFS 2023-24 to 2026-27 (Annex 3 of the report).

• The Net Budget Requirement of £342,047,227 in 2023-24.

• A Band D Council Tax for Bridgend County Borough Council of £1,675.26  for 2023-24 (Table 15 of the MTFS).

• The 2023-24 budgets as allocated in accordance with Table 10 in paragraph 4.1.3 of the MTFS.

• The Capital Programme 2022-23 to 2032-33, attached at Appendix G of  the MTFS.