The Chief Officer – Finance, Performance and Change submitted a report, in order to provide Council with an update on the Council's revenue financial performance for the financial year ended the 31st of March 2023.

She advised that in February 2022 Council approved a net revenue budget for the financial year 2022-2023 of £319.5m. Due to a technical adjustment in the final settlement the Council’s settlement was increased by £4,336 and this was reported to Council on 9th March 2022. 

The final outturn position for 2022/2023 was shown in Table 1 of the report. The overall outturn for the last financial year is a net underspend of £2.057m and this has been utilised to supplement earmarked reserves, primarily to supplement the cost of living fund for known pressures in the current financial year. The underspend is small in comparison to the overall net budget (0.6%) for 2022/2023 and therefore no transfers have been made to the council fund.

Within the outturn position directorate budgets provided a net overspend of £8.2 million whilst council wide budgets had a net underspend of £9.5 million. The out-turn position also takes into account the additional council tax income which was collected over budget during the financial year.

The 2022/23 financial year was a difficult one for the Council advised the Chief Officer – Finance, Performance and Change. The overall underspend on the council budget significantly masked underlying budget pressures which were reported during the year. The main financial pressures are in the service areas of social services and well-being, homelessness and home to school transport.

During 2022-2023 social services experienced significant pressures to meet statutory duties against a backdrop of an exponential increase in demand in children social care and an increase in the number of independent residential placements within children services, alongside pressures in learning disability and older persons residential placements. The council will need to give further consideration to the sustainable resource required specifically in children services to improve the quality of outcomes for children and families in Bridgend.

The council has seen a significant increase in the provision of temporary accommodation to support individuals who become homeless. It did receive grant funding from Welsh Government during the last financial year to support this service, however £2.5m of this was on a one off basis. This is another service that will require close financial monitoring during the current financial year.

In addition, the council had to address funding pressures during the last financial year in relation to pay and price costs that had not been anticipated earlier in the year. Elected members were briefed on this in year pressure in the Autumn of last year. These pressures are likely to continue into the current year and therefore money has been carried forward to meet those pressures.

The Welsh Government Hardship Fund which supported local authorities during the pandemic period ended on the 31st of March 2022. However local authorities did continue to administer four elements of this funding in the last financial year. The details of this are shown at Table 2 in today's report and the total claim made in 2022 - 23 was £6.2m.

The report detailed progress made against the savings requirements for the period prior to 2022/2023 and those identified in the last financial year . These were detailed at section 3.2 of the report.

There is a great deal of information in the report in section 3.3 which details the position for each main service area. The financial position of many of these services has been reported throughout the last financial year. Whilst there are some service specific issues, there are savings reported in all revenue budgets in relation to staff vacancies. Throughout the year many services have been unable fill vacancies at all levels despite advertising posts on many occasions. Directorates continue to look at how these vacancies can be filled to maintain service levels therefore these savings are not likely to continue into this financial year.

In terms of the wider council budget, there is some detail in Table 1 in the report with regards to these. The other Corporate Budgets line shows an underspend of £5.9m. Within this is underspend against a redundancy budget, pay and price (this is fully allocated for the current year), contingency budget and the Covid funding that was agreed in the 2022/23 budget when we did not know the financial impact for the Council of the pandemic. These will be reviewed as part of the budget planning process for the 2024/2025 revenue budget.

The report also provides an update with regards to the earmarked reserves that the council is currently holding. During 2022/2023 directorates drew down funding from specific earmarked reserves and these were reported to members through the quarterly monitoring reports.  The final drawdown from reserves was £18.9m and this was summarised in table 5 of the report.

The net under spend position of £2m in the last financial year along with the unwinding of some existing earmarked reserves that were no longer required, has enabled funding to be put back to some reserves. The most significant of these was £1.3m towards the Cost of Living Fund, £530,000 contribution to capital for refurbishment works undertaken by valleys to coast and other sums to support minor works and feasibility studies in the new year.

A full breakdown of the movements on Earmarked reserves at 31 March 2023 was provided at Appendix 4 to the report. It should be noted that the monies the Council has in reserves has fallen over the past year by a net figure of £14m. This is a change to the position in recent years when the council was able to increase its reserves due to underspends in the revenue budget. The council received financial support during the pandemic and a number of the grants that it has received for many years are not now being paid. This funding masked the pressures in certain service areas which is reflected in the outturn position for 2022/2023. This position will have to be closely monitored in future years as services cannot be funded from reserves in the longer term.

The Cabinet Member – Finance, Resources and Legal welcomed the £2m to support the cost of living pressures, but he asked for some reassurance that the underspend in the Corporate Base budget is available if required, to cover the Council’s liabilities going forward.

The Chief Officer – Finance, Performance and Change reiterated that some of the underspend was in relation to Pay and Inflation costs that were not accounted for in the budget of the last financial year, though these costs would be incorporated in the MTFS this current year. Therefore, that allocation would be fully required.

She added that the cost of living crisis is still very much evidenced and there may be more requests for support for that area of the budget during the present financial year. We would therefore look very closely at our central budgets in order to ascertain whether we require to make any adjustments to these in the future.

The Deputy Leader and Cabinet Member – Social Services and Health emphasised that whilst noting the financial pressures of £8.174m, currently the Authority was nearly £11m in terms of an overspend in Children’s Services, which as Members were aware, was a statutory service that the local authority were obligated to meet in order to fully support these financial challenges.

A Member expressed his concern over the level of vacancies in the Council Directorates that were at present not being filled, even though there was scope within the budget to fill these positions.

The Chief Executive confirmed that the Council’s Workforce Strategy had accounted for this and that there were a varying number of proposals that the Authority would look to put in place to address this. These included amongst others, recruiting from within, including through the apprenticeship scheme and looking at the grading of jobs where there was a very competitive market, such as in the area of Social Care.  

RESOLVED:                            That Council noted the revenue outturn budget position for 2022/23.