The Section 151 Officer submitted a report to present Council with the Medium Term Financial Strategy for the above period, to include a financial forecast for 2015-19, a detailed revenue budget for 2015-16 and a Capital Programme for 2015-16 to 20124-25.              

 

            She explained that the Corporate Plan and Medium Term Financial Strategy (MTFS) identify the Council’s service and resource priorities for the next four financial years.

 

            The Section 151 Officer advised that the Council’s MTFS was set within the context of UK economic and public expenditure plans, Welsh Government priorities and legislative programme. The MTFS articulated how the Council planned to use its resources to support the achievement of its corporate priorities and statutory duties, including the management of financial pressures and risks over the next 4 years.

 

           Paragraph 3.3 of the report then advised what the MTFS comprised of and the Section 151 Officer expanded upon this.

 

            In terms of financial context, the Section 151 Officer advised that austerity was set to continue, and that in relation to the Welsh Government Final Local Government Settlement, after considering the additional funding of £10 million for social care in the settlement that has replaced funding previously provided in the form of a specific grant, the settlement equated to a -3.6% settlement on last year. This was a reduction of £134k on the Provisional Settlement..

 

           The Section 151 Officer added that the settlement included extra funding to protect schools, which amounted to a 0.6% cash increase or £508k for BCBC.

 

           With regard to Grant Transfers into the 2015-16 Revenue Settlement, there had been a number of transfers into and out of the final settlement for 2015-16, amounting to £298k for the Authority as shown in paragraph 3.9 of the report.

 

           The next section of the report, gave details regarding the Regional Collaboration Fund (RCF)/Intermediate Care Fund (ICF), which confirmed that for 2015-16 £5m funding had been allocated by Welsh Government under the RCF to cover ongoing projects. This was a significant reduction in the £10m that had been estimated. Projects receiving funding have been asked to consider how they will reconfigure these to manage within revised reduced funding for 2015-16. There was no future funding in the Final Budget for the ICF which was £50m in 2014-15. However, Welsh Government had recently announced £20m of additional funding for the Health Service for 2015-16 to take forward projects funded by the Intermediate Care Fund in 2014-15

 

            The Section 151 Officer then referred Members to paragraph 3.14 of the report and the in-year financial position of the Council as at 31 December 2014, and Table 1 reflected that there was a projected underspend of £297k. This was mainly due to the significant underspend in Legal and Regulatory Services, but the overall figure did mask a number of in-year budget pressures in Safeguarding and Family Support and Adult Social Care. The outturn assumed full implementation of the current year budget reduction requirements across the Council’s budget which amounted to £11.274m. Where proposals to meet this requirement had been delayed or were not achievable, Directorates had met their requirements using other measures such as vacancy management. The Section 151 Officer stated that the latest figures in respect of the outturn were indicating a forecast Directorate underspend of more than £750,000.

 

           She then explained that the Council could not exceed its approved cash limit budget. As such fortuitous underspends in budgets will be applied to offset overspends on other budgets. In accordance with the Council’s Financial Procedure Rules, at year end, consideration, will be given to requests from Directors to carry forward any planned Directorate underspends for specific purposes into the following year.

 

           The Section 151 Officer then referred to the MTFS 2015-16 to 2018-19, the development of which, had taken into account Auditors’ views and issues arising in 2014-15, underpinned by the ongoing aim to embed a culture of medium term financial planning, closely aligned with corporate planning.

 

           She added that implementation of the MTFS would continue to be led by Cabinet and CMB, supported by financial and performance data, and that it widely understood by internal stakeholders and the general public where appropriate.

 

           The next part of the report outlined the consultation process conducted as part of the MTFS, that included with the public, and that 443 responses had been received, reflecting that 50% of participants believed they were very aware of the current financial situation. In terms of being asked how they would manage the budget effectively going forward, their feedback regarding this was shown in paragraph 4.6 of the report.

 

           The Section 151 Officer confirmed that there was majority support for introducing a charge for pest control, a parking charge for Blue Badge holders in our off-street car parks and for introducing a percentage charge for credit card payments made to the Council. 64% of respondents voted ‘yes’ to delivering libraries and cultural services through a not for profit trust. Over 1 in 3 (36%) believed that residents could help to reduce demand on the Council by taking more personal responsibility. This was also supported by other respondents suggesting a need for third party and/or voluntary/co-production collaboration and engagement.

 

           In addition to the public consultation Members had participated in the planning process through the Budget Research and Evaluation Panel, Council briefings and a specific Members’ budget workshop. The Town and Community Councils (TCC) and the third sector had also been engaged through the T&CC Forum and the Third Sector Review project. The Corporate Resources and Improvement Overview and Scrutiny Committee had summarised and collated observations and recommendations. Cabinet has provided a response to these recommendations which was attached to the report at Appendix M.

 

           The Section 151 Officer then referred to paragraph 4.9 of the report, confirming that the principles of the MTFS were the same as they had been for the last few years, and these were itemised 1 -14 in this paragraph. Point 12 was subject to a slight change, with resources being allocated to deliver the Bridgend Change Programme based on clear strategic plans that are kept under review by Corporate Directors to maintain alignment with the MTFS.

 

           With regard to the MTFS Resource Envelope, she explained that the MTFS planning assumptions for 2016-17, 2017-18 and 2018-19 are based on a reduction in AEF of -4.5% and an assumed increase in council tax of 4.5% each year. The 2015-16 AEF figure is -3.4% based on the published Final Settlement.

 

            Paragraph 4.11 showed in Table 3 the MTFS Potential Net Budget Reduction Requirement with an estimated budget reduction for the next 4 years of £49m. The 2015-16 figures were based on the actual settlement, with a projection for the following 3 years.

 

            The Section 151 officer then referred to the MTFS Net Budget Requirement of £252,201m outlined in Table 4 within paragraph 4.13 of the report. Appendix A showed the indicative budgets for the next four years based on the most likely scenario. This was built up based on the assumptions in paragraph 4.12 of the report and predicted on the budget reduction requirement being met from Directorate and Corporate Budgets identified in Table 3.

 

           The next section of the report ie in Table 5, showed the Risk Status of Budget Reduction Proposals 2015-16 to 2018-19 using the RAG formula, ie Red (proposals in development), Amber (Implementation Plans in Development) and Green (Implementation Plans in Place). Despite these proposals, there was still a shortfall against the forecast budget reduction requirement over the next four years of £9,458.000m.

 

            Table 6 then showed Budget Reduction Proposals 2015-16 to 2018-19 by Category. The Section 151 Officer explained that these reductions were being proposed in such a way that the Council minimises the impact on frontline services.

 

            All of the proposals have implications for the Council workforce given that 69% of the Council’s net revenue budget relates to pay costs.  It follows that annual real terms reductions in Council budgets over the next four years will lead to a reduced workforce over the MTFS period.  The intention is to manage such a reduction through the continuation of a recruitment freeze, redeployment, early retirements and voluntary redundancies, but some compulsory redundancies will continue to be necessary.  The costs of redundancies will be significant and the Council will need to ensure there are sufficient funds in earmarked reserves to meet these one off costs.

 

           The Section 151 Officer then explained about the Council’s Risk Assessment which identifies the key corporate risks and mitigating actions is attached as Appendix L to the report. The main risks which have been taken into account in the preparation of the MTFS are failure to use resources effectively and achieve the planned reductions target, the impact of welfare reform measures and local government reorganisation and increased support for vulnerable people, including children and their families. The local government reorganisation risk was correct, but references to the Vale of Glamorgan should be removed as the decision on which council BCBC will merge with, is still to be made.

 

           Table 7 of the report then identified the Revenue Budget 2015-16 which totalled £252,201 million, which would be funded through Revenue Support Grant/Non Domestic Rates and Council Tax Income, with a proposal for a 4.8% increase for the latter based on an Average Band D property.

 

           The Section 151 Officer then explained the composition of the budget in respect of Pay, Prices and Demographics, and in relation to Delegated School Budgets, she explained that this had been completely protected from the average 8.5% reductions that other Directorate have had to find. She said the 2015-16 budget provides an additional £508,000 to the schools’ budget to meet the Welsh Government’s 1% protection commitment.

 

           During 2014-15 a number of unavoidable 2015-16 service budget pressures had arisen totalling £3.270 million, detailed in Appendix B to the report.  These have been categorised into one-off pressures and more certain and recurring pressures. In total for 2015-16, the recurring pressures total £2.334 million. The one-off pressures total £936,000 and funding will be retained centrally and allocated to services to meet the cost of these pressures, should they arise during 2015-16. 

 

           The Section 151 Officer stated that Corporate budgets included funding for the Council tax reduction scheme, costs of financing capital expenditure, the unallocated inflation budget, a central contingency provision, discretionary rate relief, provision for redundancy related costs and the Carbon Reduction Commitment and Outcome Agreement Grant (OAG).

 

           She added that generally, income from fees and charges will be increased by CPI (at the prevailing rate, currently 0.5%) plus 1%, subject to rounding, or in line with statutory or service requirements. Schedules of fees and charges will be reported separately, as usual, under Delegated Powers. New charges or charges that have been included above the general increase are shown in Appendix D. A number of new charges are proposed as a consequence of the public consultation exercise.

 

            Table 9 of the report then gave details of the 2015-16 Budget by Corporate Improvement Priority made up of Corporate Improvement Priorities and the Council’s statutory obligations ie Core Business. This protocol together with the full details of the earmarked reserves could be found in Appendix G to the report. A summary of the General Fund and Usable Earmarked Reserves were shown in paragraph 4.38 of the report, while paragraph 4.39 outlined information in respect of the proposed Capital Programme for 2015-16 to 2024-25. The Capital Programme was shown in Appendix H to the report, while Table 10 reflected the Capital Programme by Improvement Priority.

 

           The Section 151 Officer then shared with Members information on raising aspirations and improving educational achievement. This was an ambitious programme and it was essential that the planned capital receipts already committed and ring fenced from the sale of school sites to finance the programme are retained for this purpose.

 

           Paragraph 4.44 of the report highlighted the projects that have been included in the Council’s approved programme, but funding for each of these would not be confirmed until Welsh Government approved the final business case and sufficient capital receipts had been generated.

 

           The Section 151 Officer then outlined details regarding the additional Capital funding that had been made available for the depot rationalisation project associated with the Parc Afon Ewenni programme, and the options that had been considered in terms of moving the depot from Waterton, near Bridgend.

 

           She then referred to Capital Minor Works, and that the allocation for these proposed in 2015-16 remained at £1.1m. However, it was proposed to top slice the revenue budget by £50,000 in 2015-16, as in 2014-15, to fund prudential borrowing to the value of £500k to enable the Council to progress major packages of repair.

 

           Table 11 of the report then outlined Current Fixed Annual Allocations of Capital Funding. Against the background of the reductions in capital funding, these annual allocations have been reviewed and those that were proposed for the 2015-16 Capital Programme were shown in paragraph 4.49 of the report.

 

           The Section 151 Officer then advised of the Capital Financing Strategy which was underpinned by the Council’s Treasury Management Strategy

            

           She then explained that the Council estimates that around £19 million of capital receipts could be generated over the next three years, of which £6 million is expected to be realised in 2015-16. Of the £19 million, £9.5 million relates to school buildings vacated through the 21st Century Schools Programme, to be used as match funding for the programme. It also includes receipts anticipated from Glanogwr offices, industrial units, and the Waterton site along with the sale of other surplus sites within the County Borough. Receipts are subject to the exchange of contracts, so it is prudent not to commit them until we have a contractual agreement.  However, the capital programme does assume £11 million of anticipated capital receipts from the sale of school sites as this was a Welsh Government requirement as part of the match funding for the 21st Century Schools Programme.  Confirmation of these receipts will be required before contracts can be awarded for these projects.

 

           The Section 151 Officer confirmed that  Prudential Borrowing totalling £34.6 million was approved by Council on 27 February 2014. It was proposed that this borrowing be increased by a further £0.5 million to allow for additional capital minor works. In addition, the Welsh Government will be making funding available to meet the cost of the Council borrowing an additional £3.6 million in 2015-16 and 2016-17 towards the costs of the 21st Century Schools Programme under the Local Government Borrowing Initiative. This will take the overall level of approved Prudential / Unsupported Borrowing to a minimum of £41.5 million by the end of 2016-17. This does not include the £2.5 million loan, from the Welsh Government Central Capital Retained Fund, to develop sites in the Llynfi Valley.

 

           She then explained about the Council’s Treasury Management Strategy 2015-16, and this was attached at Appendix K to the report. The indicators either summarised the expected activity or introduce limits upon the activity, reflect the underlying capital programme and provide assurance that capital investment decisions are affordable, prudent and sustainable.

 

           In respect of paragraph 6 of the report, headed Equality Impact Assessment, the Section 151 Officer stated that a high level equality impact assessment (EIA) has been undertaken on the Council’s budget proposals and updated MTFS (see Appendix J of the report). EIAs have been completed for individual 2015-16 proposed budget reduction proposals which may impact on certain groups of citizens within the County Borough.

 

           The Section 151 Officer culminated her submission by confirming the financial implications of the report. The Council’s Chief Financial Officer is required to report annually on the robustness of the level of reserves. The level of Council reserves is sufficient to protect the Council in light of unknown demands or emergencies and current funding levels. It must be emphasised that the biggest financial risks the Council is exposed to at the present time relate to realising unplanned budget reduction proposals in future years and the unknown impact of national legislative changes, further collaborations and local government re-organisation. Therefore, it is imperative that the council fund balance is kept at the current level over the term of the MTFS and essential that revenue service expenditure and capital expenditure is contained within the identified budgets.

 

            The Chief Financial Officer is also required to report to Council if he/she does not believe that he/she has sufficient resource to discharge his/her role as required by Section 114 of the Local Government Act 1988. Members should note that there is sufficient resource to discharge this role.

 

            The budget includes estimates which take into account circumstances and events which exist or are reasonably foreseeable at the time of preparing the budget.  The budget has been prepared following consultation with Members, the School Budget Forum and service managers.  Subject to the risks identified in the body of the report the MTFS provides a firm basis for managing the Council’s resources for the year 2015-16 and beyond.

 

                 The Cabinet Member – Resources advised that the Council continues to face significant financial challenges over the next four years.  He said that we were not alone in this, as Councils across Wales were having to make difficult decisions as a result of cuts imposed by the UK Government. For Bridgend this meant that for 2015-16 the Authority had to find savings of £11.225 million and increase council tax by 4.8% to deliver a balanced revenue budget. Over the four year period 2015 to 2019, it is estimated that savings of £49 million will be needed.

 

                 He stressed that the Authority had undertaken an extensive public consultation on the budget, and the budget reduction proposals presented in the MTFS were in line with the responses that the Council received. We had tried to limit the impact of budget reductions on our citizens by developing rigorously pursuing efficiency measures, but the level of cuts are such that there will be an impact on the level and range of services the Council could provide in the next period.

 

               The MTFS also included a Corporate Risk Assessment, Capital Programme and Treasury Management Strategy, all of which have been developed in line with BCBC’s corporate improvement priorities and the principles that govern its MTFS.

 

               A Member made the point that Council were being asked to approve this year’s MTFS on what had been agreed up to the present time in accordance with Table 7 contained within the report. However, she asked if there were overspends or underspends in what has been agreed in relation to the allocation of budgets to each Directorate at the year end, how would this be managed. For example, would this require a further report being submitted to Council to amend proposals previously agreed upon.

 

               The Section 151 Officer advised that any such adjustments would be accounted for in the year-end Financial Outturn and the Financial Statement of the Authority which would firstly be considered by the Audit Committee and then referred on to Council for information.

 

               A Member referred to page 82 of Appendix C to the report and Schools SCH2 and a proposed reduction in Schools budget for 2016-17 amounting to £750k. She asked what this was in respect of.

 

               The Group Manager – Business Strategy and Performance advised that this was anticipated in respect of a budget reduction for Nursery provision.

 

               Members then voted whether or not to conduct a recorded vote on the proposals contained within the report’s recommendations and this was agreed by way of an electronic vote.

 

              A recorded vote was then undertaken, the result of which was as follows:-

 

              For                                                         Abstain                                        Did not vote              

 

           C J James                                              G Davies                                       G Thomas

R D Jenkins                                           E Venables                                   B Jones

M Thomas                                             D M Hughes

D K Edwards                                         N Clarke                                                2

R E Young                                             C A Green

H M Williams                                         K Watts

R C Jones                                 

R Williams                                                   6

J R McCarthy

D B F White

C E Rees

R M James

M Winter

D G Owen

D R Pugh

D R W Lewis

J E Lewis

P James

E M Hughes

G Phillips

G W Davies MBE

P John

H E Morgan

P A Davies

E P Foley

E M Dodd

M W Butcher

M Jones

C Westwood

M Reeves

R Thomas

C Reeves

J C Spanswick

C L Jones

H J Townsend

J H Tildesley MBE

P J White

H J David

M E J Nott OBE

M Gregory

C E Smith

L C Morgan

 

     42

 

 RESOLVED:         That Council approved the MTFS 2015-16 to 2018-19, including the 2015-16 Revenue Budget, the Capital Programme 2015-16 to 2024-25 and the Treasury Management Strategy 2015-16, and in particular, it   approved the following specific elements:

 

•           The MTFS 2015-16 to 2018-19

 

•           The Net Budget Requirement of £252,201,218 in 2015-16.

 

•           A Band D Council Tax for Bridgend County Borough Council of £1249.07 for 2015-16.

 

•           The 2015-16 budgets as allocated in accordance with Table 7 in paragraph 4.25.

 

•           The Capital Programme 2015-16 to 2024-25 (Appendix H).

 

•           The Treasury Management Strategy 2015-16 and Treasury Management and Prudential Indicators 2015-16 to 2018-19 (Appendix K).