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RESOLVED to exclude the public for the following item of business on the grounds that there would be disclosure to them of exempt information under category 3 of The Local Authorities (Access to Information) (Variation) (Wales) Order 2007). The Monitoring Officer had determined that category 3 of the Access to Information Procedure Rules applied to the following item. His view on the public interest test (having taken account of the provisions of Rule 14.8 of the Council's Access to Information Rules) was that to make this information public would disclose information relating to the financial or business affairs of any particular person (including the authority holding that information). These factors in his view outweighed the public interest in disclosing this information. Members were asked to consider these factors when determining the public interest test, which they must decide when considering excluding the public from this part of the meeting. Proposed by Cllr. Gareth Ratcliffe and Seconded by Cllr Chris Walsh.
Apologies for absence were received from County Councillors A Jones, J Pugh. Officer Anne Phillips (Interim Head of Finance)
There were no Declarations of Interest from Members relating to items to be considered on the agenda.
Background: The Portfolio Holder gave a brief overview of the report. · An overall overspend position of £55,000 is currently forecast which includes a £199,000 overspend on the schools delegated budget and a £51,000 overspend on the HRA. · The forecast for non-ringfenced budgets is an underspend of £195,000. This is as would be expected at this relatively early stage in the financial year. · The forecast position is a combination of forecast overspends on Children’s Services (£2.0 million), School Improvement and Learning (£0.8 million) and Highways, Transport and Recycling (£0.5 million) counter-balanced currently by the forecast underspend of £3.0 million on the risk budget, none of which has been allocated as yet. · Proposed use of the risk budget through virement requests to be approved by Cabinet are set out in section 5.2. o £375k from the risk budget to education, to fund a 52-week residential placement for a learner with complex additional learning needs directed by an educational Tribunal. o £200k from risk to the school's delegated budget as a result of a significant increase in the number of learners funded within the Special School sector. o £120k from the ALN Transformation Budget originally allocated for nurture provision to the Pupil Refer referral unit budgets o £151k from third party budgets for direct payment information and advice service to staffing budgets as this service is now provided in house following the TUPE of employees to adult services in Powys County Council. o £365k from the risk budget to Highways operations as recognised as a risk in the budget process for 2024/25. o £389k transfer from the Flood Risk Reserve to highways operations for flooding related expenses costs. o £384,810 from the school's Transport Equalisation Reserve due to the number of school days to be met in this financial year. o £200k from transport services to the school's transport budget following the receipt of grant income. o £328,620 from the specific reserve for backlog remedial repairs to fund the cost of ongoing remedial repair work in this financial year. · 2 virements were noted as to be approved by Cabinet and then Full Council: o £721,282 in adult social care as a result of the award of Housing Support Grants for 24/25 to provide support to prevent homelessness. o £587,083 in adult social care to increase the Section 33 pool budget with Powys Teaching Health Board in relation to funded nursing care. · The forecast overspend on Children’s Services was a result of the increase in the number of children looked after coming into care or required placements and also the increased cost of those placements, partly as a result of increasing complexity but also in the context of a national shortage of placements. · Appendix A of the report provided more detail at the service level with Heads of Service providing detailed commentary and Appendix B looked at cost reductions. · Section 6 would be discussed in greater detail in regard to the Financial Planning Update Report. The Director of Corporate Services and S151 Officer noted that the outturn position from the last financial year was deemed favourable, with the opportunity taken to bolster the Council financial resilience in the current financial year, the draw on reserves built into the budget plan, formed some of that work. Highlighted was the significant financial challenge faced by the Council over the next 5 years. Chair commented it was pleasing to see the Q1 forecast projected to be on budget. Points raised by the Panel: Responses received from Officers or Cabinet Members. Clarity requested on the PRU virement to mitigate the saving. Concern raised as to why when the ALN service was under pressure, this budget was being utilised. The recent Estyn inspection report for the Powys PRU identified several critical areas for improvement with an action plan to be drawn up to review recommendations. Has the situation changed, with Powys not now pursuing closing one of the PRU’s and what was the impact of not realising potential savings budgeted for. Chair commented that it was difficult for Councillors to understand the abrupt re-aligning of a budget in Q1, was this purely due to the change in Leadership or were the proposals simply unsustainable at budget setting in March. Also noted if the savings were unachievable, important that this was assessed at an early stage. A detailed response would be needed from the new Head of Service and Senior Leadership Team (SLT) in Education. Concern was raised around the impact that cost reductions would have on Corporate Services and the ability to support the whole Council and transformational change. Long-term plans are needed not just the next 2 financial years. Corporate Services have an important role in supporting the organisation and the transformation. Assurance was given that the savings and efficiencies put forward were in relation to process redesign. These teams need to have sufficient resources to support the Council. Efficiencies made in the release of staff would be through general turnover. Other savings delivered through the effective management of contracts and driving down costs, ensuring value for money was demonstrated. We are in a relatively sound position currently, and this would be kept under constant review. Was the Council’s current savings position where hoped, or should it be higher so as not to leave the Council exposed. Also, were the resources sufficient within the Digital Support Services to deal with outages such as the recent Microsoft issue. At this point in the year the savings position was reasonable. The Risk Budget was set aside to cover off the identified risks and those pressures that were not fully funded at the start of the financial year. The S151 Officer was pleased to see the delivery of costs reductions to date and the assurance of further delivery. Risk, however, remained, with a key factor that the Local Government pay awards have not yet been approved for this current financial year, provision has been built in, but the level discussed could possibly exceed this. In addition demand can have a significant impact on budget plans. Cyber security and cyber threats are constantly monitored. The Transformation budget significantly supported the digital team recognising the need for resource as key to the Council’s journey over the next few years. The Portfolio Holder commented that they were comfortable with position at Q1. There were certain areas that required closer attention. Invest to save projects could be accommodated. Risk was earlier described as a Budget rather than a Reserve, which table would this appear in Appendix A. How much of the £3.3m had been allocated. A third of the risk budget had been earmarked by the end of Q1 was this unusual Chair noted that pay awards of a single percent could cost the Council between £1.8 - £2m. What was the percentage of pay reserves held. It sits within the Revenue Budget, as an annual allocation included in the Corporate activities line, currently showing an underspend of £3.3m, proposed virements if approved, would reduce the figure as funds transferred into Service Areas. Current virements total of £940k. It should be noted that the allocations made now would be for the full year. The pay reserve gave sufficient coverage to manage a 1-year pressure of 1% or 2% increase. The discussions currently were around 5%. There was substantial use of reserves, with £13.5m of other specific reserves. The Schools Delegated Reserves showed a usage of just under £3m after the submission of draft budgets by Schools in May. However, that reserve did not form part of the 4% reserves policy, has that always been the case. Should consideration be given, as schools move from a surplus to a deficit position, to change the policy to include the delegated reserves, and review the 4% policy, due to the impact on general reserves. The schools delegated budget was not ringfenced like the HRA (Housing Revenue Account) which could place the Council at risk. Members across the Council should understand the potential impact of Schools moving toward a deficit position within the delegated budget. Clarity sought on para. 5.2.7 School transport and the calculation of days. The calculation took into consideration the Easter break and allowed for the difference between academic and financial years. The base budget was held at an average of 190 days, with an equalisation reserve to manage any fluctuation. Question raised on how long had the remedial repair reserve been held, could further explanation be given, if a new reserve in March, and the funds had already been used. It was a relatively new specific reserve with significant funds transferred in at the end of the last financial year. The further information as requested would be forwarded to Finance Panel. Further information requested in relation to the additional significant grants into Q1, especially the £1.5m to Adult Social Care, when did the Council receive confirmation of the grants, when were they received and what was the criteria. Information would be checked, and Finance Panel notified. Actions · Change of PRU budget position and the use of ALN funding through virement to be explained by the Education Service SLT. · Remedial Repair Reserve usage to be checked and Finance Panel updated. · Additional Grants received – information on dates and criteria to be reviewed and Finance Panel notified.
Background The Portfolio Holder gave a brief synopsis of the report. · The programme has been updated following the reprofiling of projects and additional grants received from Welsh Government and was now budgeted at £124.73m. · Actual spend at end of Q1 amounted to £10.45m, representing 8% of the total budget. 47% of £58.93m of the capital expenditure is budgeted to be financed by borrowing, with interest costs charged to the revenue account. · Details of grants received have been incorporated into the Capital Programme. · Services would be requested to review budgets during Q2 to ensure allocations accurately reflect plans for 24/25. · Virements were as follows: o £0.10m has been included in the education revenue budget as a contribution towards ICT equipment in schools. o £0.15m capital funding for works in County Hall, Radnorshire Museum and Arosfa Day Centre to allow for the providing of front-line services after the closure of the Gwalia and Neuadd Brycheiniog. · Capital Receipts received to date stood at £0.03m with a further £0.28m received for the Housing Revenue Account (HRA). · There are currently sales agreed to the value of £5.46m, these are at the legal stage of the process and will generate future capital receipts. · At this stage it is expected that sales totalling £9.89m could be achieved this financial year. · There remains a significant risk to achieve annual target of £10 million Capital Receipts. Points raised by the Panel: Responses received from Officers or Cabinet Members. How were the Active Travel Grants allocated. How work was planned would have to be followed up with the individual service area, the Council submits bids to access the funding. Were the funds in terms of the 20mph speed limits to be used to support reverting the various areas back to 30mph. The funds provided related to the implementation. There was discussion about whether that was retained, there were some elements not covered in the general roll-out and therefore a modicum of flexibility for further 20mph restriction if requested rather than revisions. The grants received to fund staff posts do they include the on-costs or are these separate. Staff pay costs did include pay on-costs, but Grants do not generally cover the administrative costs of administering grants. Were there ever occurrences that monies have had to be repaid if not fulfilled the scope of a project. There was always a risk if projects funded by grants were not completed, but very seldom. The Council would claim as much as it was entitled to and had not been known to have repaid capital grant monies. For assurance grants were subject to audit. It was commented that funds received by the Council should be via the RSG not dependent on grants and allow the Council to decide how to allocate the funding. Services were operating on a hand to mouth existence, meaning any deficit could cause significant issues. This was a point pushed heavily with WG around the use of grants and getting a much through the RSG as possible. There has been transfer of some grants into the RSG but not of a significant degree and there was a commitment from WG to reduce further the number of specific grants. The capital receipt following sale of land in the North of the County last year of approximately £5.5m was still not received. That was correct it had not yet been received and still formed part of that £5m figure in the report. Action: Active Travel grants allocation information to be requested from Service Area and forwarded to Finance Panel.
Background: The Portfolio Holder outlined the purpose of the report. · Which was to provide an update on the latest economic projections and how these influenced and impacted on the development of the Councils’ budget for 2025/26 and the Medium-Term Financial Strategy (MTFS). The Director of Corporate Services highlighted the main factors in the report. · Section 3 noted the economic and fiscal outlook across the country. · The Ministers letter was clear that WG were facing significant challenge in and had to deploy resources in the most effective way to meet priorities. · The Wales Fiscal Analysis report which looked at the potential consequences of the manifestos for the incoming UK Government assisted the focus. · Settlements for Local Government were under significant pressure and challenges (fig2) and showed as cash flat or negative in terms of forward projection. · Whilst interest rates remained unchanged, forward projections would be considered as part of the Council’s plans. · Section 4 reviewed the potential impact of specific factors and created a detailed picture of the assumptions built into the plans. These assumptions could alter as more information becomes available and a spending review would take place in the Autumn. · General inflation has reduced, and for the last 2 months consistent at 2%, the cost increases seen over the last few years were still present, however the increase had slowed. · Energy costs have reduced over the medium term. · Pay awards were a significant proportion of the overall budget and a 1% increase was equivalent to £1.8m. · Pension costs in terms of the Local Government Pension Scheme were known, with a reduction over a 3-year period built into the plan. Teacher’s Pension Scheme - following the actuary review, a change was implemented from April 2024 that saw the contribution rate increased by 5%. This creates a pressure of around £3m for Powys Schools which it is assumed will be funded from central Government, however, until certainty received, this has been flagged as a potential risk in the plan. · Inflation had impacted on commissioned services, and some contracts would not be aligned to general inflation, those potential impacts were reviewed. · The increased construction and material costs were monitored and incorporated into plans. · Schools submitted budget plans for the current financial year, with acknowledgement that schools had drawn significantly on reserves in the financial year, and the expectation was similar for the current financial year. · The potential overall funding gap for 2025/26 at budget setting time in March, was noted at £18m, with work undertaken that gap has reduced (see table in 4.16) to £9.6m for 2026/27. The pay inflation and non-pay inflation reductions have impacted the plan. · Approximately an additional £4.5m of proposals are put forward which would form part of the debate during the next budget setting period. · Section 5 notes the capital strategy with estimates of the ongoing liabilities of the assets currently held. · There are approximately 650 individual assets, varied from monuments to schools and farms with the total value reflected in the balance sheet at £492m. · The Council would continue to review what was an appropriate level of assets to hold for the provision of services, throughout the next few years. · The asset review would also consider the requirements for buildings to achieve net zero, and costs, though estimates at this stage, would be factored into plans. · Cabinet have agreed the principles of the Sustainable Powys framework, with Services reviewing delivery models and changes in terms of transformation that could be implemented to reduce costs and liabilities. · Future Funding · Funding levels have a key impact, and modelling continues to be based on 3 scenarios. o Cash flat – the current optimum option. o 1% - /+ sensitivity model o 2% - /+ sensitivity model · The MTFS approved by Council in March 2024 modelled an annual increase of 5% in Council Tax, modelling continues on that basis, subject to decisions by Cabinet and the wider Council. · A 1% change in Council tax equated to £1m, net of the Council Tax Reduction Scheme implications. · Section 8 gave further information on the overall funding gap, with changes noted already, the cumulative gap over 5 years based on a flat cash scenario was £50.9m, with the worst-case scenario over the 5 years being £73.6m. · Section 10.9 focussed on good governance and robust financial management, planning to make informed decisions, understanding risk and the need for the Council to act promptly and decisively to balance the budget over the longer term. Points raised by the Panel: Responses received from Officers or Cabinet Members. Chair commented that the report felt dated, especially around the manifesto commitments. With a new statement expected next week from UK Government the report required updating. The Portfolio Holder agreed that some of the economic data and UK data was dated. The assumptions used were based on a level of accurate evidence. The economic situation remained fragile with the possibility of a 0.25% interest rate cut when the NPC meets next week, with CPI inflation at 2%, service inflation was still high at over 5% and pay inflation higher at 5.7%, all of which could be impacted by the current geopolitical situation. There was a potential capital expenditure of £447m to achieve net zero, with 2030 fast approaching, and a potential £30m cost of borrowing affecting the budget, an honest conversation was required not just in Powys but across Wales of how achievable some of those targets were. The UN Convention on Climate Change set a 2050 net zero target with an interim target of 63% by 2030, which if adopted here would equate to £10m less cost per annum which could reduce pressures significantly. These were the target dates LA’s had been asked to consider and would require a national change. The Council can only invest when it could afford to do so. It was important to understand the cost of getting to that point, clearly there was the need to reduce liabilities There was constant discussion with both the WLGA & WG, and to note that no LA was in a position to achieve net zero by 2030 without significant financial support from WG. The Portfolio Holder shared the concerns expressed by the committee. Clarification requested on the cost of borrowings at £30m and where did the cost of repaying the loan end up. Within the revenue budget a level of funding was set aside to repay that debt in the future, which was the Minimum Revenue Provision (MRP) The £30m interest annual cost of borrowing was a mixture of interest and principle payment, similar to a mortgage payment, by the end of the term, all of the debt would have been repaid and the length of that borrowing reflected the life of the asset. The Annuity method calculation of the life of assets was currently 35 years. For schools there were maintenance costs of £91m in one column with improvements noted in the next, could these to some degree cancel out, or had allowances been made for this in the second column. There were distinct figures to achieve the full maintenance backlog and net zero. The £91m was last year’s figure and there would be £273m more required get to operational net zero. The information on schools posed further questions, as well as the £90m delegated budget, schools had drawn £6m from reserves, actual figure revised to £5.8m, which reads as a positive. Despite this schools were moving into a negative position with the Council knowingly underfunding the delegated budget in order to save on an increase Council Tax, unsure this was the correct way to portray the challenges as some schools were already in deficit and there were no reserves available. High schools were reporting a £4.5m deficit this financial year, would this qualify as a risk to Council. When the budget was approved in March, consideration was given to the available funding for schools as part of the overall budget, alongside the reserves that schools held, recognising that some were in a deficit positions. The service continues to work with schools to help manage the forward projections. Modelling was completed on a flat cash basis, as was the indication of what the Council was likely to receive. The debate on the level of funding for schools in subsequent financial years was still to be worked through, the S151 Officer advised that the Council cannot allow schools to reach the projected deficit position over the longer term. The Portfolio Holder responded to the comment made of underfunding schools, as simply not the case, as every additional penny received in the RSG was passported over to schools. The Team around the school have undertaken deep dives and found significant savings. The intention has been to attempt to stabilise the in-year budgets and once achieved to tackle the overall deficit. Where the funding formula was not addressing the structural concerns within a school, this may require further intervention. The new Director of Education has 3 experts working in all sectors to assist schools to manage their budgets. The funding passported only accounted for 70%, the remaining 30% comes from Council tax, which was not passported on at the same level as the council tax was increased. The Learning and Schools Scrutiny Committee have raised concerns that deep dives were focussed on schools already in and moving further into deficit, but not with the significant number of schools heading toward a deficit position. The deep dives have not yielded savings in a number of schools, which was important to understand. The Director was clear on seeking external advice on the challenges faced. Equal focus needs to be on Adult Social Care, Children’s Services and Schools as these services were in receipt of the highest proportions of the Councils budget. The Portfolio Holder advised that any school could request support through a deep dive. Additional funding cannot be given prior to the Council being satisfied that budgets are being managed properly, especially given the current financial situation, as would be irresponsible and other services would suffer as a result. The financial planning update has been undertaken as early as possible since the MTFS was set, and the Council was still severely impacted by the economic situation. The update will be reviewed again in September and refreshed ongoing prior to it coming as part of the formal budget setting process later in the year. The table at 4.16 where assumption figures were in red was a positive. Yes, in this instance red figures reflected an improvement. Where were the disposal receipts shown on the table in 8.1. Capital receipts would not be shown there as this was the revenue budget and capital receipts fall into reserves. The revenue budget would include any change in the cost of financing borrowing.
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RESOLVED to exclude the public for the following item of business on the grounds that there would be disclosure to them of exempt information under category 3 of The Local Authorities (Access to Information) (Variation) (Wales) Order 2007). The Monitoring Officer had determined that category 3 of the Access to Information Procedure Rules applied to the following item. His view on the public interest test (having taken account of the provisions of Rule 14.8 of the Council's Access to Information Rules) was that to make this information public would disclose information relating to the financial or business affairs of any particular person (including the authority holding that information). These factors in his view outweighed the public interest in disclosing this information. Members were asked to consider these factors when determining the public interest test, which they must decide when considering excluding the public from this part of the meeting. Proposed by Cllr. Gareth Ratcliffe and Seconded by Cllr Chris Walsh.
RESOLVED to exclude the public for the following item of business on the grounds that there would be disclosure to them of exempt information under category 3 of The Local Authorities (Access to Information) (Variation) (Wales) Order 2007). The Monitoring Officer had determined that category 3 of the Access to Information Procedure Rules applied to the following item. His view on the public interest test (having taken account of the provisions of Rule 14.8 of the Council's Access to Information Rules) was that to make this information public would disclose information relating to the financial or business affairs of any particular person (including the authority holding that information). These factors in his view outweighed the public interest in disclosing this information. Members were asked to consider these factors when determining the public interest test, which they must decide when considering excluding the public from this part of the meeting. Proposed by Cllr. Gareth Ratcliffe and Seconded by Cllr Chris Walsh.
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