Agenda item

The Director of Finance and Digital Services presented the report to Cabinet.  He advised that the revenue budget for the financial year ending the 31st March 2023, must be constructed in accordance with the “Budget and Policy Framework” (contained in the Council’s Constitution.   Under these arrangements, it is for the Council’s “respective Chief Officers” to report to Cabinet, and for the Cabinet to then recommend a budget to Council. 

He continued that given the continuing financial pressures the Council is working under, it remained his view, that the Council should hold a minimum of £10M as General Fund Balances.   As part of the Councils ongoing strategy, he advised that we have continued to identify and deliver savings in year which means we have been able to increase the level of transitional funding available and the latest position is that this reserve has now increased to £4.607M

The Director advised that Audit Wales continue to emphasise that we must remain disciplined, if we are to maintain our long-term goal of driving forward continuous improvement of key services, though this becomes increasingly harder to achieve following a period of such severe financial pressures.

Members were informed that the overall increase in Revenue Support Grant (RSG) and Non-Domestic Rates (NDR) funding for 2022/23 at an all Wales level, after adjusting for transfers is 9.4% (+£437M). The settlement for Rhondda Cynon Taf, amounts to an increase of 8.4%. 

The Director stated, notwithstanding the positive settlement from WG for 2022/23, it does follow a sustained period of real term reductions to our funding levels and more recently significant storm damage and the pandemic, and it is against this context that we need to develop a balanced budget for next year

The Director continued that Welsh Government support to fund costs arising as a direct consequence of the pandemic has continued through the 2021/22 financial year via the Hardship Fund. WG have stated that they do not intend to continue to provide such additional support going forward and that councils will have to manage these implications through the additional resources provided in the settlement. The Council will monitor the financial implications closely moving forward, using any flexibility afforded within its available reserves to transition any permanent additional costs into the base budget over the medium term.

Members were reminded that the costs of the Council Tax Reduction Scheme (CTRS) impacts on the net income generated through any increase in Council Tax.  He added that A 1% increase in Council Tax will generate an additional income for the Council of £1.195M (at the 2022/23 tax base level) but will also cost £0.253M in additional CTRS requirements. It therefore follows that a 1% increase generates a net additional income of £0.942M, or stated another way, 21% of any Council Tax increase is lost to support the increased costs associated with the Welsh Government’s CTRS. He advised therefore that it is proposed that the level of Council Tax for next year now be remodelled and set at an increase of 1.00%. This would align with the expectations of the Cabinet in terms of Council Tax levels and in light of the more favourable settlement, balanced against the reported ongoing pressures across our services.

In respect of the Schools Budget (ISB) he advised it is proposed to be increased to cover, in full, all pay and non-pay inflationary costs, including increased NI costs associated with the Health and Social Care Levy.  In overall terms, the proposal sees the Schools Budget increase by £11.2M from £163.8M to £175.0M. This represents an increase of 6.8%. Schools are therefore fully funded for 2022/23.

As part of the current year’s budget strategy, efficiencies of £4.6M were identified and delivered albeit it was noted that the ongoing sustainability of delivering efficiencies at this level would need to be considered.

Whilst identification and delivery of efficiencies continues to be more difficult year on year without impacting on front line services and delivery, we have identified £4.9M which can be removed from our base budget requirement for next year.

The Director continued that the Cabinet have always been focussed on protecting our front line services and have taken any opportunities to prioritise or reallocate resources to areas of priority. For 2022/23, the proposals are set out in 9.3 of the report for Cabinet’s consideration.

The Leader was pleased of the positive settlement from Welsh Government but stated he was concerned that there would be no hardship fund.  He continued that this was a big risk to the Authority as costs were still being incurred due to the pandemic as staff were still having to take time off work to isolate due to COVID. 

He spoke positively of the £11.2m uplift for education and stated this was the largest uplift since his time being Leader of the Authority and this was a recognition of the pressures our schools face.

He was also pleased that the Business Support Grants, Climate Change and Public Health areas had been given an uplift as over recent years these are the areas that the Authority have had to cut back on so was pleased to be in a position to reinvest in these areas.  

He continued that the Council Tax rate of a 1% uplift will be used to offset pressures such as the £2m reduction in Capital Funding, he added that they have tried to keep this as low as possible to support residents through the pandemic but recognise that there are other pressures. 

The Leader then referenced a £75k uplift in Detached Youth which will contribute to a third hub vehicle meaning there would be one in each area of RCT, he continued that this will contribute to expanding the YEPS programme to continue to work with youngsters which had so far been very positive. 

Acknowledging the proposed increase of 2.5% in fees and charges the Leader stated that whilst inflation was currently over 5% and continuing to rise, he thought it was only fair on residents and families in the Borough that the Authority absorb some of the costs and not pass on to families who were still struggling with rising costs of living. 

In concluding his comments he was pleased to be in a positive position following the settlement, but he advised that we should not underestimate that there is still huge pressure on services and whilst Social Services will receive an uplift, they still face pressures on a huge scale and is why he proposes to go further than the real living wage for Social Care Workers to ensure their positions are more sustainable.

The Cabinet Member Corporate Services echoed the Leaders comments in relation to the positive settlement and is pleased to be in a position to continue investing in services.  He was also concerned that the removal of the hardship grant is going to hit the Councils finances in addition to the rising cost of living.  He reassured members that they will freeze as many Fees and Charges as possible recognising the difficult time ahead for many.  

The Deputy Leader stated it was reassuring to see the positive level of engagement with residents having been restricted due to COVID and there was strong support for our priorities.  She continued that no one is under the illusion that we do not have strong challenges facing us and was very concerned at the rising cost of living with no direction from UK Government on how we can address this. 

Following consideration of the report it was RESOLVED to

1. To note that the procedures relating to revenue budget construction, the

budget consultation process, and reporting to Council, are set out in the

“Budget and Policy Framework” within the Council’s Constitution.

2. To note and consider the outcomes of the budget consultation phase 1

process.

3. To review and consider the draft 2022/23 Revenue Budget Strategy, detailed in the attached Discussion Paper ‘Appendix A’.

4. The level of Council Tax increase at 1% for 2022/23 which it would wish to build into the strategy to form the basis upon which a second phase of

consultation will take place.

5. To the draft timetable for setting the 2022/23 revenue budget as set out at

Appendix A2.

6. To receive feedback from the second phase of budget consultation in order to consider and determine the final budget strategy for submission to Council.

7. That the Council continues to support the medium-term financial strategy

aimed at maximising ongoing efficiency in service delivery, targeted service

transformation and other changes that maintain the financial integrity of the

Council whilst still aiming as much as possible to protect jobs and key

Services.