Agenda item

To receive the report of the Deputy Chief Executive & Group Director – Finance, Digital & Frontline Services.

The Group Director of Finance, Digital and Frontline Services presented the Cabinet’s proposed Revenue Budget Strategy for the next financial year 2024/25 which is now being recommended to Full Council.

The Group Director explained that the initial draft strategy was agreed by Cabinet on the 24^th January and has been subject to a second phase of consultation which was held between the 24^th January and the 9^th February. All feedback from the second phase of consultation has been considered by Cabinet and is attached to the report. The Group Director added that the feedback included the consultation report, the minutes of the meetings of the Council’s Overview & Scrutiny Committee, the School Budget Forum and the Joint Consultative Committee. The Group Director advised that the strategy, which was subsequently agreed by Cabinet on the 21^st February, is set out in the report.

The Group Director advised that the Council’s initial budget gap, as set out in the last Medium Term Financial Plan, was forecast at £36M for next year. Against this position, a number of early budget reduction measures, which have previously been reported and determined have been offset, leaving a remaining gap of £25.9M and it is this position against which the budget strategy has been formulated. He added that the Council has now received the final local government settlement which is also reflected. He added that the final settlement confirmed an increase in funding at an all Wales level of 3.3% and 3% for this Council. The settlement levels across Wales range from 2.3% to 5% with a funding floor in place at the lower level of settlement. He added that there were three transfers into the revenue support grant at final settlement, however, these do not have a net impact on the budget position.

The Group Director advised of the key components of the budget strategy which are set out from section 7 of the report, which deal with the remaining £25.9M budget gap:

Ø    The proposed council tax increase for next year is 4.99% which will provide an additional income of £1.122M over and above the 3.9% which was originally modelled. This equates to an increase of £1.03p per week for a Band A property or £1.55p for a Band D property. An element of the council tax increase has been set aside to support public transport provision across the county borough;

Ø  The Council’s schools have been protected for many years with their budgets increasing by 34% over the last ten years, during which other council services have seen increases of only half of that level. School reserves amounted to £15M at the end of the last financial year, which is at a historically high level, compared to the 31^st  March 2020 when school reserves amounted to £2.4M. It is proposed that the council fully funds schools for all pay pressures next year plus provide them with a further £1M of recurring funding plus a further £0.5M of one off funding. This will see the Schools budget increase by £12.4M or 6.6% for next year taking the overall schools budget to £198.5M. This level of increase is over twice the uplift as compared to the councils overall funding increase. The Council awaits confirmation from Central Government regarding funding for increased costs associated with teachers’ pension costs from April next year which the Council has been advised is a timing issue.

ØAdditional efficiencies of £5.2M have been identified by the Senior Leadership Team as measures which can be delivered operationally and without a significant detrimental impact on the council’s frontline services. This £5.2M is over and above the £8.2M of early budget reduction measures previously identified and reported in November 2023 and will bring the total of efficiencies measures, which are now built into next year’s budget, to over £13M.

Ø    There are also a series of measures, set out in section 10 of the report which are around energy efficiency and base budget adjustments, the impact of the decision to charge for the childcare element of breakfast clubs, the money from which has been recycled back into the Schools budgets, capitalisation and proposals regarding the level of fees and charges for next year.

Ø    The final settlement also confirmed the early notification the council received from Welsh Government on the level of additional resources which the council will now receive as a consequence of the UK Government’s announcement in January with an additional £600M of funding for local government in England. This resulted in an extra £25M for Wales and an extra £1.951M for Rhondda Cynon Taf. This additional funding is provided through a combination of additional revenue support grant and the reinstatement of the social care workforce grant to £45M at an all Wales level.

Ø    The aggregate value of the strategy components amounts to £16.457M which with the extra resources at the final settlement leaves a remaining budget gap of £7.502M and this is set out at table 2 (paragraph 10.4). It is proposed that the remaining budget gap is balanced with an allocation from the transition funding reserve which have been set up for this purpose and replenished as the year has progressed.

The Group Director advised that the Council’s transition funding and reserves are used sensibly as part of the Council’s annual budget setting processes recognising that the use of reserves alone is not a sustainable strategy and he added that he is satisfied that the council has arrangements in place to continue to deliver savings early which serves to replenish this reserve and deliver the needed base budget recurring savings going forward.

The Group Director concluded that in overall terms, this will result in a council net budget for next year of £631.795M. He commented that this year has been a challenging year and financial environment within which the budget options and now Cabinet’s recommended budget has been constructed. He stressed that there may be a need to be prepared for further and significant financial constraints but he assured Members that senior officers will continue to do all they can to maximise efficiency and protect the Council’s frontline services.

The Leader of the Council thanked the Group Director for his report and acknowledged the diligence of senior officers in managing the budget despite the difficulties faced this year with the high rates of inflation, pay growth and the ever increasing demands on council services. With regards to the proposed level of council tax, the Leader commented on the council tax levels set by other Welsh local authorities, with RCT Council being the second lowest level.

The Leader reminded Members that the Council is doing its utmost to protect and fund schools with this council fully funding the schools teaching and non-teaching pay award with Cabinet recommending an additional one off payment of half a million pounds for schools (as set out in the report). He commented on the importance of producing a balanced budget that is credible and sustainable for the residents of RCT.

Other Group/Deputy Group Leaders took the opportunity to discuss the report in detail whereby the Group Director responded to a number of queries in relation to the Revenue Budget Strategy 2024/25.

In conclusion and following a vote, it was RESOLVED to:

1.     Note the letter from the Minister for Finance and Local Government (Rebecca Evans MS) and the table on the 2024/25 Final local government settlement, reproduced at Appendix 1;

2.     Note the implications for the Council and the remaining budget gap as set out at section 5;

3.     Agree a Council Tax increase for 2024/25 of 4.99%;

4.     Agree the uplift to the aggregate Schools Budget as detailed at section 8;

5.     Agree the budget strategy proposals as set out at paragraphs 10.2 to 10.4;

6.     Agree the use of the ‘Medium Term Financial Planning & Service Transformation Reserve’ as transition funding, totalling £7.502M for 2024/25;

7.     Approve Tables 4 and 5 in Section 13 of the report as the basis of allocating resources to the Individual Schools Budget (ISB), to other Council Services and to meet its corporate financing requirements; and

8.     Agree the Council’s overall budget for 2024/25 at £631.795M, in order to pass the necessary statutory resolutions to set the Council Tax for the forthcoming financial year by the statutory deadline of the 11^th March 2024.

(Note: Councillor R Lewis declared a personal interest-““I am Vice Chair of the Central South Consortium Joint Education Service Joint Committee”).