Agenda item

(Members are requested to note that due to the size of the appendix 1 A (ii) hard copies will not be provided and can be viewed on the Council’s website for the Executive Board Meeting of the 1^st February 2016 via the following link:

http://democracy.carmarthenshire.gov.wales/documents/g299/Public%20reports%20pack%2001st-Feb-2016%2010.00%20Executive%20Board.pdf?T=10

(NOTE: Councillors C.P. Higgins, S.L. Davies, A.W. Jones, J.D. James, T. Devichand, A. Lenny and K. Madge had earlier declared interests in this item and remained in the meeting during its consideration)

The Council was informed that the Executive Board, at its meeting held on the 1^st February, 2016, (Minute 14 refers) had considered the Revenue Budget Strategy 2016/17 to 2018/19 and had made a number of recommendations with regard thereto, as detailed within the Report of the Director of Corporate Services, for consideration by the Council.

The Council received a presentation from the Executive Board Member for Resources, on behalf of the Executive Board, in which he set out the background to the budget proposals being presented for Council’s consideration, incorporating the latest position on the Welsh Government Settlement, feedback on the budget consultation together with updates on growth and validation data. He commented on the fact that, for a number of years, the Authority had acknowledged the difficult funding scenario it had faced and recognised the need to do things differently, to prioritise how it spent its increasingly scarce resources and had always set a balanced budget whilst, at the same time maintaining service standards, to a large degree. For 2016/17, the Authority had once again only received a settlement for one year and it was fair to assume that the theme of unprecedented cash reductions in Local Government and Welsh Government settlements would continue. Accordingly, the Authority would need to continue to maintain its focus on efficiency or cost reductions to ensure its financial sustainability could be achieved and a balanced budget set into the future.

He advised that whilst the Council had received an indicative funding settlement for 2016/17 representing a 1% reduction, notification of the final settlement would not be received until the 2^nd March, which would be subject to Welsh Government approval on the 9^th March. Therefore, as per recommendation 1.3 within the report, the Director of Corporate Services would need to advise Council at its meeting on the 10^th March of any changes in the settlement. Whilst the final settlement had yet to be announced, it was pleasing to note that the provisional settlement indicating a 1% reduction was more favourable than had been anticipated, which had allowed the Authority to reconsider some of its original budget proposals enabling adjustments to be made to some of the figures therein including adjusting for validation, efficiencies not identified, potential pay award and the level of protection offered to schools.

The Executive Board Member reported that whilst Carmarthenshire’s indicative settlement had reduced by 1%, the reduction, in real terms, would be significantly greater when the effects of inflation and new burdens were taken into account. Bearing in mind the fact Welsh Government funding accounted for approximately 76% of the Authority’s net spend, with each 1% equating to approximately £2.5m the impact of the reduction on spending plans was clear for all to see. However, whilst the authority would see a reduction in its settlement, the Welsh Government in announcing the Welsh settlement had allocated £35m for the protection of school budgets and £21m for social care support. The Council’s share thereof had been pass ported down to the respective service areas with schools receiving £2.1m and social care £1.3m.

The Executive Board Member advised that other significant changes within the settlement included the transfer of the Outcome Agreement Grant to the Revenue Support Grant and also lower than anticipated reductions in other specific grants, for example, the Environment Grant had only reduced by 6% compared to the original proposed 25% reduction. However, the details of some grants had yet to be announced which placed an element of risk into the budget strategy.

The Executive Board Member referred to his earlier statement that the settlement announcement only applied for one year, with no forward indicators having been provided in respect of the settlements for future years and advised that the situation made it difficult for the Authority to develop the medium term financial plan and introduced more financial risk into the plan. In addressing the continued funding reduction, and at the same time ensuring council tax increases were, as far as possible, minimised, the Authority had to continue to seek efficiencies in the way it delivered services and, in some instances, the level of service provision itself. That was against the backdrop of the last five years where approximately £51m of recurring expenditure had been stripped away from its annual spend with the trend to continue over next three years with a further funding reduction of £34m, assuming the reduction in local government funding continued in years 2 and 3.

The Executive Board Member also referred to the widespread consultation undertaken on the budget and as a result thereof, together with the Authority having benefited from a better than anticipated settlement, the Executive Board had made a number of recommended changes to the initial budget, as detailed within the report, in respect of the Environment, Communities and Education Departments. In addition, following recent concerns raised regarding the proposed £100k reduction in funding to voluntary organisations, particularly the Citizens Advice Bureau, it was being recommended that the proposed reduction be withdrawn for the current time pending completion of the third sector review. If that proposal was acceptable to the Council, the resultant £100k shortfall would be funded partly via an adjustment in the required ERW funding, as a consequence of grant movement and partly through the use of general balances.

The Executive Board Member advised that the Executive Board had also recommended that the 1% pay award included within the original budget be actioned in April in advance of the nationally agreed settlement for the non-teaching staff pay grades.

The Executive Board Member stated that throughout the budgetary process the Executive Board had three clear objectives in mind:-

1.     Preparing the authority for any reductions in funding that may lie ahead,

2.     Ensuring as far as possible that service levels and standards were maintained and

3.     Recognising that its citizens were also finding it hard in the current economic climate and minimising as far as possible any increase in the council tax.

The Executive Board Member reported that having regard to achieving a fair balance between the above objectives the Executive Board was recommending a Council Tax increase of 3.85%. However, in achieving the above budget, Council should be mindful that balances had, again, been left at the lowest prudent level the Director could support, and it had been assumed that substantial cost reductions would be delivered.

In concluding, the Executive Board Member, commended the hard work of the Chief Executive, Director of Corporate Services and all officers involved in the budget process for their efforts in helping to sustain the Council’s performance and service delivery at reasonable cost to the taxpayer.

He thereupon moved the recommendations of the Executive Board in respect of the Budget Strategy 2016/17, the Council Tax increase of 3.85% and approval of the medium term financial plan as a basis for the future years financial planning. The proposal was duly seconded.

The following amendments were duly proposed and seconded:-

·        Delegated School Budget – Defer the proposed savings of £3.4m for one year to provide school teachers and governors the support in identifying and exploring efficiency savings without adversely affecting children’s education,

·        Inclusion Services – Special Education Needs (2014) (Page 76 refers) – that the proposed £200k cut in the service be removed on the basis the proposal would impact on vulnerable young people who needed that support and will undoubtedly affect outcomes and prospects for these youngsters,

·        To reduce the reliance on external contractors when the service can be more efficiently and effectively managed in-house,

·        That £10m be taken from reserves to build 130 new council houses (HRA) over two years commencing 2017/18.

The Chief Executive in response to the amendment advised the Council that with regard to the issue of the schools delegated budget, (page 62 of the report refers) whilst the Executive’s Board initial proposal involved reducing the existing £109.708m budget by £5.5m for 2016/17, that proposal had now been amended to a near cash neutral, stand-still budget to be funded via the £2.1m received from the Welsh Government together with additional validation of £3.4m. He advised that Council, in considering the amendment would need to be clear as to whether it entailed an additional £3.4m of funding for education on top of what was being proposed and, if so, whether the additional funding would come from increasing council tax or via reductions elsewhere within the budget in order to achieve a balanced budget.

The Director of Corporate Services advised the Council that if the proposals for both the delegated school budget and the SEN provision were to be funded by increasing the Council Tax, it would require the proposed council tax levy to increase by between 4-5%.

The proposer outlined to the Council the rationale for the amendments and provided funding details in support of the proposal to offset the £3.4m cut, in real terms, to the schools budget. Those included utilising a proportion of the Early Voluntary Redundancy additional cost that he anticipated would be incurred (£1.5 m), utilising £500k of the £7.5m funding received in the revenue settlement over and above that anticipated, increase council tax by 10p per week on a band D Property realising an additional £800k, savings in grounds maintenance (600k) and, if required, use of general reserves as a one off contribution. The Council was also advised that following consideration of the amendments, a recorded vote would be requested.

The Chief Executive reminded the Council of his earlier advice that in considering the amendments, it must set a balanced budget and in voting thereon it would need to be precise on what the budget contained. At the present time, if the amendment were to be adopted, it would result in the Council setting an unbalanced budget.

The Director of Corporate Services in response to the funding proposals advised that with regard to utilising a portion of the EVR Fund, that was currently overspent and any additional burden thereon would be met from the Corporate Retirement Fund. The proposal to increase council tax by 10p would only raise an additional £400k and then there was the potential of the grounds maintenance proposal. Accordingly, the proposals would fall short of the funding required. To use reserves to fund that shortfall was not sustainable as they currently stood at the lowest prudent level and would only delay the eventual £3.4m reduction. He accordingly advised that he considered the current amendments would result in the Council setting an unbalanced budget, contrary to law.

The Chief Executive confirmed that should the Council endorse the amendments, then, as outlined by the Director of Corporate Services, it would be setting an unbalanced budget and the Director, as the Council’s S151 Officer, would have to consider invoking his statutory powers to prevent that occurrence.

Following a requisition by more than 10 members and, in accordance with Council Procedure Rule 16.4 a recorded vote was taken on the amendments with the votes cast being as follows:-

For the Amendment (17)

Councillors D.J.R. Bartlett, S.M. Caiach, A.P. Cooper, S.L. Davies, T. Davies, T. Devichand, J.S. Edmunds, D.C. Evans, C.P. Higgins, J.D. James, A.W. Jones, K. Madge, S. Matthews, E. Morgan, B.A.L. Roberts, R. Thomas and J. Williams.

Against the Amendment (44)

Councillors S.M. Allen, C.A. Campbell, J.M. Charles, A. Davies, G. Davies, I.W. Davies, J.A. Davies, W.R.A. Davies, T.T. Defis, E. Dole, H.A.L. Evans, L.D. Evans, W.J.W. Evans, W.T. Evans, A.D. Harries, W.G. Hopkins, J.K. Howell, P.Hughes-Griffiths, I.J. Jackson, A. James, D.M. Jenkins, G.O. Jones, H.I. Jones, T.J. Jones, W.J. Lemon, A. Lenny, M.J.A. Lewis, D.J.R. Llewellyn, A.G. Morgan, J. Owen, P.A. Palmer, D. Price, D.W.H. Richards, A.D.T. Speake, L.M. Stephens, T. Theophilus, E.G. Thomas, G.B. Thomas, G. Thomas, S.E. Thomas, J. Tremlett, D.E. Williams, J.E. Williams and J.S. Williams.

Abstentions (0)

RESOLVED that the Amendment to the Motion be not supported.

Council thereupon proceeded to vote on the Motion

RESOLVED that the Motion be adopted and that