Agenda item

The Cabinet considered a report on the Council’s Revenue Budget Outlook subsequent to the Council in March 2022 where its Medium Term Financial Plan had been agreed based on estimates and known commitments at that time and formulated in the context of the Welsh Government financial settlement for 2022/23, including settlements and years 2 and 3 of the plan and estimates for other key inputs.  Whilst at the time of the budget setting, the risk of inflation was noted and the greatest uncertainty at the time was adjudged to be the unknown impact and on-going costs and reduced income due to Covid 19, the Cabinet noted that, subsequently, there had been a number of significant changes to the external environment which would have a significant bearing on the future budget i.e:-

·       Significant higher general inflation, which was expected to last longer leading to sustained cost of living pressures;

·       Acute increases in energy prices impacting both transportation costs as well as heating and electricity bills for households and businesses;

·       A strong response from national unions on pay awards;

·       A full relaxation of the Covid 19 public health restrictions.

The Cabinet Member for Resources informed the Cabinet that having regard to these, and other budgetary pressures, the report detailed a number of key assumptions for its consideration that would frame the Council’s budget development. However, given the scale of uncertainty at the present time on demands on the council’s budget from issues such as increased fuel costs and pay awards, the standard approach to budget development had been expanded to incorporate a best, as well as a base case scenario.

Cabinet noted that even in a best-case scenario, it had been calculated that a minimum of £6.1million of budget reductions would be required for the next financial year, being £2m more than previously envisaged. Under the base case scenario, the shortfall was estimated to rise to an almost nearly £19 million, and assuming the already planned £3.9m savings were delivered. In that context, it was important the Council focussed its efforts on the next financial year given the scale of the challenge. It was noted that although the full picture would not likely to be clear until notification of the draft financial settlement was received from the Welsh Government, which is not expected until December, it was important to recognise that at the current point many of the pressures facing Carmarthenshire were not only outside of its control – such as staff pay agreed nationally and the foundation living wage set externally – but were issues also being faced by all Local Authorities across the country.

The Leader advised that, as outlined above, the severe budget pressures were being faced by all local authorities in Wales and, with that in mind, the issues had been discussed at a recent meeting of the Welsh Local Government Association, attended by the Welsh Government’s Finance Minister. The Association had stressed that without additional funding being forthcoming to address the budgetary pressures the next financial year would be extremely challenging with severe cuts being necessary. It was therefore important that the authority worked with other Welsh Local Authorities to lobby both the Welsh and UK Governments on the matter.

UNANIMOUSLY RESOLVED