Issue - meetings

Cabinet received and considered a comprehensive report prepared by the Head of Finance, dealing with the revenue budget, capital budget and Treasury Management.

The Leader thanked the Cabinet and officers for their hard work on the budget. Cabinet had been working on the proposals since last autumn.

The Leader also thanked the public for their responses on the consultation.  Over the last few years, the Council had gathered some 5,000 responses to engagement activities. This consultation itself produced a good response rate with 2,680 individual proposal responses, 47 people attended the market event and 75 people attended specific sessions on individual proposals. Responses also came from the Scrutiny Committees, School’s Forum and the Fairness Commission.  All were included and summarised in the Appendices to this report.

Cabinet had to make difficult decisions within the context of austerity, however the budget was built on recent successes, such as -

Capital Investment in:

§  Friar’s Walk

§  Investment in key buildings in the city centre through the VVP scheme - £13m

§  Significant investment in existing and new schools, including a new Welsh Medium School - £52m

Revenue investment in:

§  services which look after the most vulnerable in our society -  nearly £9m in our social care budgets over the last 5 years

§  our school budgets – increase of around £7m

There was continued improvement in the Council’s day to day services and the indicators, audited independently, which measured these.  This was whilst still spending some £8m under our Standard Spending Assessment and having the second lowest Council Tax in Wales and one of the lowest in the UK. 

The draft proposals included:

§  Further capital investment of £70m in our schools.

§  Further regeneration projects in the city centre.

§  Very significant revenue budget investment in our social care and special education services at £5m.

§  Significant investment in schools and funding new schools.

The Leader was pleased to say that the draft revenue budget would be improved even further.

The Leader reminded those present that although the Treasury Strategy would be a Council decision, it had already gone through the Council’s Audit Committee review.  The strategy would remain as it was now, which was, on borrowing, to remain internally borrowed wherever possible. Additionally, on investments, to invest any surplus funds within the parameters of security, liquidity and return, in that order.

The Council recently considered and approved a change to the Minimum Revenue Provision (MRP) method and this was recommended to carry on into 2018/19.    

The report highlighted how the Council could maximise capital expenditure and support the ambitions for the city. This would need to be kept under review, as and when the financial situation changed.

There was £70m in the capital programme to continue the investments in school buildings and officers were working on the detailed developments.

A number of key schemes in the city centre, such as the market arcade and the developments of grade ‘A’ offices in Mill Street were included.  Other projects included  ...  view the full minutes text for item 4

The Leader presented the report which detailed the current forecast position on the Council’s revenue budget and the risks and opportunities that presented themselves within the September position.  The Leader met with Leader of the Local Government Authority for England along with Scottish and Irish Leaders in London the day before.  Each Local Government Leader faced the same issues even in different party political groups, which was a lack of finance and huge demand for service resulting in the demand outstripping supply.

The report pointed to a challenging position that the council was currently managing.  There was significant and unprecedented demand in social care and special education services, this was an issue across all Council’s in Wales and the UK.   The position however was currently being managed within the overall budget and some actions had been previously agreed to bring this about, such as the non-essential spending restrictions.  Focussing on the positive there was only three out of 156 areas where there were any issues.

It was noted that the position had improved since last report and whilst there were inherent risks in these forecasts; not least in these ‘demand-led’ areas, there were also opportunities for the position to improve even further towards the second half of the financial year.  With this in mind, Cabinet would be keeping a close eye as time progressed.

Whilst there was no guarantee as to the demands in the future, everyone was expected to exercise stringent financial management.  The Leader on behalf of the Cabinet thanked senior managers and their teams for their hard work.

Finally, as the report highlighted that the key focus was to stabilise and manage the demands and lower the future cost pressures on social care and education budgets.  This would take some time and it was therefore paramount to manage the risks in these service areas.  The Leader felt confident that the challenges could be met, whilst continuing to address the needs of Newport’s most vulnerable residents.

The following observations were made:

§  Whilst there were three areas that faced challenges, the majority of areas by comparison had done extremely well to show a projected underspend.

§  Social Services were looking into ways on how to maintain a quality service and reduce costs.

§  It was important to emphasise that the Council was projecting an underspend, however it was during these times of financial hardship that reserves were used to ease the pressure.

Decision:

§  To note the overall budget forecast position and key budget challenges.

§  To note the use of the Council’s contingency budget to balance the current level of overspending, previously approved by Cabinet, which would be assessed each month on an on-going basis.

§  To note that a targeted non-essential spending restriction was already in place as reported previously and re-affirm the need for robust financial management and maximise savings on the non-essential spend restriction, wherever possible.

§  To note the level of undelivered savings within each directorate and the risks associated with  ...  view the full minutes text for item 7

CAB 52/17 

July Revenue Budget Monitor

Options Considered/Reasons for Decision

The Leader presented the latest Revenue Budget Monitor, detailing the current forecast position on the Council’s revenue budget as of the end of July.  When the last monitor was considered in July, Cabinet noted the ongoing pressures and overspends within the budget, which were able to be managed through underspending in other areas.  This latest report now showed a forecasted overspend of £1.4m at the end of July.  The Council was able to offset this through using the unused revenue budget contingency, bringing the budget to an almost balanced position. 

The reasons for budget pressures were understood, and spending was being monitored and managed closely to bring the forecasts back to a more comfortable position.  However, a significant part of the pressures were due to areas outside of our control.  Increasing out of area placements, for both Education and Children’s Services, were an unpredictable and significant element.  The Council was doing what it could to manage these pressures within the Council, but this was also a national issue.  The Leader reported that she would be raising this through the WLGA, to suggest that a national approach was taken, to highlight with the judiciary the financial impact of the decisions made in court on the provision of care packages.

The Leader highlighted that the budget was everybody’s responsibility across the Council, and the administration would do everything it could to balance the budget by year end. 

The Head of Finance highlighted the importance of managing the budget, and the knock on impact of overspending for next year’s budget if it was not brought under control.  The Chief Executive also noted that the overspend represented less than 1% of overall spending, and was in line with similar patterns of spending in previous years.  He assured Cabinet that appropriate actions would be taken to deliver a balanced position by the year end.

Decisions:

To note the overall budget forecast position and the key assumptions and issues which underpin and impact on the Council’s financial forecast position.

To approve the use of all the Council’s contingency budget to balance the current level of overspending, which will be assessed each month on an on-going basis.

To agree to instruct all areas of the Council to maintain robust financial management and bring forward planned underspending wherever possible to mitigate against the current position.

To note the level of undelivered savings within each directorate and the risks associated with this.

To note the forecast movements in reserves.

To note and ratify the Corporate Management Team’s decision to implement a targeted spending freeze for all non-essential spend.

To agree the use of and note the balance in respect of the investment reserve which has been assumed within current forecast.

Consultation

Strategic Directors, Head of Finance, Heads of Service, Budget Holders, Accountancy Staff

Implemented By:   Cabinet Members, Head of Finance, DMT, CMT

The Leader presented the latest Revenue Budget Monitor, detailing the current forecast position on the Council’s revenue budget as of the end of July.  When the last monitor was considered in July, Cabinet noted the ongoing pressures and overspends within the budget, which were able to be managed through underspending in other areas.  This latest report now showed a forecasted overspend of £1.4m at the end of July.  The Council was able to offset this through using the unused revenue budget contingency, bringing the budget to an almost balanced position. 

The reasons for budget pressures were understood, and spending was being monitored and managed closely to bring the forecasts back to a more comfortable position.  However, a significant part of the pressures were due to areas outside of our control.  Increasing out of area placements, for both Education and Children’s Services, were an unpredictable and significant element.  The Council was doing what it could to manage these pressures within the Council, but this was also a national issue.  The Leader reported that she would be raising this through the WLGA, to suggest that a national approach was taken, to highlight with the judiciary the financial impact of the decisions made in court on the provision of care packages.

The Leader highlighted that the budget was everybody’s responsibility across the Council, and the administration would do everything it could to balance the budget by year end. 

The Head of Finance highlighted the importance of managing the budget, and the knock on impact of overspending for next year’s budget if it was not brought under control.  The Chief Executive also noted that the overspend represented less than 1% of overall spending, and was in line with similar patterns of spending in previous years.  He assured Cabinet that appropriate actions would be taken to deliver a balanced position by the year end.

Decisions:

To note the overall budget forecast position and the key assumptions and issues which underpin and impact on the Council’s financial forecast position.

To approve the use of all the Council’s contingency budget to balance the current level of overspending, which will be assessed each month on an on-going basis.

To agree to instruct all areas of the Council to maintain robust financial management and bring forward planned underspending wherever possible to mitigate against the current position.

To note the level of undelivered savings within each directorate and the risks associated with this.

To note the forecast movements in reserves.

To note and ratify the Corporate Management Team’s decision to implement a targeted spending freeze for all non-essential spend.

To agree the use of and note the balance in respect of the investment reserve which has been assumed within current forecast.

CAB 42/17 

Medium Term Financial Plan

Options Considered/Reasons for Decision

The Leader presented the report on the Medium Term Financial Strategy, based on the current financial outlook. 

The Chief Executive highlighted the figures relating to Welsh Government budgets and changes in funding levels in the report (Table 1 and Chart 1), and how this impacted upon the local authority’s budgetary pressures.  The Leader reiterated comments made earlier in the meeting, regarding the need to maintain pressure on national governments to improve the funding position of local authorities, and her commitment to drive this forward on behalf of this Council working with colleagues from the WLGA.

In response to a question on the impact of cabinet financing costs on the revenue budget (Table 4 in the report), the Assistant Head of Finance confirmed that the percentages shown would not be impacted significantly by the Friars Walk deal.  The drop shown in the 2019/20 figure was due to the timing of particular repayments and refinancing of borrowing costs.  It was confirmed that the authority continually reviewed borrowing and financing to ensure the best deal possible was in place.

Decision:

1.    To approve the current key planning parameters in setting out the current budget gap for 2018/19 and the medium term, noting that this work is subject to refinement.

2.    To note and approve the current working strategies officers are working under to provide budget solutions to the current financial challenge.

3.    In particular, to approve the working strategy in relation to schools funding in the next financial year which funds school inflation, demographics and school reorganisation pressures whilst noting that this could be reviewed in light of the draft settlement when known;

4.    To agree the approach to the one off funding that was allocated to schools from 2016/17 unused contingency budget.  This was one off funding which is to be reviewed as part of the 2018/19 budget process;

5.    To note the Head of Finance’s comments and observations on the current risks facing the budget, how they are being managed and financial resilience issues;

6.    To note the current level of reserves, projected use and their utilisation in the context of the medium term.

Consultation

Senior Leadership Team and Statutory Officers.

Implemented By:   Head of Finance, Senior Leadership Team and Corporate Management Team to develop budget proposals and discuss with Cabinet; Head of Finance and Chief Education Officer to discuss schools funding strategy with schools / schools’ forum and develop plans to meet the financial challenges of the funding strategy outlined.

The Leader presented the report on the Medium Term Financial Strategy, based on the current financial outlook. 

The Chief Executive highlighted the figures relating to Welsh Government budgets and changes in funding levels in the report (Table 1 and Chart 1), and how this impacted upon the local authority’s budgetary pressures.  The Leader reiterated comments made earlier in the meeting, regarding the need to maintain pressure on national governments to improve the funding position of local authorities, and her commitment to drive this forward on behalf of this Council working with colleagues from the WLGA.

In response to a question on the impact of cabinet financing costs on the revenue budget (Table 4 in the report), the Assistant Head of Finance confirmed that the percentages shown would not be impacted significantly by the Friars Walk deal.  The drop shown in the 2019/20 figure was due to the timing of particular repayments and refinancing of borrowing costs.  It was confirmed that the authority continually reviewed borrowing and financing to ensure the best deal possible was in place.

Decision:

1.    To approve the current key planning parameters in setting out the current budget gap for 2018/19 and the medium term, noting that this work is subject to refinement.

2.    To note and approve the current working strategies officers are working under to provide budget solutions to the current financial challenge.

3.    In particular, to approve the working strategy in relation to schools funding in the next financial year which funds school inflation, demographics and school reorganisation pressures whilst noting that this could be reviewed in light of the draft settlement when known;

4.    To agree the approach to the one off funding that was allocated to schools from 2016/17 unused contingency budget.  This was one off funding which is to be reviewed as part of the 2018/19 budget process;

5.    To note the Head of Finance’s comments and observations on the current risks facing the budget, how they are being managed and financial resilience issues;

6.    To note the current level of reserves, projected use and their utilisation in the context of the medium term.

CAB 43/17 

Revenue Budget Monitor

Options Considered/Reasons for Decision

The Leader presented the report, which provided an early indication of the revenue financial forecast position and the issues affecting financial management during 2017/18. The report projected a small overspend, but this was in the context of some significant pressures.  The issues highlighted in the report had already been discussed in detail at the previous Cabinet meeting, under the 16/17 outturn report.  The Leader reiterated that the administration of the Council remained committed to strong financial management, and promoting the message that everybody, at all levels of the organisation, was responsible for good budgetary control.  This message would continue to be cascaded through the organisation in the preparations for the 2018/19, including a meeting that had already been set up with Head Teachers to discuss the position and approach within schools.

The Assistant head of Finance took Members through some of the technical details in the report before the decisions were taken.

Decision:

1.    To note the overall budget forecast position and the key assumptions and issues which underpin and impact on the Council’s financial forecast position.

2.    To agree to instruct all areas of the Council to maintain robust financial management and bring forward planned underspending wherever possible to mitigate against the current position.

3.    To note the level of undelivered savings within each directorate and the risks associated with this.

4.    To note the forecast movements in reserves.

5.    To agree to allocate £100k of the revenue contingency budget to a new, specific reserve, for 2018 events.

6.    To note the projected balances of individual schools over the next two years and that a specific budget seminar for schools will be organised for schools in September to discuss and agree a way forward to the current position.

Consultation

Strategic Directors, Head of Finance, Heads of Service, Budget Holders, Accountancy Staff.

Implemented By:   Cabinet Members, Head of Finance, Senior Leadership Team and Corporate Management Team

The Leader presented the report, which provided an early indication of the revenue financial forecast position and the issues affecting financial management during 2017/18. The report projected a small overspend, but this was in the context of some significant pressures.  The issues highlighted in the report had already been discussed in detail at the previous Cabinet meeting, under the 16/17 outturn report.  The Leader reiterated that the administration of the Council remained committed to strong financial management, and promoting the message that everybody, at all levels of the organisation, was responsible for good budgetary control.  This message would continue to be cascaded through the organisation in the preparations for the 2018/19, including a meeting that had already been set up with Head Teachers to discuss the position and approach within schools.

The Assistant head of Finance took Members through some of the technical details in the report before the decisions were taken.

Decision:

1.    To note the overall budget forecast position and the key assumptions and issues which underpin and impact on the Council’s financial forecast position.

2.    To agree to instruct all areas of the Council to maintain robust financial management and bring forward planned underspending wherever possible to mitigate against the current position.

3.    To note the level of undelivered savings within each directorate and the risks associated with this.

4.    To note the forecast movements in reserves.

5.    To agree to allocate £100k of the revenue contingency budget to a new, specific reserve, for 2018 events.

6.    To note the projected balances of individual schools over the next two years and that a specific budget seminar for schools will be organised for schools in September to discuss and agree a way forward to the current position.

The Leader presented the Revenue Budget Out-Turn for 2016-17, highlighting the following points:

·         The confirmed use of the underspend, as was reported to and agreed by Cabinet at its meeting in March 2017.  Following this series of one-off investments, the final position showed a balanced budget with a small underspend of £326k.

·         The key issues arising from the out-turn, which Cabinet would be monitoring closely over the coming months, in implementing the 2017-18 budget and planning for 2018-19. 

·         The overspends returned in some areas.  The reasons for these variances were understood, and outlined in detail within the report.  However, thanks to the prudent financial management of the Council’s staff, these overspends would be offset by underspends achieved in other areas, resulting in a balanced budget.

Decisions

To note the out-turn position, which is subject to audit and the major variances for the year (paragraphs 3-7).

To note the current level of general and specific reserves (appendix 4).

To approve the use of the underspend as set out in paragraph 20 of the report.

To note the concerns around on-going financial management given the recurring nature of some of the issues which have arisen during 2016-17.