Agenda item

Revenue Budget Draft Budget and MTFP: Final Proposals 2023/24


The Leader presented the report Colleagues, this report highlighted the key issues affecting the development of the Council’s 2023/24 budget and Medium-Term Financial Plan. 


Cabinet were asked to agree the proposals in order to enable the commencement of the 2023/24 budget consultation process.  The results of the consultation would be reported back to Cabinet in February 2023, when we, as a Cabinet would agree a final detailed budget and recommend the corresponding council tax level to full Council.


Cabinet were asked to:


(i)                Agree the draft proposals for consultation;

(ii)              Approve the implementation of the delegated decisions set out in appendix 3 and appendix 11 of the report with immediate effect, and

(iii)             Note the position on developing a balanced budget for 2023/24, noting that the position would be subject to ongoing review and updates between now and the February Cabinet when the final budget is agreed.


Unfortunately, budget preparations this year presented a distinct set of challenges.  Not only with the requirement to build on the unprecedented circumstances of the last few years, but also being faced with drastic economic changes over an incredibly short period of time. 


This challenge was being felt across the whole of the UK, and the council, as with residents, were dealing with pressures on a scale never seen before. High inflation, soaring energy bills and increasing demand for services were resulting in substantial financial pressure and, the Council, was seeing significant budget shortfalls over the immediate and medium term.


This resulted in a considerable budget gap of £27million between the money available to spend and what the Council needed to spend.


Whilst the UK Government Autumn Statement confirmed cash increases in funding for the next two years, the impact of rising costs means that a budget gap remained.


This was the case even after allowing for the fact that Welsh Government had, on 14 December, confirmed an 8.9% increase in core funding for the Council, which reflected an improved settlement in comparison with the indicative settlement figure provided a year ago.


The Council was required by law to set a balanced budget every year.  Therefore, there was a need to consider all potential options for addressing the budget gap of £27m in 2023/24. This deliberation was against a backdrop of a period of sustained budget savings over the last decade of austerity.


Overall, the draft budget included investment of £45m in 2023/24 and £94m over the life of the medium-term financial plan, although 77% of this was to fund pay and pricing inflationary increases, the Leader specifically mentioned the areas of investment that were the areas in greatest need.  The Leader wished that the Council had additional resources to invest in many other areas, but this was simply not an option with the limited resources available to us:


Schools were facing significant inflationary pressures and cost increases. As stated on a number of previous occasions, Cabinet was committed to supporting schools and would continue to protect them as much as possible. This was reflected in the choice to wait for the draft Local Government settlement to be announced on 14 December, before announcing the draft proposal for schools, in the hope that a more positive settlement would facilitate a greater degree of protection.


However, whilst the draft settlement was more positive than initially anticipated, the extent of the financial challenge being faced meant that it was still not possible to completely shield schools from the need to contribute towards the Council’s budget gap in 2023/24. Cabinet was therefore proposing that schools contributed towards a proportion of the pressures identified in relation to them.


As a result, consultation on a proposal whereby the Council provided additional funding to schools to cover the cost impact of increasing pupil numbers and 50% of the identified pay-related pressures. This meant that schools would be required to absorb the balance of pay pressures and any other inflationary increases in costs. However, this also meant that, overall, the cash value of the total school budget would increase in comparison with the current budget.


As always, Cabinet was keen to hear feedback from schools and encouraged both individual school representatives and collective groups to engage in the consultation process and provide views on the proposal at this meeting. Cabinet was committed to listening to the views put forward and would consider these before finalising proposals in February 2023.


For Social Care and Homelessness:


(i)                This budget proposed to invest over £4 million in social care in 2023/24 and almost £5.5 million over the medium term to help support its most vulnerable.


(ii)              £3.5 million provision to support Welsh Governments directive to ensure that there were no rough sleepers in Newport and continued to deliver a huge amount of support to rough sleepers following the pandemic and found accommodation for many individuals and families who found themselves in a difficult position. This investment would enable the Council to continue this.


Detailed investments would be agreed at the final budget in the Cabinet’s February meeting and Cabinet would consider feedback from consultation, with particular interested in hearing views on its key priority areas of schools, social care, and homelessness, as well as feedback on specific budget investments. 


After allowing for the investments outlined above and the indicative funding increased outlined by WG a year ago, a significant gap between estimated costs and funding existed. Cabinet considered options for addressing this gap, including a further increase in Council Tax and savings from across all council services.


The position and figures set out within the report were based on a 9.5% increase in 2023/24.  For contextual purposes, 9.5% is a weekly increase of £1.55 - £2.07 for properties in Band A to C, which were the most common bands in Newport.


It was well documented that Newport’s council tax was low compared to others in Wales, generating 23% of the Council’s income. This council’s average council tax rate was 15% lower than the Welsh average and even with a 9.5% increase next year, council tax would still be lower than most (if not all) of the neighbouring authorities even if they had a lower level of increase.

The continued financial crisis was causing financial hardship and challenges for residents and business in the city and that would be at the heart considerations when planning the next year’s budget.  Like all councils across Wales and the rest of the UK Newport was facing its own unprecedented financial challenge.


After allowing for a 9.5% Council Tax increase, and the approach outlined earlier on schools, a residual budget gap remained. A range of savings was considered and a total of £11.6m was agreed for the purpose of public consultation.


These proposals were detailed within the appendices to the report and reflected an in-depth review of all council services, including back-office functions and front-line services.


It was important to highlight that this was not an easy process to undertake and decisions which have led to this set of proposals were not taken lightly. 


To conclude, £27million was a significant proportion of our £343million total budget, and as with households the Council continued to face a rise in prices and the cost of delivering services was higher, affecting everything from schools to street lighting.


With two thirds of the budget funding schools, education and social care the Council was intent to ensure continuation of the delivery absolutely essential services to the most vulnerable and those requiring a helping hand at these most difficult of times.


However, with grim economic forecasts continuing the Council faced very limited options.  This situation was not created by the Council or the people it served but the Council had to make these tough choices.


Cabinet therefore committed to looking closely and carefully at the responses to this draft budget as it finalised the budget in February. 


Comments of Cabinet Members:


·        Councillor Davies highlighted that WG were £1.2Bn worse than they had been in the past two years off and grateful with additional funding which made it possible to make a settlement towards schools, who had our support and wanted to stress that Cabinet were here to listen to them. The key pressures was and increase in staff costs.  The Deputy Leader referred to the 9.5% Council tax rise and wanted to remind residents that we had a council tax reduction scheme, this was available to those on employment support allowance, pension credit and income support.


·        Councillor Harvey mentioned that Cabinet had been looking closely at the budget since September.  This was a consultation document and Cabinet was listening to residents and wanted their feedback. The Council would do everything they could to support residents.  There were over 800 services ran by council but this was on a shoe string.


·        Councillor Clarke highlighted that times were very difficult at the moment and wanted to assure Newport residents that we were a listening council and therefore it was important to hear the views of residents, and hoped that they would get involved.


·        Councillor Lacey added that Cabinet would support family and businesses in Newport and therefore supported the proposal and would welcome comments from the public during the consultation.


·        Councillor Hughes thanked the social care staff for their hard work during these difficult times and echoed comments of colleagues that people of Newport must get involved and make a contribution to consultation.


·        Councillor Forsey mentioned that whilst there were financial pressures the Council was working towards improving the environment within Newport due to the changes proposed within the report.


·        Councillor Batrouni also added that all councils within the UK were affected by the cost of living due to the scale of cuts.


·        Councillor Marshall stressed that the Council cared and wanted to support residents, including social services and education.  The Cabinet Member for Social Services also encouraged residents to put forward their views and stressed that we would get through this due to the hard work of the staff within the Council.


The Leader thanked Cabinet colleagues for their contribution towards the proposals outlined in the budget and their continued support.




1.Cabinet agreed the following draft proposals for public consultation:

i)                  Budget savings proposals in Appendix 2 (summary table) and Appendix 10 (detailed proposals).

ii)                As a starting point a council tax increase of 9.5% would be consulted upon, a weekly increase of £1.55 - £2.07 for properties in Band A to C, the most common bands in Newport, set out in paragraphs 3.12 to 3.15.

iii)               Proposed fees and charges in Appendix 5.

iv)               The budget investments shown in Appendix 1

v)                The specific schools proposal as verbally outlined in the meeting (ie that the Council provided funding to cover pupil number-related pressures and 50% of pay-related pressures).


2.  Cabinet approved:

vi)               Implementation of the delegated decisions in Appendix 3 (summary table) and Appendix 11 (detailed proposals) by Heads of Service with immediate effect, following the usual Council decision making processes.


3.  Cabinet noted:

vii)             The position on developing a balanced budget for 2023/24, noting that the position would be subject to ongoing review and updates between now and the February Cabinet when the final budget was agreed.

viii)            The current position in the development of a ‘Transformation Plan’ for the Council and the Head of Finance comments on the importance of that in relation to the medium/long term budget challenge and contributing to sustainable financial footing for services.

ix)               Further work was required to specifically review and manage the financial impacts of some key risks in 2023/24.


Supporting documents: