Agenda item

The Leader introduced the final proposals on the MTFP budget for 2023/24. The report followed the one considered at December’s meeting, which was approved as the basis for the public consultation on the draft budget proposals. The consultation was concluded and the report outlined the responses received to the consultation, changes in budgetary assumptions in the intervening period and final proposals for consideration. This was one of the most important reports of the year and was given careful consideration, especially considering the financial context within which the Council and residents were operating.

 

The Leader gave a backdrop to the budget, outlining that the report represented the culmination of an incredibly challenging period, which began with Cabinet considering the implications as we transitioned out of the worst of the COVID-19 pandemic. At the beginning of the year, there was concern about the lasting impacts of the pandemic and a temporary COVID contingency was created to mitigate some of the uncertainties ahead.

 

What had transpired however, was quite different to what was expected, high inflation represented the single biggest challenge facing the Council and the wider economy. This resulted in pay awards being much higher than anticipated, placing a significant in-year pressure on finances as well as a lasting one that was being addressed as part of this budget. Additionally, energy inflation was running at historic levels, this affected budget planning for next year. It was not only the costs incurred by the Council, but its service providers were also facing the same pressures, which was being passed on to us.

 

Demand for services was also high and there were a number of significant pressures emerging. One example related to homelessness services, where the continued high demand for temporary accommodation placed an extraordinary financial pressure upon the Council. This draft budget addressed the current level of overspend to the tune of over £4m and allowed us to continue supporting some of the most vulnerable people in our city. 

 

As a consequence of these pressures, our December budget report highlighted an unprecedented budget gap and a number of strategies was outlined to address this gap, including a proposed Council Tax rise and savings from all services. In the meeting itself, we outlined a specific approach in relation to schools, whereby the Council would meet the cost of certain pressures, with schools themselves being asked to absorb others.

 

The proposals set out within the report were those that formed the basis of the consultation with the public that concluded earlier this month. This was an incredibly difficult process and the decisions to consult on those proposals were not taken lightly. The Leader was therefore, pleased to see the high levels of engagement that the residents of Newport, and other stakeholders, had in this consultation process, evidenced by the vast array of responses received.

 

The report highlighted the different sources of consultation responses that were received, with just under 1,800 responses in total. This represented a significant increase on previous years, aided in part by additional bus Wi-Fi responses, driven by increased passenger numbers. As well as this, several engagement exercises were conducted, including a pre-budget survey, engagement with the Fairness Commission, engagement with the Youth Council, public consultation events and events with users directly affected by proposals. Responses were received from trade unions, scrutiny committees and Schools’ Forum.

 

Appendices 1 to 4 provided the details of responses received and the Leader highlighted some of the key messages coming through.

 

It was clear from the outcome of the consultation that there was a degree of understanding of the situation decision-makers within the Council face. A range of responses to specific proposals were provided, particularly visible within the statistical analysis, where a spread of views of certain proposals was evident. There was also clear support for some proposals, and this provided Cabinet with assurance that the feeling of residents was reflected when making such proposals.

 

Some of the qualitative comments made were pertinent and, as a listening council, these comments were taken seriously by Cabinet, with a commitment to acting on those as and where possible.  It was understood that reducing services in areas such as Social Services was not going to be popular, as these were the services that safeguarded some of our most vulnerable people. Our approach was to avoid reductions to the most critical services and only cease or reduce services where the impact could be managed. Difficult decisions were required, Cabinet was looking to balance the impact across services as best as possible.

 

In terms of Council Tax, it was clear and pleasing to see that there was recognition that increases were unavoidable and that increases in the rate of Council Tax could enable the most vital services to be protected.

 

The Leader wanted to assure the public and other stakeholders that feedback was taken on board and used in determining our final proposals. Cabinet would continue to review the way in which Council consulted and the information included within the budget proposals to ensure as many people could fully engage with the process.

 

The development of the budget was an ever-changing process year on year and there was a number of key changes since issuing the draft proposals in December. The most significant of these, as announced in the Cabinet meeting itself, was the announcement of the draft Welsh Government settlement, which provided an additional £11.7m of funding over and above that already assumed. In addition, Cabinet incorporated the draft contribution from schools, as well as a number of other positive changes to budgetary assumptions, such as reduced pressures in certain areas, new non-service savings and the availability of specific grant funding to offset pressures that were previously assumed to fall upon the Council.

 

Whilst these movements provided welcome mitigation to a significant budget gap, there was inevitably some movements that only added to the pressure, such as the need to increase the assumptions around future pay awards, as well as other emerging pressures in certain services. The reports listed the updated assumptions.

 

The culmination of these movements meant that a balance in hand of circa £2.5m now existed. The Leader detailed how it was intended to target th balance in hand as effectively as possible, having taken into account the consultation feedback.

 

It was clear from the feedback received that there was a strength of feeling towards the short breaks provision currently provided at both Oaklands and Spring Gardens. Cabinet recognised that vital services such as these, which supported some of the most vulnerable people, needed to be protected as much as possible. The Leader therefore announced that the proposal in relation to Oaklands was to be withdrawn at a cost of £485k. In terms of Spring Gardens, the proposal would be reduced by £300k on a permanent basis so that some provision continued and as well as this, Cabinet committed to a one-off sum of £200k from re-prioritised reserves for 2023/24, to provide capacity for further continued provision and give some time for a review of the service to be undertaken and move it to a more sustainable footing.

 

Also, having carefully considered the feedback received, the decision to withdraw the proposal to introduce car parking charges at four countryside car parks. In addition, there would be no replacement bin charges during 2023/24, having considered the impact on residents struggling the most with the cost of living crisis. The proposal would be reconsidered and reviewed and only be introduced in a future year, if felt it was fair on all residents. The cost of withdrawing these two proposals was £90k.

 

In relation to Council Tax, listening to the views of Newport residents on the proposed 9.5% increase, it was understood that an increase of this size was challenging for residents, at a time when costs of other household bills were increasing. The Council was also facing the same cost pressures, coupled with a comparatively low rate of Council Tax to other Welsh local authorities. Cabinet was however committed to doing what it could for residents and proposed to reduce the increase in Council Tax to 8.5% to ensure that it was less than the current rate of inflation. For Bands A to C, the most common in Newport, this equated to an increase of £1.39-£1.85 per week. This would still leave Newport with one of the lower Council Tax rates across Wales and the UK and those residents who received help with their Council Tax bills through the ‘Council Tax Reduction Scheme’ would continue to do so as Cabinet was fully funding that to keep up with this increase and the Council already adopted to apply the Wales wide scheme in this respect.

 

As a result of reducing the increase in Council Tax, and withdrawing or reducing the savings proposals just outlined, it reduced the balance in hand to £937k. Cabinet believed the best use of this residual amount was to reduce the requirement for schools to contribute to the budget gap. Cabinet recognised that this still left schools with a challenge to face heading into 2023/24 and, to assist with this challenge, was committing to use nearly £1.9m of repurposed earmarked reserves to target financial support for those schools who needed it the most. Taking this into account, meant a commitment of £9m towards the pressures being faced by schools in 2023/24.

 

In addition to using re-purposed reserves to support Spring Gardens and schools, Cabinet intended to provide temporary support to Growing Space for the next two years and provide temporary support to the EAS to enable a partial deferral on the proposed saving on our annual contribution. Again, these savings allowed for service reviews and changes to take place which provided a better and more sustainable services to go forward, some of which supported our most vulnerable people.

 

As well as this, £150k of existing reserves would be used so that changes to services for people with a learning disability could be reviewed and tapered over the coming year.

 

Furthermore, for Cwtch and the Barnardo’s partnership, officers worked to remodel the service using radical reform grant funding. The current staff and all their experience and skills would be part of this remodelling. This meant, in effect, that the savings proposal would be delayed by two years.

 

Re-purposed reserves would provide one-off further investment in the city centre, ensuring that we supported and sustained the recovery of the city centre coming out of the pandemic. This included the Council’s support on Business Rates for those eligible businesses in the city centre so that in 2023/24, alongside the WG rate support scheme, they had no business rates to pay. 

 

By allocating the balance in hand, it meant that Cabinet proposed a balanced budget for 2023/24, as per our legislative requirement. This was achieved without the general use of earmarked reserves to balance the budget. This was because the use of the re-purposed reserves would be for either one-off uses or to provide one to two years support only so that services could be reviewed and changed to both make savings in the future and be more sustainable whilst providing a better service and outcome. Some may question this approach, particularly considering some of the difficult savings that were put forward, however as a responsible council, financial management was taken very seriously. Use of reserves would be an easy option, although it would only store up problems for next year and beyond. The Council would still ultimately make the same level of savings, plus we would then have to replenish any reserves used. For this year, it was therefore right to act responsibly and ensure a sustainable financial footing for this Council.

 

Whilst the process of developing a budget for 2023/24 was incredibly challenging, unfortunately the outlook for the medium term did not look any easier. Oaklands, Appendix 7 to the report highlighted a potential budget gap of £15m in 2024/25 and another £12m in 2025/26. Whilst these figures were lower than the initial gap in 2023/24, there remained a significant amount of uncertainty, both in terms of ongoing inflationary pressure and demand for services, as well as the funding to be received from central government. Whilst Welsh Government provided an indicative settlement for 2024/25, this depended upon the settlement they received from UK Government, which was subject to change. There was a possibility that the medium-term gap could be worse than modelled, additionally, it came against the backdrop of the challenging decisions already taken in readiness for 2023/24.

 

It was therefore highly likely that further challenging decisions around Council Tax and savings was be needed in the future. To address this, it was a necessity for the Council to continue to reflect on the way it operated and look at ways to deliver services differently. Services needed to be transformed to deliver better experiences for citizens and service users, on a lower cost base. We needed to look at things differently to ensure a modernised, sustainable council, fit for the 21^st century going forward.

 

The Leader reiterated it was an incredibly difficult process, thanked Cabinet colleagues and the officers who worked tirelessly to ensure that the proposals to the balanced budget. Under the circumstances, this was a fair, sustainable and responsible budget.

 

Only full Council could approve the overall rate of Council Tax for 2023/24. Cabinet were also asked to recommend an overall net budget and resulting Council Tax for approval at the Council meeting on 28 February 2023.

 

Comments of Cabinet Members:

 

§  Councillor D Davies thanked those residents who participated in the consultation processed and also thanked officers who worked incredibly hard in support of this report.  Cabinet had met with union leaders and teachers there were difficult decisions that had to be taken. It was hoped that they would agree that Cabinet listened carefully. The Deputy Leader advised that whilst there was a Council Tax increase, Newport had the lowest in Wales.  At Council recently, the Council Tax Reduction Scheme was unanimously agreed, to allow council tax exemption for those in need; these were students, people that lived alone, carers and those with disabilities amongst others that were also eligible, including those on a low income.   Finally, turning to Education, it was welcomed to see the extra £937,000 being given to support our schools and it was hoped that with careful scrutiny Newport schools would balance their budgets this year.

 

§  Councillor Harvey met with residents who expressed their upset over the original proposals to Oaklands and the Cabinet Member advised them to complete the consultation form and was pleased that they did as a result this gave them a voice.  It was pleasing to see that residents out the consultation and that people understood the budget pressure that the Council was under.

 

§  Councillor Hughes mentioned that during the consultation period he and his Cabinet Member colleague had met with key services that faced the hardest of potential outcomes and therefore took the opportunity to thank all those who contributed to the consultation particularly those in Spiring Gardens and Growing Spaces.  The Cabinet Member thanked the senior management team in social services and social workers.  Individuals who contributed in the consultation such as the residents in Oaklands made an emotional impact and it showed that there was value to consultation in Newport and listening to their stories made a difference. The focus throughout was to protect the vulnerable and Councillor Hughes was therefore pleased to protect projects that meant so much to the people in Newport. 

 

§  Councillor Lacey welcomed the budget, which show that Cabinet had taken into account the public consultation, especially with regard to Spring Gardens and Oaklands.  Whilst there was an 8.5% increase in Council Tax, by comparison to other councils particularly in England where the increase was over £100 by comparison to the average of £96.20 per year, the increase was lower.  It also meant however that the increase would allow those who cannot afford to pay their Council Tax to be eligible for the Council Tax Reduction Scheme, as mentioned by the Deputy Leader.  We were a listening council and listened to the most vulnerable residents.

 

§  Councillor Marshall added that in considering the budget, it was warming to see collective work to protect education and social services.  We listened to residents, parents and staff and scrutiny committees.  There were some good suggestions put forward by residents during the public consultation.  The Cabinet Members for Social Services were deeply thankful for contribution from the parents Oakland residents.  Councillor Marshall also expressed his appreciation to all involved and as a result felt that we were in a fairer position as well as putting education and social services at the heart of what was being done.

 

§  Councillor Forsey mentioned that the range of proposals was wide and that the decision made to produce this budget was difficult but logical and caring.  When it came to considering the reduction of bin collection or keeping Oaklands open, there was no comparison. The Cabinet Member reminded everyone of the range of recycling facilities which would help towards the three weekly bin collection.

 

§  Councillor Batrouni also supported the proposals to the budget report.

 

§  Leader thanked Cabinet colleagues and officers who worked tirelessly to bring forward the budget proposed today.  The Leader echoed sleepless nights as referred to by Councillor Davies and understood that was also how the officers also felt and thanked them once again.  The budget was a fair, sustainable and responsible budget, which prioritised the most vulnerable.

 

Decision:

 

Cabinet in relation to Budget proposals and medium term plan (section 3-5)

 

1.      Noted the formal consultation on the budget as outlined in section 4 and the feedback received, shown in Appendices 1 to 4.

 

2.      Noted the equality issues and the Fairness and Equalities Impact Assessment (FEIA) on the budget proposals, shown in Appendix 9.

 

3.        Reviewed and confirmed budget proposals (appendix 5 - 6), as summarised in the Council’s Medium Term Financial Plan, with the exception of the following changes:

 

§  The proposal in relation to Oaklands will be withdrawn at a cost of £485k

§  In terms of Spring Gardens, the proposal will be reduced by £300k on a permanent basis so that some provision will continue and as well as this, we are committing a one-off sum of £200k from re-prioritised reserves for 2023/24 only, to provide capacity for further continued provision and give some time for a review of the service to be undertaken and move it to a more sustainable footing.

§  To withdraw the proposal to introduce car parking charges at four countryside car parks

§  To withdraw charges for a replacement bin

§  To reduce the requirement for schools to contribute to the budget gap by £937k

§  To make available, from re-purposed reserves a sum of £1.87m one-off to support schools that need it the most during 2023/24

§  Provide temporary support to Growing Space for the next two years at £100k and provide temporary support for 2023/24 only to the EAS at £79k to enable a partial deferral on the proposed saving on our annual contribution

§  Cwtch and the Barnardo’s partnership, officers have worked to remodel the service using radical reform grant funding. This means, in effect, that the savings proposal will be delayed by 2 years

§  Re-purposed reserves will also provide one-off further investment in the city centre, to ensure that we support and sustain the recovery of the city    

 

4.        Agreed the 2023/24 fees and charges of the council shown in appendix 11.

 

Cabinet in relation to Overall revenue budget and resulting council tax 2023/24

(section 6 and 7)

 

5.        Noted the significant risks and uncertainties within budget planning and specific issues highlighted in section 6 of this report and the mitigation in place to manage. 

 

6.        Reviewed and agreed the re-purposing of specific earmarked reserves as set out in Appendix 10a

 

7.        Proposed to reduce the proposed increase in Council Tax to 8.5% to ensure that it is less than the current rate of inflation and which will fund their budget requirement.

 

8.        Recommended an overall net budget and resulting council tax to full Council, noting that a formal resolution including the Police and Crime Commissioner for Gwent and Community Councils’ precepts would be presented to Council on 28 February.

 

Approved expenditure and use of reserves in line with the summary shown in appendix 10b, noting they were based on detailed proposals reviewed by Cabinet in their December 2022 meeting.