Agenda item

The Leader presented the first report to Cabinet colleagues that dealt with the 2024/25 Council budget and draft budget proposals.

The report outlined the key planning assumptions for the proposed budget, investments and the savings that were required to produce a balanced annual budget, and which also delivered sustainable future finances to ensure the Council continued to deliver services to residents in Newport and met its priorities.

The report also covered the consultation arrangements and the timetable to agree final budget proposals to be considered at full Council at the end of February.

The budget consultation was started later than usual to ensure certainty on the Council’s core ‘revenue support grant settlement’ and considered the budget gap.

Further work is required before agreeing the final budget proposals, concerning aspects of the settlement itself.  Whilst the Council budget has a budget gap for 2024/25, the Leader was pleased to confirm that it was lower than this time last year and previous years. The report considered confirmed a budget gap before savings of £3.8m due to funding increasing at a lower rate than cost increases. 

The Leader provided more detail on key parts of the draft budget to the Cabinet.

The Councils budget remains subject to significant price and inflationary increases on pay and social care contracts, driven mainly by the significant increase in the UK minimum wage and, more specifically in Newport, the ‘real living wage’ rates. The increase was smaller than anticipated back in February 2023, because of significantly reduced energy costs and some of that decrease has been kept back to invest into a new match funding budget against Welsh Government grants for carbon reduction projects.

Demand on services continued to be the biggest challenge. Continued increases impact on children’s social care and homelessness provision with legacy issues of Covid and the current cost of living challenges. These represent the biggest risks to the Council’s future financial sustainability and work to stabilise these to the greatest extent possible continues.

Newport received the highest percentage increase in its core funding settlement from the Welsh Government, driven by demographic factors such as an increasing population. Funding increased by 4.7%, which is a further £13.5m of funding. 

The Council is consulting on an 8.5% increase in Council Tax;

o   The starting point is lower than nearly all other Councils in Wales and the UK. In cash terms, the increase is much lower than the percentage might suggest. The report showed that this would be £1.50 to £2.01 per week for those houses in Newport’s most common bandings and remains one of the lowest Council Tax rates in Wales and the UK.

o   The Council supports those eligible for financial assistance with their Council Tax bill. Households suffering financial challenges would not pay this increase as the Council Tax Reduction Scheme still supports them.

o   Therefore, those who could not afford this increase would continue to receive help with paying their Council Tax.

o   The Leader advised residents to look beyond the headline percentage change as it could be misleading. Those who required help with their bill continued to receive support. The increase also protects essential services to the most vulnerable.

Because of the increased core settlement funding and to a lesser extent, Council Tax funding increases, some services are protected and developed. These are:

o   Protection of the school budget, with no savings requirements from school budgets next year.  An investment of £9.5m into budgets next year and £24m over the Medium-Term Financial Plan (MTFP) period in teachers cost increases and growth in pupil numbers and schools. 

o   Continued funding of social care commissioning budgets to pay at least the ‘living wage’ to employees. This provides support to this sector, ensuring the most vulnerable are supported.

o   Investment in a new budget to accelerate the Council’s carbon reduction by creating match funding to use alongside Welsh Government funding for these projects. 

o   Continued investment in support for those with the greatest need in the community. Investment of nearly £400k for additional learning needs provision, £600k for homelessness provision and over £3m in children and adult social care budgets to increased provision.

There is still a budget gap to resolve, and the report set out these savings. The vast majority would not impact on service provision and are delegated for implementation by Heads of Service and Directors.

Lastly, the medium-term funding outlook is uncertain and likely to be challenging. Welsh Government could not forecast receiving a sufficient increase in its own budgets and was therefore unable to pass that on to Local Government, the NHS, and other vital public services here in Wales.

Comments of Cabinet Members:

§  Councillor Davies highlighted to colleagues that the report showed a far better position than this time last year.

The financial pressures of inflation, increasing staffing costs, labour shortages and increasing demand for services continued and accounted for almost £56m or 76% of total investment which would be required over the next three years.

In education, additional funding amounting to £9.5m to cover pay awards and the costs of managing the increasing pupil number is necessary, with this amounting to £24m over the next three years.

Councillor Davies supported the proposed budget savings and welcomed the consultation due to be launched.

§  Councillor Clarke reflected that Cabinet Members and Councillors were also residents and had to make the right decisions for all.  The views of Newport residents are important, and Councillor Clarke urged residents to get involved in the consultation.  Councillor Clarke supported the report as it is essential that a balanced budget is met.

§  Councillor Forsey referred to adults having aging carers that could not support them and reflected that the Council was there to help people in these difficult situations.

§  The Leader thanked all service areas for their support in providing a balanced budget as well as the finance team for their hard work in preparing the report and budget.

Decision:

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)                A Council Tax increase of 8.5%, a weekly increase of £1.50 - £2.01 for properties in Band A to C, the most common bands in Newport, as set out in paragraph 3.8.

iii)               Proposed fees and charges in Appendix 5.

iv)               The budget investments shown in Appendix 1, including those for schools.

2.         Cabinet approved:

v)                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:

vi)               The position on developing a balanced budget for 2024/25, noting that the position was subject to ongoing review and updates between now and February Cabinet, when the final budget was agreed.

vii)             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.

viii)            Further work is required to specifically review and manage the financial impacts of some key risks coming out of the draft settlement for 2024/25.