Agenda item

The Leader presented the report to Cabinet and confirmed it included the consultation results from the draft budget set out in the December 2019 meeting and the current position on the Council’s funding envelope following receipt of the draft Revenue Support Grant for 2020/21.

 

In light of the above, Cabinet needs to agree the final budget proposals, including a recommended Council Tax level.  The Council Tax level will be reviewed and agreed at full Council at its meeting on Thursday 27 February 2020.

 

The draft budget was based on a number of assumptions, the key one being the Revenue Support Grant Settlement but also, for example, on such things as provision levels for pay increases and contract price increases.

 

The Leader confirmed that since the draft budget was published the Authority has had:

 

·         confirmation of the Revenue Support Grant;

·         confirmation of levy amounts;

·         confirmation of the UK minimum wage increase (which affects a number of  key social care contract prices);

·         national pay negotiations for Local Government staff have continued;

·         a couple of new budget savings proposals have also been confirmed which do not require wider public consultation and are being implemented under Head of Service delegations.

The position at today’s date and how the position has changed since the draft budget reported in December 2019 is shown in Table 2 of the report.  In summary:

·         there was a budget gap of c£5.6m at that time;

·         the better than expected Revenue Support Grant gave c£7.3m more funding than initially assumed;

·         savings of c£5.2m already identified in December 2019 and a further two proposals amounting to £300k have been identified;

·         consideration and approval by Cabinet of further cost pressures of £1.8m (shown in Table 1) and taken the opportunity to stop the reliance on reserves to balance the budget.

 

The cost pressures and new savings are detailed within the cost pressures and savings appendices of the report which has resulted in today’s position of a balance in hand of £3.9m

In considering what to do with the balance in hand, Cabinet considered the budget consultation feedback – both on the draft proposals themselves and the associated draft fairness and equalities impact assessments (FEIA’s).  Where needed, the FEIA’s have been updated and Cabinet have considered these in coming to its final decision.

 

The Leader was pleased to see the work that the Fairness Commission had done on developing a new matrix to aid their response to the consultation.

 

 

The Leader thanked her Cabinet colleagues for the attention paid to the consultation process and the diligence given to the responses received; the Leader also thanked all those who responded to the consultation.  Details of the exercise and the volume of responses received are included in section 6 of the report; the Leader noted the following: 

 

·         3,800 public responses, the highest received to date;

·         A successful public event held in the Newport Centre;

·         Feedback from a number of organisations representing user groups and interested parties as well as internal Council groups such as Scrutiny Committees as well as the Council’s Fairness Commission.

The Leader went on to speak about the final budget decisions and confirmed Cabinet had considered all the feedback and advice and the following final proposals on how to utilise the balance in hand of £3.9m, and the Council Tax level have been made:

 

In terms of investment the Cabinet proposes to invest:

 

·         £1.4m further in school budgets;

·         £250k further in the Council’s ICT budgets to accelerate modern ways of working and digitisation;

·         £70k in management development training to help prepare the Council for on-going challenges;

·         £292k in foster care fees to bring the Council’s fees closer to that of the best paying Gwent Council levels and create the foundation to attract and retain these valuable partners in Children’s social care;

·         £90k in the education department to strengthen governance arrangements with schools;

·         £120k in the city’s youth services (the Leader confirmed the youth council will be consulted on how best to utilise this funding);

·         *£80k in supporting bringing empty homes back into use by way of Council Tax reductions using the Council’s discretionary powers (the Leader confirmed a  detailed policy will be developed to support this;

·         *£60k in discretionary rates relief for community and youth groups across the city where they use their own premises (the Leader confirmed a detailed policy will be developed to support this.

·         £210k in city centre cleansing and safety initiatives;

·         £193k into the benefits’ service.

 

·         * The Leader confirmed that work will begin to build on the above two investments (marked *) as quickly as possible to provide the best possible support to businesses.  Already in place is the Welsh Government funded business rate relief schemes (small businesses and the high street reliefs).  Further work will be carried out to see what assistance can be developed with regard to business rates such as a hardship fund or a specific relief.

 

The Leader confirmed the following amendments to the existing proposals:

 

·         Delete the draft saving of £75k from the Barnardos’ contract and maintain the current level of preventative work from this partnership;

·         Delete the draft saving of £475k from using existing capital reserves to fund 2019/20 capital spend.  This will enhance the Council’s capital spend headroom in the future (this links back to discussions on the previous report); 

·         Delete the draft saving of £45k in 2020/21 and in future years from stopping the Post-16 Transport Support for schoolchildren;

·         Reduce the social care voluntary grants draft saving by £22k and not including the reductions shown for People First and MIND;

·         Reduce the proposed Council Tax increase to 6.95% - a Band A-C weekly increase of between £1.00 and £1.33 per week.  Two thirds of households fall into these bands.  This is the Council Tax required which underpins the overall budget and will have to be agreed at the Council meeting on the 27 February. 

The Leader gave some further detail on the budget proposals:

 

In respect of schools, section 4 of the report deals with schools’ funding.  The draft budget allocated new, additional funding of c£4.4m to schools.  The draft settlement allocated permanent funding for currently one-off funded base costs and together the schools’ budget would have seen an increase of c£9m – or 9.4%.

 

Only £4.4m is new and additional funding.  The £4.4m is the calculated cost increases for 2020/21, including costs of new schools and growing pupil numbers, and therefore it maintains schools’ current position, but does not worsen or enhance it. 

 

Schools are currently overspending significantly on their budgets – at c£3.5m based on latest estimates and on this basis, schools would have no reserves at the end of the financial year, in total.  There is therefore no flexibility for further overspending to be funded from school’s own reserves and it would fall on the Council’s general budget and other reserves to fund any further overspending.  The Leader confirmed there are no unallocated reserves with which to do this.

 

The additional funding of £1.4m will assist schools in operating within their funding but is incumbent on schools to deliver their own cost saving plans in addition to this.  It also anticipates increases in specific grants to schools; schools must operate within their funding next year and make inroads into recovering from deficit, where deficit exists.

 

The Council has recognised the financial pressures in schools by initially allocating the full amount of their assessed cost increases next year and now providing even further funding.  

 

Moving on to Council Tax.  The Leader stated that it is well known that Newport’s Council Tax is low compared to nearly all other Welsh Councils and indeed, across the UK.  However, this does have consequences on the Council’s finances:

 

·         The current year budget is c£8.3m below its Standard Spending Assessment level – that amount calculated by Welsh Government for the Council to deliver services based on their standard level of Council Tax;

·         In terms of ranking in Wales on its budget position against the standard spending assessment – Newport City Council is 19^th worst funded currently;

·         Newport has the second lowest level of Council Tax in Wales.

Until this year, the Revenue Support Grant, which funds about 75% of the Council’s net budget spend has not been increasing.   At the same time, the budget has had to accommodate pricing increases (inflation) and increased demand on the budget, particularly in social care and schools.  In this context, the Council’s relatively low Council Tax is very challenging when it aspires to provide the best support it can for the most vulnerable in society and a growing population.

 

The Council has made significant savings over many years to balance the Council’s budget as well as increasing Council Tax.  The budget for 2020/21 is balanced through c£4.3m of additional Council Tax income and £6k of savings.  The increase in the city’s Council Tax since 2015/16 has been lower than approximately half of the other Councils in Wales.

 

The increase announced today will:

 

·         Still place Newport amongst the lowest Council Tax Councils in Wales;

·         The budget will still be lower than the Council’s Standard Spending Assessment – by c£9.2m as the standard rate of Council Tax assumed in calculating the Council’s Standard Spending Assessments went up by 7.1%;

·         In cash terms, the increase represents a weekly increase of:

 

§  £1.00 for a Band A household;

§  £1.16 for Band B household and,

§  £1.33 for Band C household. 

§  The Leader confirmed help is available through the Council Tax Reduction Scheme for those households that qualify for the reduction;

 

·         The increase will allow the Council to invest in services:

 

-          £10.5m into schools

-          £4m into social care, and,

-          £800k to deliver the promises set out in the Corporate Plan.

 

The Leader stated that this balanced budget has been put together in the best interests of the citizens of Newport.

 

The Leader invited comments from her Cabinet colleagues. 

 

Cabinet members agreed that more funding is required from UK and Welsh Governments in order to provide the correct level of services expected by the people of Newport; schools must stay within their allocated budgets.  All thanked colleagues and staff for the work undertaken to reach a balanced budget.

 

The Chief Executive thanked Cabinet for taking this longer term view and confirmed she totally supports Cabinet in taking forward these proposals and their willingness to look at future priorities and investment to reduce the longer term pressures. 

 

The Leader thanked officers, cabinet member colleagues, partners and the citizens of Newport for their contribution throughout the budget process.

 

The report asked Cabinet to:

 

In respect of the budget proposals and medium term projections (section 3-6)

 

1.    note the formal consultation on the budget as outlined in section 6 and the feedback received, shown in appendices 1 to 4b.

 

2.    note the equalities impact assessment summary on the budget proposals, shown in appendix 9.

 

3.      review all draft budget proposals (appendix 5 - 6), as summarised within the medium term financial projections (appendix 7) and allocate the financial flexibility shown in table 3. In doing so, agree theimplementation of the resulting full three-year savings programme, including all budget investments and saving options.

 

4.      agree the 2020/21 fees and charges of the council shown in appendix 11.

 

 

In respect of the overall revenue budget and resulting council tax 20/21 (section 7 and 8)

 

5.      note the Head of Finance’s recommendations that minimum General Fund balances be maintained at £6.5million, the confirmation of the robustness of the overall budget underlying the proposals, and the adequacy of the general reserves in the context of other earmarked reserves and a revenue budget contingency of £1.5million.

 

6.      note the current level of council tax for Newport City Council and the monetary value of various percentage increase and how this compares to levels of council tax at other councils as shown in table 5.

 

7.      recommend an overall net budget for the Council and resulting council tax to full Council, noting that a formal resolution including the Police and Crime Commissioner for Gwent and Community Councils’ precepts will be presented to Council on the 27 February.

 

8.      approve expenditure and use of reserves in line with summary shown in appendix 10b, noting they are based on detailed proposals reviewed by Cabinet in their December 2019 meeting.

 

Decision:

 

All of the above proposals were agreed by Cabinet.  Cabinet agreed further changes as follows:

 

Investment of:

 

·         £1.4m further in school budgets;

·         £250k further in the Council’s ICT budgets to accelerate modern ways of working and digitisation;

·         £70k in management development training to help prepare the Council for on-going challenges;

·         £292k in foster care fees to bring the Council’s fees closer to that of the best paying Gwent Council levels and create the foundation to attract and retain these valuable partners in Children’s social care;

·         £90k in the education department to strengthen governance arrangements with schools;

·         £120k in the city’s youth services.  The Leader confirmed the youth council will be consulted on how best to utilise this funding;

·         £80k in supporting bringing empty homes back into use by way of Council Tax reductions using the Council’s discretionary powers.  The Leader confirmed a detailed policy will be developed to support this;

·         £60k in discretionary rates relief for community and youth groups across the city where they use their own premises.  The Leader confirmed a detailed policy will be developed to support this.

·         £210k in city centre cleansing and safety initiatives;

·         £193k in the benefits’ service. 

 

Agreed that the following changes will be made to existing proposals:

 

·         Delete the draft saving of £75k from the Barnardos’ contract and maintain the current level of preventative work from this partnership;

·         Delete the draft saving of £475k from using existing capital reserves to fund 2019/20 capital spend.  This will enhance the Council’s capital spend headroom in the future; 

·         Delete the draft saving of £45k in 2020/21 and in future years from stopping the Post-16 Transport Support for schoolchildren;

·         Reduce the social care voluntary grants draft saving by £22k and not including the reductions shown for People First and MIND;

·         Reduce the Council Tax increase recommendation to Council to 6.95%.

Decision:

 

Cabinet recommended the budget, in line with the agreed changes noted above, is put to Council for consideration and decision at the next meeting to be held on Thursday 27 February 2020.