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Question from: County Councillor Iain McIntosh Subject: Budget setting
Question:
I note the Finance Cabinet member’s recent criticism of opposition councillors for not presenting an alternative budget but I’d like to point out that he already has an alternative budget at his disposal.
During my time as a Cabinet member, preliminary budget proposals were discussed in the lead up to Welsh Government’s announcement of the settlement Powys County Council would receive. During this time, a balanced budget was discussed based upon what funding this authority assumed would be offered by Welsh Government, with a proposed council tax increase of 5%. In December, Welsh Government announced their funding settlement for Powys County Council, which included an extra £18.6 million over and above what this authority thought we were going to get. That extra £18.6 million equates to what would be the same as a 21.6% rise in council tax for the financial year.
Considering the fact that a legal balanced budget proposal based upon an increase of 5% to council tax was on the table, and the fact that this authority has been sent the equivalent of 21.6% council tax increase, can the finance Cabinet member please explain why a new proposal is now being presented to council based on a council tax increase of 3.9%? This would result in a net increase equivalent of 25.5% to council tax for the financial year. What extra financial challenges has the authority found since last December?
Surely, with the current cost of living crisis, and the fact this authority has finally been sent the level of funding Powys residents deserve by Welsh Government, there should be no council tax increase this year, at all?
Minutes: Response by the Portfolio Holder:
The budget development for 2022/23 took place throughout the year and was guided by the principles set out in the Councils Medium Term Financial Strategy approved by Council last February. The strategy set out the opening budget position for 2022/23 in the FRM, but this needed to be further developed until a final budget proposal is presented by Cabinet. The opening budget position although based on 5% Council Tax was not balanced and a budget gap of £11.7 million was reported, at that point significant additional service pressure had not been identified.
No formal budget for 2022/23 is actually confirmed until it is officially proposed by Cabinet. Cabinet approved their draft budget in January 2022 and this then formed the budget proposed to Council. Any budgets submitted after this date are classed as alternative budgets.
As the budget was developed Cabinet considered updated information from services across the Council as they finalised their IBP’s and this work highlighted significant financial pressures across service particularly Social Care, this all increased the pressure on the budget. The Council budget seminar in November informed Council that a budget requirement of an additional £22.9 million for 2022/23, was needed in order to balance the budget.
The increased Settlement from Welsh Government when received in December came with significant additional obligations falling on the council, the additional funding to support social care helped to bridge the increased gap being projected in those services as their pressures increased. The settlement also included additional funding to replace the Covid hardship fund with those costs now falling on the Councils budget, and a requirement for the council to ensure that all care workers, including those that work for external providers commissioned by the council to be paid the Real living wage, a new significant pressure for next financial year and Cabinet had to consider this and amend their budget proposal to ensure that services have appropriate levels of funding to deliver the services our communities need.
In summary the Net budget requirement falling on the Council for 2022/23 was finally proposed by Cabinet as an increase of £22.541m, the Welsh government settlement provided £18.374m with the remainder raised through Council Tax £4.166m or 3.9%.
The increased cost of living with rising inflation is also impacting on the cost of delivering services and this too creates financial pressure on the Council, some of this has been factored into the service budgets but the Council still carries a level of risk in that costs could rise further.
Cabinet have clearly considered all of these factors in finalising their budget proposal. It is essential that we consider the ongoing financial sustainability of the Council, and ensure that we can maintain the vital local services upon which our communities rely.
The receipt of additional funding during the last quarter of the year provided the Council with further funding, Cabinet reassessed the budget and have utilised this additional funding to reduce the impact on the base revenue budget, ... view the full minutes text for item 1. |