To receive and consider the Revenue and Capital Forecast as at 30th June, 2021 together with an update from Heads of Service.
Minutes:
· Revenue and Capital Forecast as at 30th June 2021.
Issues Discussed:
· At Quarter 1 the projected position was a £700k surplus. There are a number of elements in the report showing the delivery of cost reductions. At that point 30% were achieved, 51% assured, and 19% were now considered to be unachievable. Appendices A and B give more detail around each service.
· Highways, Transport and Recycling
· Q1 was showing a net deficit of over £1m, but this has improved in Q2 to a deficit of £663k due to additional support from the Welsh Government hardship fund. Covid has had an impact on the level of income possible and it is expected that there will be an overspend at year end, but the Service is working to reduce this. There are some opportunities in year to mitigate this in year by reducing services or spend but this is a last resort.
· Of the unachieved savings the largest element is the £549k reduction in respect of transport. The pandemic has delayed this saving the Service is expecting to achieve £100k to £150k by year end. Bus routes will also be reviewed. There has been some pressure also in the waste service due to shuttling staff due to the social distancing requirements for operational staff. This week the Service has returned to three in a cab so the additional shuttling of staff is no longer required. Waste and transport are the areas with the greatest challenge to achieve savings, but some of these will need to be rolled forward.
· The Portfolio Holder commented that improvements in the budget had been made since Q1 and changes including digital transformation were being considered. Operational changes were being considered as the Service was moving into the new centre at Abermule shortly.
· Questions:
Relating to all services - there is little information in the report about the Covid grants received and the impact this has had on the out-turn.
This will have significant effect on highways as a substantial amount of money is anticipated for reducing potholes. A substantial amount has been spent on new lorries. Could this be explained, and why was this not included in this year's budget. There is a big gap between what was set in the budget and the out-turn. Was the budget that was set achievable.
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Covid grant funding – some has come from Welsh Government £340k for the jet patcher of which £164k spent so £166k left to spend. Also received £100k for public toilets which has been distributed to Town and Community Councils. In terms of other funding Welsh Government funding is anticipated for collecting more waste and Welsh Government has agreed to provide 50% funding for the additional waste. Lorries – the Service has one electric RCV (Refuse Collection Vehicle) which was 50% funded by Welsh Government. The lorries purchased were more expensive than originally budgeted for and this is a pressure moving forward. Is budget achievable – the Service is confident, and new data sets are being used to assist used with the pressures being faced to be realistic to ensure it does meet the budget.
In terms of the new lorries, 23 new recycling vehicles needed to be ordered and 6 RCVs at a cost of between £3m and £3.5m. With a need to move towards more electric vehicles in 2025 / 2026 this will need to be factored into the budget as the electric RCV was 100% more cost than a petrol vehicle. Whilst the budget was set during covid pandemic, the long term effect on staff and the savings was not known. In relation to the £549k reduction the bus emergency scheme has been introduced which is likely to fund a large element of that. The Service is starting to come back to normality now for services and should be in a better place to achieve the reductions by next year. However, there are additional pressures through inflation on materials of around £450k to £500K associated with fuel, materials, replacement bins and an inability to use red diesel in gritters. Account will need to be taken of the current and new pressures.
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Not sure why is the covid fund is being used for jet patching. With the additional pressures coming forward, will these be included in the discussion with the Cabinet as it will have impact on Council Tax next year. |
The Head of Service assured the Committee that there will be full transparency in relation to the additional costs and that the Service will seek to achieve the targets moving forwards. |
With regard to three persons in a cab has there been any advice to staff such as keeping windows open or wearing masks.
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Returning to three in a cab has been passed by Welsh Government following risk assessments. Operatives have been given advice as to how to manage their environment in the cabs. PPE is also provided to staff should they require it.
The Portfolio Holder for Finance reported that Welsh Government had withdrawn the funding for the follow on vehicle. Undelivered reductions will put a pressure on next year's budget and need to be taken into account in that budget. Delivery of budget reductions generally fluctuates but is around 80% achieved in a year.
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With the grants of £1.5m received to support public highway refurbishment, has it been received, is it a one off grant, and how will it be spent.
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Yes, it is a one off grant to support capital schemes around resurfacing roads. Approximately £9m has been received in additional capital grants which needs to be spent by the year end.
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Are charging points for electric vehicles in place in all depots. Has account been taken of acute winter pressures if there is an acute winter this year.
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The winter maintenance season is starting and arrangements are in place and ready for a bad winter. Charging points are not installed at all depots currently. £300k has been received this year which will be used for electric vehicle charging at Brecon depot. This £300k will be required for a number of years to come to install charging points at the other nine depots.
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There is a question as to whether the reductions should have been tested before they went into the budget as the council has a poor record of achieving budget reductions. If these are not achieved what else will be cut and what will be the impact, |
There will be a need to look at depots, and the management structure. Some key senior officers have been away ill for a period of time, and some of this work should have been undertaken by now, but has not although it is progressing. The Service is aware that it needs to stay within its budget. The Portfolio Holder advised that when the senior staff were back in work she was confident that savings targets could be achieved.
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At what point do services become undeliverable and have we already passed that point in regards to Highways, Transport and Recycling.. |
The Service is currently sustaining most of the services. There are some elements such as some C class roads where the condition is below the Wales average. For class A and B roads there has been a slight improvement of that network last year. There is a need to sustain the budget as more cuts in the budget could mean a deterioration of the road network, and due to the size of the network in Powys it would be difficult to get it back to a standard. There needs to be an investment in the C roads which is why jet patching is so important. |
Would the same be true for waste and recycling. At what point are we not able to deliver these services. Members need to understand what point a budget cannot go past, otherwise services cannot be delivered. |
Where there are targets, the Service could not look to reduce those services. Current levels would need to be sustained and maximise income. With the 70% recycling target we could not reduce the service if the Council is to achieve that target. |
· Comment:
· The Cabinet will review where savings are identified as undeliverable and seek other areas to reduce costs.
· Could the Committee have this understanding in future as to where the Highways budget could not be reduced further without cutting services.
· Property, Planning and Public Protection (PPPP)
· The Service overall is predicted to have an underspend of £66k. The Planning Service is on track to secure its income targets, but this does vary with planning fees and issues such as phosphates, and this is being monitored.
· Public Protection Team, there have been additional costs which have been offset by the Covid Recovery fund.
· Strategic Property is an area where income targets have not been achieved, but more business are signing business tenancies at present which is positive. The Service is also looking to offset any losses by a review of business rates which is currently being undertaken.
· Questions:
In relation to cost reductions, will the additional 63% be achieved. From which services in PPPP will the additional savings come from and is there likely to be a detrimental impact of these savings on those services.
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The cost reductions will be achieved by means of the business rates review which will offset a number of the income targets. New tenants going into properties will help sustain the service in the medium and long term. There are a number of vacancies in the PPPP services, for example in Planning so there is a temporary decrease in the salary budget.
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With regard to Environmental Health and Trading Standards, these are small budgets so its likely that there is little scope for changes in these services.
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There is little scope within the Public Protection area. There have already been substantial increases in income targets and Powys is of the highest in Wales for income fees, and it will be difficult to raise these income targets further.
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Cost pressures of £102k, is the income reduction largely due to covid. Will the amount of income rise as things get back to normal and lessen the cost pressures.
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Covid has had an impact on income targets and the ability of Services to undertake work, and services are paid for the work undertaken. It is hoped that a return to normality will see income targets rise in future.
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Shortfall of £51k in unachieved savings in respect of running buildings. Is this an ongoing cost or is this due to the cost of adapting another building or buildings for a particular service use. How many PPPP staff are working partially or wholly at home and will the council be able to see a tangible benefit as a result of changing work patterns.
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The £51k is for running Ty Maldwyn in Welshpool. It was originally envisaged that there would not be a Council office in Welshpool, but subsequently one is required and the oncosts for running that office will need to be planned for going forward. Most of the service's staff are not going into the office except for property staff. There will be options for savings if new ways of working does progress and it could need a review of how the Council works and the use of offices.
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With regard to services and response times, if there is a need to make further savings can the services meet the savings targets and their statutory obligations. Do the services have sufficient resource to deliver statutory services.
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Services do have the resource to deliver services, but the quality of that service and the expectations of customers is another issue. Statutory services can be met but customer services is the issue of concern. The biggest threat currently for services is the ability to recruit and retain staff. There are a number of vacancies in planning services but have difficulty in filling those vacancies.
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· Comment:
· The Council has for some time spoken about new ways of working and reducing the numbers of buildings, but it needs to demonstrate a tangible benefit of these new concepts and that they do deliver.
· Housing and Community Development
· In terms of assured savings the Service has delivered or is on target to deliver a large amount of this. Income is looking positive and the Service is overachieving in some areas. Further work is being undertaken on library savings which were delayed due to staff capacity in the Council, but are being progressed and a part year saving is anticipated. In relation to the Catering Service, an overspend is predicted as income has been reduced due to the Service not being able to provide a full time service in high schools at present and this is dependent on ending covid restrictions in schools. Furlough has ended but the hardship fund has been extended to the end of March 2022 and this will be utilised by the Service.
· Questions:
What is the difference between assured and guaranteed in relation to savings. The library savings depends on work in the community. How can we guarantee savings in advance of the discussions being completed. Are there any positive or negative changes resulting from the work being undertaken in respect of HOWPS which can be seen in the budget.
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Assured means the saving has been or will be delivered in the current financial year. Some savings have been completed and the item removed from the budget. Other savings are due to increases in income levels. In relation to the £75k for libraries, work has been undertaken with communities, but has been delayed in the current financial year due to capacity in teams but work is progressing again and the Head of Service was confident that part year savings would be achieved. The service has had a number of staff vacancies and staff redeployed. The Service is having difficulties in recruiting staff in some areas. There is no impact from the HOWPS changes as yet.
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How are we going to overcome the issues with recruitment
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The Service will do whatever it can to promote the service and the area, working with the Council's HR Team.
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Welsh Government funding not yet claimed. There will be additional pressures on people when furlow ends and when cuts in universal credit take effect. The Council could find an additional demand for free school meals because of these changes. Is the Service planning for this.
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Discussions have already been ongoing for some time with the expectation that more pupils will become eligible and able to claim Free School Meals (FSM) , and the team is prepared for this to happen. Welsh Government has announced additional funding for FSM up to the end of March 2022 and this will continue in school holidays. The Service is regularly promoting the FSM offer.
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There are a large number of children in Powys not receiving FSM when they should have been. What has been done about that and what impact would it have on the budget if more pupils moved onto FSM.
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A campaign has been undertaken to promote and encourage the availability of FSM. Changes to numbers receiving FSM should not have an impact on the catering service budget.
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The Housing Revenue Account (HRA) is ring fenced. There is a comment on the HRA included in the papers. Could you comment about this.
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It is anticipated that there will be an underspend in the HRA. Some construction projects have been delayed due to a lack of availability of contractors, labour and some materials. One of the priorities in the HRA is voids, and the average void time this year has been reduced from 48 days to 34 days.
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What were the number of voids at the end of the last financial year and what is the current number. What was the cost of voids last year in terms of lost rent income.
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In January 2021 it was around 85 voids, and now its down to around 40. This figure can be provided, but it was significant. (ACTION)
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· Digital Services
· There is an out-turn overspend of £549k. This is mostly due to unachieved savings of £969k. The gap is being bridged with grant income and vacancies due to issues with recruitment which has brought the unachieved savings down to £549k. £600k of those savings are corporate savings held against digital transformation, so the service is holding a balanced budget at present. The delays on digital transformation are due in part to the work undertaken last year on Covid recovery systems and meant a move of unachieved savings from last year to this year. Covid recovery systems included a TTP system to support before national systems became available, library click and collect, Welsh Government food parcels, desk booking system. In Regeneration there were some savings based on extra income from ESP5 and other grants available, and it is hoped to manage this within the budget but it remains a challenge.
· Questions:
Regeneration. In terms of Appendix A, table 2 the original budget is showing as zero and there are a significant amount of virements which have been approved and transferred. As at June there was 91.2% of this budget remaining. Has any of this been allocated. Are there any tourism projects planned and if so how do these tie into the overall Visit Wales Tourism plan.
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Virements to the budget are where there is grant funding available which might not be spent in year but could be spent the following year. Virements are usually cleared early within the quarter. With regards to Tourism, this is a small team and the biggest investment will be through the Mid Wales Growth Deal. The team is working on studies and projects in that area, also continuing with day to day tourism support through Covid and business grant recovery and working with the Tourism sector and Welsh Government to continue that support. The Covid recovery fund has been available to support tourism and businesses.
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Normally virements are allocated early in the financial year. There still seems to be much unallocated. Can you give assurances that there are plans such as Powys' contribution to the Growth Deal or how this will be allocated.
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Most of these are capital projects. All funds are put in as bids against a specific project, so all of the programmes are on track to deliver within the current year.
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Are you confident in being able to pick up pace in relation to the transformation agenda.
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Digital transformation – over the last two years there has been a target of £900k savings and the Service is on target to achieve these savings. However, some of these savings are not cashable e.g. Office 365 which has allowed everyone to work at home, and whilst there have been savings across the organisation these are not attributable to digital. This does, allow the organisation to transform digitally. The service is continuing to work against a programme, but will not be able to meet all savings this year, but are reprofiling the work to ensure that the services makes as many cashable savings as possible.
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How are issues such as Office 365 captured.
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These programmes are not part of digital transformation but are part of ICT infrastructure transformation instead. These are significant pieces of work that has supported the Council through the pandemic. Corporate savings always a challenge.
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Only a small proportion of savings have been assured due to the delays of transformational change. Is this transformational change broader and across the Council.
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Some of the savings are still a challenge. Corporate savings are for other services some of which cannot be taken forward as those services are in business critical mode. Work has been progressed to transform the way customers can interact with the Council. This has the benefit that customers are supported during the digital transformation and making sure they can interact better with the Council. This has the benefit of making some corporate savings.
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Where you cannot meet the targets, what challenge do you get from Portfolio Holders and Corporate Directors.
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Digital transformation reports to the Digital Transformation Board which comprises the Portfolio Holder and Corporate Director. Savings are discussed there and an update has also been requested for Cabinet and the Executive Management Team.
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· Transformation and Communications
· Anticipated £36k underspend in quarter 1. Additional income has been achieved and there have been staff vacancies. 100% savings have been achieved this year. Expecting either a balanced budget or an over achievement of income in 2021-22.
· Questions:
What Welsh Government funding might be claimed by the Service, or is there nothing to claim currently.
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Funding has been claimed from Welsh Government for the TTP information provided as well as exploring the opportunity of selling the Powys Information Bank across Wales. In quarter 2 Powys will have claimed part of PSB funding which it receives.
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· Workforce and Organisational Development
· The Service currently has a small overall underspend of £14k. At the end of the year the budget is expected to be in balance. Savings pressures and unachieved cost reductions will be offset by staffing underspends.
· Recruitment – the recruitment market is currently at its tightest across UK and Wales since the 1970s both in the private and public sectors. It is more difficult to recruit in the more skilled and diverse jobs. The Council is seeking to promote Powys in the best possible light, and trying to make the recruitment experience for applicants on the website as easy as possible and making sure that the Council is visible on the right recruitment sites. An additional resource is being brought in to assist with this. This is a challenge for Powys and all Councils in the UK.
· Questions:
Regarding the £120k apprenticeship programme which is not achievable, what are the challenges.
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This is prefaced on bringing in an average of 10 apprentices across the year. The concept that the apprentice would be covering a job vacancy and therefore receiving training whilst undertaking the role. They would also be undertaking a nationally recognised course in a recognised field. At the end of the training they would then get a job. The £120k was also an efficiency saving as the apprentices were undertaking a real vacancy. However, this is not as straightforward as expected. When services started recruiting they changed the pattern of recruitment, and some services took the view that they wanted a different type of apprentice rather than to fill a vacancy. Therefore the view is that this is not achievable.
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For those services that wanted to change how they recruited people, did they have conversations with the HR Service or were these changes last minute. Does it impact on the Council's overall recruitment strategy.
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It would not affect the overall strategy. Over the last year it has been a gradual change by some when working under business continuity, so there may have not been the expected level of conversations with HR.
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Do we offer a service where young people can send a CV into the Council and then the Council tries to place them in an appropriate role.
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An apprenticeship pool has been established and still has about 60 people interested in taking up employment with the Council. There is also an officer in place to support people getting an experience with the Council as suggested.
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· Legal and Democratic Services
· The Service is forecasting an overspend of £86k in quarter 1 which is due to unachieved savings in members support, the restructure of Democratic and Scrutiny Services and the Registration Service restructure which were paused. The Service is looking to putting forward some proposals which will include additional support in place for scrutiny working with the Communications and Transformation Service. In terms of cost pressures of £77k these are as a result of a loss of income due to covid restrictions.
· Questions:
With regard to Members' services and scrutiny support, have the cuts to this area gone too far. |
Do not consider that the cuts have gone too far to date. Only £105k savings have been made to date which is why the savings targets have not been achieved. Aware that there have been concerns about the level of support and the Service will be looking at level of support to Members and there will be more support but there will be savings associated with that over a longer time period. |
Has any thought been given to reallocating travelling expenses which Members are not claiming to Members support.
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Member travelling budget has been reduced from £90k to £50K and it is hoped to identify additional savings from next year. |
Members' support is currently non existent.
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This issue is not raised by other Members but will test this.
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What assurance is there that the savings can be achieved.
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The full savings will not be achieved this year, as they are dependent on the restructure, but there is a possibility of part savings by year end.
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What challenge is there to you as a Head of Service from your Director and Portfolio Holder around the budget.
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The is a regular challenge from both. The decision to suspend the restructure was made in conjunction with both. There will need to be the level of support which Members require, and some savings will be made but not at the level required this year.
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Will the unachieved savings from this and other services be spread across the organisation in future.
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No. Some unachieved savings will be offset by underspends elsewhere in the budget.
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· Finance
· The Service is predicted to be within budget and have an underspend. There are some pressures such as the retendering for the Council insurance premiums. There are no further pressures as the service resource is mainly based on staff. Cost reductions – anticipated to deliver all of these during the year with some already achieved.
· Questions:
In relation to corporate activities there is a £336k overspend anticipated. With changes to living standards and universal credit pressures, should we have some of this pressure becoming apparent sooner and how will this be met. |
The Council has been able to claim some funding from Welsh Government's Hardship Fund. It is unclear as yet whether the Council can claim for this in the current year or for Council Tax reduction pressures. Some of these pressures have been met from underspends in other corporate activities such as a reduced cost of borrowing. However this is being monitored to see whether the end of furlough will have a further impact with more people needing additional support.
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Torfaen Council it is believed were able to provide some additionality to discretionary housing payments to those who were losing £20 per week universal credit. Did we know about that and is it something we were considering.
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We did not know that Torfaen were planning that and there have been no discussions about this within the Council.
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Would it be possible to have details of the cuts made to Services over the last 10 to 15 years. There is concern about the point when services become no longer viable.
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If this is across all services about £100m has been taken out of budgets over the last 10 years and this information can be provided in an annual breakdown.
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Outcomes:
· Noted.
Supporting documents: