Proposal for draft Budget strategy to be considered by Cabinet
Cabinet could agree for phase two of this year’s Budget consultation to focus on a draft strategy put forward by officers, proposing how the Council could set a balanced budget for 2024/25 amid the significant financial challenges being faced.
At their meeting on Wednesday, January 24, Cabinet will consider a detailed report that proposes a draft strategy in response to the large Budget gap being faced. December’s provisional Local Government Settlement included a 2.8% funding increase for Rhondda Cynon Taf, and the Budget gap following this was £36.65m.
All councils in Wales are facing significant challenges to set legally-balanced budget by March 2024. This is based on many factors that include the high level of inflation, the ongoing Cost of Living crisis, and pressures across key services that need to be protected as far as possible, such as schools and social services.
A series of early budget reduction measures were reported to Cabinet in November 2023, with Members also previously agreeing proposals relating to the Learning Disability Day Services offer, Supported Living Service for people with a disability, Domiciliary Home Care, and Day Services for Older People. These will deliver combined savings that contribute to reducing the Budget gap to £25.91m – which is the position on which the draft Budget strategy is based.
The draft Budget strategy that could be consulted on
If agreed by Cabinet, the draft strategy included in Wednesday’s report would become the main focus of the Council’s phase two Budget consultation, held each winter. Members could agree for it to run from January 24 to February 9.
The Council always takes a responsible approach to setting council tax levels, balancing the need to protect key services and residents’ ability to pay. Every council in Wales will need to raise council tax next year due to the financial outlook, and officers have modelled the draft Budget strategy on a 4.9% rise.
The proposed Schools Budget would see schools allocated funding to cover all pay pressures in full, including teacher pay awards. Above this, it is proposed that a further £1m budget is provided towards non-pay costs, funded in part by a proposed charge for pre school-day childcare prior to Breakfast Clubs, that was recently consulted upon. Overall, the increase for schools will be £11.9m which is a 6.4% uplift.
Work by Senior Officers to identify efficiency savings (beyond those reported to Cabinet in November 2023) has continued – resulting in a potential further £5.24m saving. The savings include some Operational Service Reconfiguration proposals that are listed in the Cabinet report, and officers have provided assurances that the changes can be made without a significant impact upon Council services.
Other proposals to reduce the Budget gap are listed in the report. These include a reduced base budget requirement for energy costs next year compared with this year; a new income stream from the generation and sale of energy once the Council’s new solar farm becomes operational; and adjustment to certain base budget requirements following detailed review.
A separate report to Wednesday’s Cabinet meeting outlines the proposed Fees and Charges for Council services, which must be set each year as part of the Budget. It is proposed that a standard 5% increase is implemented – however, there are a number of services where costs are proposed to be frozen or increased at a more specific rate. The proposals would generate additional income of £452,000 per year.
Having factored in all of the proposals outlined above, the remaining Budget gap for 2024/25 would stand at £8.95m. The draft strategy proposes that this sum is met in full by the release of reserves funding which has been set aside for this purpose.
Councillor Andrew Morgan OBE, Leader of Rhondda Cynon Taf Council, said: “These are extremely challenging times for councils right across Wales, each of which will be closely reviewing the delivery of their services to identify potential revenue savings. This financial challenge is influenced by a number of economic factors including the high level of inflation, the ongoing Cost of Living crisis including high food prices, and pressures across many services.
“We welcome the uplift from Welsh Government in the provisional settlement, however, it is nowhere near the level that would be required for us to set a legally-balanced budget without looking at making significant savings. Our revised Budget gap following the settlement was more than £36m, which is one of the biggest gaps we’ve ever faced as a Local Authority.
“Officers have compiled a draft strategy that outlines how we could deliver a balanced Budget for 2024/25 – and Cabinet could agree to consult residents on this in phase two of our annual consultation, starting on January 24.
“The draft strategy rightly protects schools and social services that make up around 70% of our Budget, which has also been achieved in previous years. But then it becomes increasingly difficult to make further savings each year from the remaining 30% of our Budget. We’ve made large efficiency savings across consecutive years, including £16.1m in the current year – and it’s been a tremendous effort to identify another £13m for next year. Such operational changes are increasingly hard to find without impacting upon services.
“It appears that nearly all councils in Wales will raise council tax by between around 5% and 10% next year, and the draft strategy is modelled on a 4.9% rise which comes in at the lower end of the scale. While we don’t want to pass on costs to households, we have to balance that with protecting our services – and officers believe that the proposed level is a reasonable compromise.
“Finally, it’s proposed that almost £9m is used from our reserves to meet the remaining Budget gap. Most reserves held by the Council are allocated – for example, earmarked for large infrastructure projects like our investment in new school facilities. We do hold some transitional reserves that are available, and officers have noted that these can be replenished with some certainty as the Council continues its strategy of delivering savings early each year.
“If agreed by Cabinet on Wednesday, the phase two Budget consultation will be progressed, and I’d urge residents to take part and have their say. Further details would be available on the Council’s website and communicated soon.”