Conwy Council faces ‘massive storm’ amid predicted £18.5m budget shortfall
Conwy County Council could face a shortfall of £18.5m in the next financial year, impacting on services across the board.
Councillors met as part of the finances and resources overview and scrutiny committee to discuss planning the budget for 2023/24, voting for a review of services to avoid a ‘salami slice’ approach.
But proposals for a public consultation regarding service cuts and council tax were thrown out after a second vote, following talks of a 6% council tax rise.
The final decision, though, will lie with cabinet once the debate and processes are complete.
Cabinet member for finance Mike Priestley gave a grim warning at the meeting.
“I’ve been on the cabinet in the past, and it is fair to say that this is probably the most challenging that I’ve ever experienced,” he said.
“Business cases (from services) have to come forward, and they have to be absolutely unavoidable and essential.
“We are basically in a massive storm at the moment. We will be looking at reserves to bridge some gaps. But make no bones about it – it is really difficult at this time.”
He added: “We are looking at services (and asking) is it good enough and do we need to provide certain services?
“But it is fair to say, in my experience as a councillor since 2004, everything we do is important to somebody, so it is going to be a difficult time, and I just hope as a council we come together.”
The committee discussed the council’s business planning framework and the financial outlook for the next financial year.
Councillors considered the potential variables, both in terms of expenditure.
But warnings were issued that investments in service business plans would only be made when absolutely necessary.
The committee heard how planning for the year ahead was ‘extremely difficult’ due to uncertainty about staff pay increases, inflation, and future government funding.
Other pressures included the rising cost of social care and children’s services.
The report also advised council services should be ‘remodelled’ where possible.
Conwy’s strategic finance and resources director Amanda Hughes explained to the committee just how dire the situation might be.
“As has been the case for many a year now, the outlook for 23/24 looks particularly challenging, and perhaps actually more challenging than it has been for a long while given the significant pay and price inflation that we have in our economy as many other countries do in their economies as well,” she said.
“Whilst I’m not for one moment suggesting the figure I’m quoting in table one, which is effectively a shortfall of £18.5m, is a correct figure, because there are clearly many unknowns at this stage, (there are) a range of uncertainties around the inflationary pressure that we’ve still got to see, and they are predicting inflation going as high as 20% if you read some articles, but also we don’t know what business cases will be coming through. We don’t know what those pay awards are going to be.”
The finance officer said the situation also depended heavily on UK Government and Welsh Government funding in the shape of the annual settlement.
“So there is a whole host of unknowns, but I think at this moment, the figure of £18.5m shortfall gives an idea of the kind of shortfall that we potentially face,” said Ms Hughes.
“Obviously, the biggest caveat to all of this is we don’t know what Government funding will be, so although I’ve assumed we’ll get that 3.5% uplift (from the Welsh Government annual settlement) that we are aware of, we obviously don’t know whether further funding will come through UK Government to Welsh Government and to us.
“Unfortunately, though, we won’t know what the settlement is until December, and therefore we’ve got to start planning for the worst-case scenario.”
Leader Cllr Charlie McCoubrey added: “Clearly, it is a very worrying situation. We are not going to be able to sort this out ourselves.
“If we were going to make cuts of that kind of magnitude, it would destroy our services.
“I knew it was going to be bad when we took it on. We were aware of this coming. This doesn’t come as a big shock.
“It was something I was very conscious of when I took the job and when I selected the cabinet.
“I went for experienced members where I could because they need to know the services as well as they can because some of these choices are going to be really, really difficult.”
Cllr Nigel Smith proposed a 6% increase in the precept for council tax, insisting social services were struggling.
“We are going to have to swallow that bitter pill,” he said. “We are just going to have to do it.”
But Conwy’s head of law and governance Rhun ap Gareth reminded councillors they weren’t actually setting the next budget but considering background information.
“The information isn’t here today for you to come to those conclusions to make those recommendations,” he said.
“You need to follow a process. Setting a minimum council tax is a pretty big statement without going through a process.”
When calls for a public consultation were dismissed, Cllr Paul Luckock said it was a vital part of democracy that residents were consulted.
But leader Cllr Charlie McCoubrey responded: “To expect a member of the public to understand what a 3% cut to procurement, what a 2% cut to legal systems means, they do not have that level of knowledge.
“You would have to produce a 600 or a 1,000-page report for them to tease all that out.
“These are really difficult choices that are going to require bravery and choices and courage. It’s not a popular choice to cut anything, but that is the difficult choice we have to make.”
He added: “A consultation should only be if there is a meaningful answer.”
Cllr Anne McCaffrey proposed that there was no ‘salami slicing’ of services and a strategic review of all services and their functionality and impact on residents was carried out, and councillors voted 7/3 in favour with two abstentions.
Cllr McCaffrey also made a second proposal that there was a public consultation, to allow residents to have their say on potential cuts and council tax increases, but this was defeated 3/8 with two abstentions.
Councillors backed the report 12 votes to one, advising cabinet note the scale of the funding gap in planning for the 23/24 budget.
By Richard Evans – Local Democracy Reporter
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