Y Pwyllgor Cyllid
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Mike Hedges MS|
|Peredur Owen Griffiths MS||Cadeirydd y Pwyllgor|
|Peter Fox MS|
|Rhianon Passmore MS|
|Russell George MS||yn dirprwyo ar ran Peter Fox am ran o'r cyfarfod|
|substitute for Peter Fox for part of the meeting|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Alwyn Jones||Llywydd, Cymdeithas Cyfarwyddwyr Gwasanaethau Cymdeithasol Cymru|
|President, Association of Directors of Social Services Cymru|
|Andrew Jeffreys||Cyfarwyddwr, Trysorlys Cymru, Llywodraeth Cymru|
|Director, Welsh Treasury, Welsh Government|
|Anthony Hunt||Arweinydd, Cyngor Bwrdeistref Sirol Torfaen|
|Leader, Torfaen County Borough Council|
|Darren Hughes||Cyfarwyddwr, Conffederasiwn GIG Cymru|
|Director, Welsh NHS Confederation|
|Dave Street||Cyfarwyddwr Corfforaethol Gwasanaethau Cymdeithasol a Thai, Cyngor Bwrdeistref Sirol Caerffili|
|Corporate Director of Social Services and Housing, Caerphilly County Borough Council|
|Emma Watkins||Dirprwy Gyfarwyddwr Cyllid a Busnes Llywodraeth, Llywodraeth Cymru|
|Deputy Director, Budget and Government Business, Welsh Government|
|Jon Rae||Cyfarwyddwr Adnoddau, Cymdeithas Llywodraeth Leol Cymru|
|Director of Resources, Welsh Local Government Association|
|Lis Burnett||Arweinydd, Cyngor Bro Morgannwg|
|Leader, Vale of Glamorgan Council|
|Llinos Medi||Arweinydd, Cyngor Sir Ynys Môn|
|Leader, Isle of Anglesey County Council|
|Rebecca Evans MS||Y Gweinidog Cyllid a Llywodraeth Leol|
|Minister for Finance and Local Government|
|Sally May||Cyfarwyddwr Gweithredol Cyllid, Bwrdd Iechyd Prifysgol Cwm Taf Morgannwg|
|Executive Director of Finance, Cwm Taf Morgannwg University Health Board|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Georgina Owen||Ail Glerc|
|Leanne Hatcher||Ail Glerc|
|Mike Lewis||Dirprwy Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.
Dechreuodd y cyfarfod am 09:30.
The committee met in the Senedd and by video-conference.
The meeting began at 09:30.
Bore da a chroeso cynnes i'r Pwyllgor Cyllid y bore yma. Rydyn ni'n parhau efo'n sgrwtini ni o'r gyllideb ddrafft. Rydyn ni wedi bod yn edrych ar sesiynau, ac mae gyda ni'r Gweinidog yn dod i mewn yn hwyrach y prynhawn yma. Rydyn ni'n disgwyl Rhianon Passmore—bydd hi yma mewn ychydig. Mae Peter Fox wedi rhoi ymddiheuriadau ei fod o'n methu bod yma ar ddechrau'r sesiwn, ond croeso cynnes i Russell George, sy'n ymuno efo ni. Oes gan unrhyw un unrhyw fuddiannau i'w nodi cyn ein bod ni'n cychwyn? Na. Gwych.
Good morning and a very warm welcome to the Finance Committee this morning. We're continuing with our scrutiny of the Welsh Government draft budget. We have been looking at sessions, and we have the Minister joining us later this afternoon. We are expecting Rhianon Passmore—she'll be joining shortly. Peter Fox has sent his apologies that he can't be here at the beginning of the session, but a very warm welcome to Russell George, who's joining us. Do Members have any interests to declare before we start? No. Excellent.
Fe wnawn ni symud ymlaen i'r sesiwn gyntaf y bore yma, sef sgrwtini—. Efo ni mae gyda ni gynrychiolwyr o'r NHS ac o social services.
We'll move on to the first session this morning, namely the scrutiny—. With us today we have representatives from the NHS and social services.
Welcome this morning. Welcome to our witnesses online and witnesses in the room. Would you be able to introduce yourselves and where you're coming from, or who you're representing? If we start in the room and then we'll go over to Dave and Alwyn. So, if we start with Darren.
Bore da. Good morning. I'm Darren Hughes. I'm the director of the Welsh NHS Confederation.
Diolch, Darren. Sally.
Bore da. Good morning. I'm Sally May. I'm director of finance for Cwm Taf Morgannwg University Health Board, and I'm the chair of the all-Wales directors of finance group.
Croeso. Diolch yn fawr. Dave.
Welcome. Thank you. Dave.
Bore da. Good morning. I'm Dave Street. I'm director of social services and housing at Caerphilly County Borough Council. I'll be here in my capacity as a member of the Association of Directors of Social Services Cymru.
Lyfli. Ac Alwyn.
Lovely. And Alwyn.
I'm Alwyn Jones. I'm chief officer of social care in Wrexham and currently the president of ADSS.
Diolch yn fawr iawn. Croeso cynnes.
Thank you very much, and a very warm welcome to you.
Welcome to everybody. We'll crack on. As I said, we've got quite a bit of ground to cover. Obviously, the NHS budget, and the social services budget, is a huge chunk of the Government budget and is under the spotlight at the moment as well. I'd like to start. The Welsh Government says it's reprioritised its funding based on three priorities. What are your views on these? Is it clear from the budget documentation how these have been reflected in the allocations and how will the funding address these priorities? We could maybe start in the room. Sally or Darren, you choose.
I'm happy to open. Thanks very much for the opportunity to talk to you today. I think in the way that the Welsh Government budget is described around protecting front-line services and protecting future ambitions, you can't argue with any of that. We know that front-line services in health and social care have been under extreme pressure for a considerable period of time thorough COVID and pre COVID. The area that we're most interested in is protecting the future ambitions, particularly around training and retention of the workforce—so, looking after the future—and continuing to provide help for those most impacted. We've got the health challenges and social care challenges, but also the cost-of-living challenges, which are having a knock-on effect on people's health, so another very important area. And supporting the economy, because we know if the economy is doing well, people's health is improved, and particularly mental health. So, all very sensible things, but, like most budgetary issues, the devil's in the detail.
Does anybody want to add to that—Sally, maybe?
The ambitions are really helpful and clear. I think it's about, as Darren said, how these then get operationalised. At the moment, I think what we're facing is pressures in the NHS that are higher than we've ever seen before. I've been in the NHS for 32 years. This now feels very, very difficult in terms of both the demands facing us, but also inflationary pressures and, clearly, those workforce challenges that have grown up over a number of years, compounded by some of the issues that have occurred for people during COVID. People are burnt out and are struggling in some ways with the workload that's now facing them. There's been no respite. And I think that means that we really do need to focus, as Darren says, on that future—how do we build resilience in our current workforce, retain people, but then also make sure that we're training the workforce for the future as well.
I've not got a lot to add to that. I think the reality is that the current budget does support us in terms of protecting front-line public services. I think maybe where there's a challenge in the budget is in terms of our ambitions for the future. Clearly, we have lots of ambitions in terms of strengthening the workforce available to support social care, and I think there is probably some way to go in terms of being able to support that through this current budget. But certainly in terms of protecting front-line public services, I think the budget achieves that. In terms of our ability to continue to fund those, and clearly in terms of being ambitious around being able to recruit, train, and strengthen that workforce, I think we've probably got still some way to go.
So, do you think you're having to curtail your ambition because of what's happened?
I think that would be fair. I think in terms of where we want to go in terms of parity of esteem for workers in social care, and strengthening that workforce, I think that's going to be difficult within the current budget—probably not possible.
Anything to add, Dave?
Nothing specifically. I think Alwyn's covered that off. Obviously, in terms of the issue around providing help to those most affected, there's a lot of publicity around people waiting for domiciliary care, and the impact on the NHS. I don't think we would want to lose that. I know we are in unprecedented times in the context of people waiting for mental health support, and indeed the impact that COVID has had on children's services.
Thank you. Coming back to you, Darren, last week the Minister for Health and Social Services said to the Health and Social Care Committee—and Russ was there—that the NHS has to focus far more clearly on a smaller number of points, and she hoped you would agree streamlining is the right direction to go in. Do you agree with that approach? Is it sensible and is it clear what needs to be prioritised?
I think when everything is a priority, nothing is a priority. We're here today to talk about some of the limitations on resource, and the biggest limiting factor for the NHS is workforce, in terms of being tired, in terms of absolute numbers, in terms of training.
The six priorities the Minister's listed—I'll just make a few brief points about each, if that's okay. In terms of delayed transfers of care, that's a huge issue for the NHS, with around 12 to 15 per cent of NHS beds with people in them. It's not the best place for those people to be, for their well-being, but also it's really difficult then for the NHS to function effectively with the huge increase in demand of people coming through the front door. The 111 calls and 999 calls, and the number of people visiting GPs, is something we need to focus on, and the limiting factor there is workforce. Access to general practice, yes, is something we all agree with, and people getting the care as close to home and as soon as possible. There've been workforce challenges around dentistry. Again, big challenges there, and people's oral health declining. Declaring an interest as I'm married to an optician, but opticians are doing a lot more than they've done previously in terms of emergency eye care—the Welsh eye care initiative. If you look at the complete list there—supporting urgent and emergency care, planned care, recovery, mental health—it's still a very extensive list, and the things that sit under those headings are still very broad. I think it's fair to say we're facing challenges on all of those fronts, and if there was one factor common to all of them, it's that sustainability of the workforce.
So, do you think that the relative priorities—? Are they getting it right? Or is it—?
I think the priorities are right, and they are the things we should focus on; it's our ability to deal with them is the challenging bit.
Thank you, Chair, and thanks, Darren, for your answer. I suppose if you're clear on what the Welsh Government say their priorities are, as you've outlined, are you clear what is not a priority, or what is a lesser priority for the Welsh Government?
From an NHS point of view, I think everything we do sits under those priorities, and the focus is our ability. In planned care, we've seen the size of the waiting list going up not just in Wales, but in all parts of the UK—waiting lists growing, and people's condition deteriorates the longer they're on the waiting list and, often, their mental health does. So, these are priorities. But our ability to provide urgent and emergency care has to be protected. We've seen news stories about the challenges there.
I suppose, almost, if everything that is a priority for you is in the Government's priorities, what's the point of having priorities?
We do need to focus, and there are things you have to with a finite amount of resource. The NHS, through the difficult times, has focused on the areas where people are in the most clinical need. The urgency when you—. You really feel for the people who've been on waiting lists for considerable periods of time, but it's the life threatening and more serious—
I suppose what I was trying to get out is do you have a sense, if the Government has got priorities, that something else has got to give. Do you feel that you've got from the Government an understanding of what has to give in order to make the other areas priorities?
I think it is that focus—focusing the finite resources that you've got on things that—. I'm sure if you asked patients, you'd get a similar answer. We're hearing stories from family members about difficulty in accessing dentistry. It's very urgent for those people, and there is that focus on clinical need. But also—and colleagues onscreen have touched on that longer—we need to invest in the future workforce to enable us to deliver in the future whilst delivering today. And I think probably the biggest frustration in terms of a financial point of view is clarity around what we can afford in terms of training the workforce for the future, because we know what the problems are now and how to address them from a workforce point of view, but you can't do that overnight.
I just want to raise primary care. Now, I'm fairly confident, when we have the budget coming out and it goes to health boards, the percentage increase into the health boards will not be equalled by the percentage increase for primary care. It never has done since primary care and secondary care were merged, which I think was a complete and utter disaster for primary care. But if we don't get primary care right and people don't see the GP at the right time, then they end up at A&E. What are you intending to do—and I think this is probably aimed at somebody working in health—to try and get people seen on time by GPs in order that they don't use A&E as the alternative and, secondly, that they don't end up getting worse so they have to use A&E?
If it's okay, I'll say a few things about the general picture, and go to Sally for some specifics from Cwm Taf Morgannwg. I think it's slightly over-simplistic to say it's just about GPs. We've heard about—. I'm talking about community care, as I would describe primary care, because I think we fall into the trap of saying primary care equals GPs, where pharmacy is playing a huge and increasing role, and the amount spent in pharmacy for the minor ailments service so that people don't need to see GPs. In many parts of Wales, recruitment of GPs is a huge issue. My generation of friends and people I know who are GPs, their ambition was to buy into a GP practice. They worked hard, saved hard, bought into a GP practice as a great career ambition. Now, in many parts of Wales—Cwm Taf Morgannwg being a particular example—we're unable to recruit GPs into those areas where GPs are now directly employed. The pressure on community services is huge. I can't give you a figure, but I can come back to the committee after about the proportion of health board budgets spent in community and spent on secondary care. But, I think the challenge on this one, like many others, is that workforce and sustainability. There are vacancies in my local GP practice, and similarly for colleagues around the table in your areas as well.
From the Cwm Taf view, or from your view?
That and a broader view. So, clearly, there are challenges in terms of recruitment of GPs, but we need to think about the broader primary care team and workforce diversification. So, many practices in the cluster development space are using pharmacists in a different way. We're starting to see paramedics used in a different way, and a team approach around the patient, which I think is more responsive. Over time, we also need to think about how people are supported by digital and the different interaction. We're seeing the NHS app developing. I think that will be really helpful for people to be able to hold and see their own records, and it empowers them.
But, from the Cwm Taf Morgannwg perspective, primary care is a focus for us. We've just reorganised ourselves into care groups. Primary and community care is one of our care groups. We deliberately created that to give it that focus. And we are thinking about our resource framework about how we show that we're moving resource from acute out into primary and community care. The challenges with that are that, obviously, the demands at the front door almost drag resource into the wrong place, and we need to have a planned approach to trying to move that. That's what we're trying to create as we move forward, but the challenges at the moment are that we're opening additional capacity just to get through the winter because of the challenges of delayed transfers of care, high demand and high acuity.
So, is it clear from the budget, and is it transparent from the budget that you've seen from the Minister and, effectively, from the Government, that there is a floor in the budget that says you can see a direct line to that, or is there some opaqueness in where that money is to be spent?
In terms of primary care, absolutely, because each of the contracts has got a separate—. We understand how that comes in and the resources allocated. Some of the budgets, like dental, are ring-fenced and, so, that's clear what the funding is and how it will be spent, and we have to set that out at the start of the year. Community care is probably less clear as a direct funding stream, but we are clear in terms of how we set out our expenditure, our budgets, so that we can try and track that movement over time.
And then, maybe bringing in colleagues in social care, what about that link between the two, because one doesn't work without the other, and then it becomes that link between who funds what, especially getting people out of hospital into a social care setting? Alwyn or Dave, have you got an idea of that transparency from that point of view? Would you understand where the money has been allocated and how you're dovetailing that to make it work? Which one of you would be best placed to talk about that?
I think there is a knowledge of where the money has been allocated and where it's been spent. I think that some of the other challenges that colleagues from the NHS Confed have referenced there are almost mirrored in social care as well. On your comment around how the money is spent when people are discharged, I don't think that's a major factor at the moment. I think the real hindrance in terms of our ability to get people out of hospital is our sheer inability to recruit staff, both as local authorities and, indeed, in the independent sector.
Okay. Great. I know Rhianon wanted to come in, but I'm conscious of time, so I'm going to move on, and we'll do that in a bit.
That's fine. I'll dovetail.
What's your assessment of the Welsh Government's draft budget for 2023-24, which allocates funding increases for health and social care as well as local government? To what extent, in your fields, will that protect front-line services?
We understand the difficult situation that Welsh and UK Governments are in in terms of budget allocation. I think the challenge for us is inflationary costs in things like energy. The energy bill for the NHS has absolutely skyrocketed, the same as everywhere else—as a proportion of the budget, that's increased. But also it's the demand increase. So, efficiencies are being made—the Welsh Government and colleagues across the NHS are working hard on efficiency savings—but the graph of demand is going up much more quickly. Just related to Dave's point, really, I think that health and social care are intrinsically linked, and they're totally and utterly interdependent on one another—the workforce challenges. There's the role that social care play in keeping people well, which is often unseen, and I have regular conversations with colleagues in social care about the unseen, unmet needs in communities across Wales. And we're seeing 12,000 to 14,000 people in hospital who should be discharged, but the need in the community is probably two to three times that. So, we've seen the headlines and the pictures of ambulances, but it's the unmet need in the community is where the real challenges are. Demand is going like that. The financial challenge is still huge, and we're going to be working extremely hard to maintain services at their current level. And importantly, when times are tough, like they are now, we still need to keep that investment in training the workforce for the future. With Dave and Alwyn, we speak regularly about the challenges in workforce in community care, and pay for staff in the community is a huge issue, where, currently, pay levels don't compete with the retail and hospitality sectors, and these people are hugely skilled and make a huge difference to people's well-being.
Moving on to social care then, on the back of what you were just saying, ADSS, in your written evidence, you say 'very difficult choices' will have to be made about continued service provision, and the allocations are
'not going to put social care on a path of stability and sustainability.'
Can you expand on what actually the implication would be and what the impact will be on our communities, especially vulnerable communities and the people who are vulnerable within those communities? Alwyn maybe.
Yes. If I start, I think what we're alluding to there is that there are very difficult challenges for us around—. Budgets are under pressure. I think this current budget supports us to—. We probably remain in a position where budgets are under pressure, and probably what it means is, in practice, that we'll have to consider where we are in relation to some statutory element of our delivery and whether we need to consider curtailing some services that we provide as a matter of course now—so, whether there are elements of our statutory delivery that we actually will have to consider, moving forward, if the pressures remain at the same level as they are now.
Okay. Thanks. Okay, I'll move on to Rhianon now, if I can.
Thank you. And before I move into my line of questions, it's a broad question, and if you could be really, really brief: how much of this challenge, in terms of what this draft budget can do, with the amounts that we're talking about in terms of finance, meets the real challenges of what we're facing on every single leg of the health and social care octopus? Every one of those legs is under massive and intense pressure, and you as managers want to put a brave face on this, but, actually, isn't it now time to say, 'This is actually getting to a level—', that this amount of money within the budget, which is the maximum, really, that we can do, is going to suffice?
It is incredibly challenging. And I speak to colleagues in other parts of the NHS Confederation in England, in Northern Ireland, that it is incredibly difficult to deliver. You need to invest in the future to change—and other colleagues of yours have talked about the investment in primary care—. So, capital is a huge—. You need capital to change things in terms of not just in buildings but equipment and everything else. If capital is needed to transform, there are huge capital challenges. Sadly, we're hearing about industrial action today, across the ambulance service today, but we've heard, in other bits of the NHS, and the feedback from front-line staff is, that they are feeling under huge pressure. The pressure in the service is making it difficult for them to do their jobs to the standards that they would like to, and, within the current financial envelope, it's going to be hugely challenging. I don't know if Sally wants to come in with any examples of the challenges.
I don't know if there's anything that you would like to add that's brief, but I mean—.
I suppose, briefly, as Cwm Taf Morgannwg is operating with a £26.5 million core deficit this year, and we're receiving additional funding for exceptional costs, which include the energy costs, plus some COVID response costs, that becomes consolidated in one position going into next year, which means that our challenge, in terms of our underlying deficit, is getting worse. There are some huge variables within that, particularly energy, and we still don't understand exactly what the energy billing relief scheme will do, going into next year, but that presents an enormous challenge just to stand still, and I think it would be wrong of me not to flag that as being—. I think this is the most difficult, as I've said, financial situation I've ever experienced in my career, and I've been in finance in the NHS since 1990.
Okay. Thank you.
So, are we are at crisis point?
I think we are certainly facing an incredibly difficult challenge; I'm not sure whether it's quite gone to crisis yet. But, in terms of the industrial action, the way in which our staff feel about what they're being asked to do, and the psychological consequences of having worked through the pandemic, I think that, alongside the inflationary pressures, and the pressures on people as individuals because of the cost-of-living rises, I think gives us a very, very difficult landscape in which we need to maintain public services. And we're really conscious about that balance between quality and safety, performance and finance, and trying to manage that effectively.
Do you mind if I just come in very, very briefly? I think it is important not to lose sight of the huge amount of work that is going on and the enormous amount that staff are achieving. And Mike asked earlier about the balance between primary care and secondary care: in secondary care, we're 400,000-plus consultations a month, 375,000-plus consultations in primary care. So, there's a huge amount to go on, and we're really keen to give staff that hope and recognise the brilliant work going on. But, in terms of the increase in demand, 111 calls—[Inaudible.]—double the usual 999 calls, and it isn't a case of people using it inappropriately either—it's a case of when people are calling 999, they really need it. Demand is going up very quickly, and, when finances are flat or, because of inflation, actually, in real terms, going down, there is huge pressure.
Okay, thank you. And in terms of the overspends that you've just mentioned, Sally, for 2022-23, how financially sustainable are the organisations, Darren, in terms of who you represent? And what are, briefly, the main risks?
In terms of the sustainability, they are huge, the pressures. COVID costs—. If you say 'COVID costs', people think COVID’s gone away, but infection prevention control, the capacity—the number of people on a particular ward is reduced to ensure they're safe. So, many of the increase daily costs associated with COVID are still with us.
Unfortunately, staff well-being and staff morale are huge challenges for colleagues across the NHS. I've said publicly before that I think things are on a knife edge, and I think there is a recognition from colleagues across Welsh Government and UK Government, Scottish Government, Northern Ireland, and local government, that we're in a hugely difficult position and there is a need now to transform and change and work together. There is a finite resource, and we've got to do the very best that we can within it.
Okay. Thank you for that response. In terms of those pressures, and in terms of every single aspect on that clock face where those pressures are accumulating—I can't see anywhere where it's not accumulating, despite the best efforts of Welsh Government here—how much of a need—? Without the investment, mass investment, for transformational change that is needed, are we going to be able to transform the way the public and the NHS and social care interact? And who starts that conversation? Who should lead that?
I'm happy to go first. It feels like I'm going first the whole time.
I'll ask those who are bereft on the screen shortly.
I think there are difficult—. I'm not a politician, but there are difficult conversations going on between different bits of Government, between local government and Welsh Government, and between Welsh Government and UK Government. Thankfully, there is a recognition at all levels that we are on a knife edge. I wouldn't describe it as anything—. And the time for working together is now. Huge steps are going on. I'm talking to health board chief execs across Wales, directors of social services, that we're looking what we can with the resource we've got. But workforce is the biggest challenge and we need to continue investing in workforce and supporting and retaining the workforce we've got, which is challenging at a time of high inflation and high pressures.
My next question—I don’t know if anybody wants to add anything to that—would be really how you quantify the scale of the challenges, but I actually think that's been answered. I don't know whether, Dave, you wanted to add anything in terms of the scale of challenges that we face, because, whatever conversations we have with the public in terms of how we use our services, we can't change it when somebody needs care and needs to be given those services. If they're bed bound, we can't change that conversation. So, I don't know if you want to add anything to that. Dave, do you want to—?
Yes. Yes, by all means. I think, to a degree, we're going to have to find a way of changing that conversation. I think the word 'unprecedented' has been used several times this morning, and I'll use it again. I've never seen anything like what we're going through at the moment, and I think one of the fundamentals for me is there's no short-term indication that the financial position of the public sector is going to improve. There have to be different conversations with the public, because we're simply not going to be able to sustain the level of support and the way that we configure services going forward. People are going to have to get used to the fact that services will need to look different and, to an extent, there will be less of them as well. So, I think we've got some very tricky conversations ahead of us.
Okay, thank you. And also, in terms of care providers continuing that journey of getting into more and more financial difficulties, with local authorities having to intervene, with their own financial pressures, what are the financial consequences to that? And you also have mentioned concerns with the Welsh Government's pledge to eliminate profit from the care of looked-after children. Bearing the amount and quantity and scale of finance that takes from local authorities in terms of the budget, and in terms of doing things differently in the future, having destabilised that market—and it is a market—could you also expand on that in terms of the social services directorate as well?
Perhaps Alwyn would like to come in on the children's services part, but, certainly, from a broader provider part, services are becoming increasingly fragile. We're seeing provider failure more regularly. Domiciliary care—we're getting packages of care handed back. This year is going to be very challenging. I'll give you an example—in my own authority, we're probably going to be able to up their fees by around 10 per cent. Yet, we know, in reality, the cost of living and fuel pressures are far in excess of that. So, I think we will see more pressure on providers over the next 12 months than we've seen even this year.
Alwyn, I don't know if you want to come in on the children's services element.
I will do. In terms of the children's services element, I think we're all really supportive of the eliminate agenda, so, in terms of supporting towards a more mixed economy and eliminating profit. I think the challenge in arriving there is that we have some really good and valuable providers who are making decisions to not do providing in Wales, and, as a result, that's reducing our options. And in turn, in the short term, that's increasing costs.
We do recognise a lot of capital has been placed in to support us in terms of developing our own provision, working with the third sector. But one of the unintended consequences is that short-term effect of less provision, and, therefore, increased costs for us in terms of that children's market. And when we need to place a young person, we really have to, and, therefore, sometimes, we're in a very difficult position with the market.
Just on that basis, and on what Dave was saying—I know a little bit about Caerphilly, obviously, where Dave's based—from the budget that you've got, part of the problem or the issue that we're tackling is that it's qualitative and quantitative. So, you've got a quantity of care packages that can be rolled out fairly straightforwardly, and, if you've got the people, then you can deliver them because they're fairly straightforward. But then you've got the complex need element as well, day care—I'm sure Dave will know what I'm on about with day care centres and things like that—where you've got complex needs that need intense investment, or a higher proportion of the budget. How is that decision being made across Wales in different local authorities, to try and grapple with that problem?
I think 'grappling' is a great word; I think that's exactly what we're doing. In terms of the assessment and need, clearly the resources have to go to those in the greatest need. And we're trying to do that to the best of our ability, but it does mean there is a cohort of people whose needs, perhaps, are less, that are having to wait longer for services, or perhaps seeing services in a different form.
If you look at domiciliary care, for example, in my own authority—we've talked about hospital pressures—only 20 per cent of the people who require a domiciliary care package are in hospital at the moment; 80 per cent of them are actually living in their own homes needing support. Yet perhaps a disproportionate amount of our spend and services are going to try to get people out of hospital. And that worries me, because if we're not able to put those preventative services in place then those people are going re-emerge in another part of the system. That might be in the social care part of the system, or, indeed, in primary or secondary care. But it's a balancing act that we are actually living with every single day.
Thank you. Are you done, or—?
Can I just ask Alwyn, in regard to the looked-after children point, and, I think, the last point that's been made in terms of, potentially, down the road, another huge issue in terms of that feeding back into secondary care? But, in regard to looked-after children, you mentioned investment in terms of provision for looked-after children. What scale is that across Wales in terms of local authorities being able to make their own provision, bearing in mind we also understand that the variety of complex needs is very, very diverse?
Okay. In terms of the scales of that, I think you'll find that most local authorities across Wales are positively using the capital funding provided by Welsh Government in relation to this area to develop our own provision for what, in a sense, would be children's homes, but they're not in the old-fashioned sense of large children's homes, but smaller, group-living accommodation for children. That doesn't happen overnight, so my point being that that will be gradual over a period of years. So, us scaling up our provision is probably not as quick as we're having the challenge from the markets, I guess, is what my answer is. I think, in three or four years' time, we will have more robust provision across the different sectors, that being the local authority provision, third sector, so that we have more diversity. I think this is actually a challenge while we're actually making that change. And also, remember, local authorities are having to develop that skill as well—something we maybe haven't done so much in the last couple of years.
Okay. Thank you, Chair.
Thank you, Chair. We talked a lot about workforce already, and some of the issues around recruitment and retention of staff. But looking at the draft budget specifically ahead of us, what measures are included in the draft budget to specifically address staffing issues? I wonder if you want to expand, perhaps, on some of the earlier points that you've raised in this regard.
We were pleased to see that Health Education and Improvement Wales is planning to recruit more nurses. There have been some positive steps in terms of increasing the number of GPs that we train in Wales, but as well as that training and recruitment of new people, the support and development of people within the service is a challenge. In a previous role, I worked for the General Medical Council, and looking at what proportion of doctors, in particular, we've recruited from overseas; we've been increasingly reliant, over the last 20 years, on international medical graduates. For reasons that we probably haven't got time to go into today, the UK has become less of a priority for overseas graduates. The numbers we've trained in the UK have gone up as well. But on my earlier points around that long-term plan to enable the development of the workforce we need and increasing people's skills in digital is going to be absolutely huge. It's that sort of pipeline issue. So, at the moment, people are probably going out of the end of the pipe further than they're going in, and there are a few leaks in the middle as well, and I think that whole-workforce approach is why we need that sort of certainty and costed longer term plan from the UK and Wales.
Is there anything in the draft budget, Darren, that you think needs to change, or that later, the committee needs to challenge the Minister on?
The main thing is the longer term financial certainty, because it takes five years plus to train a nurse; the same for a pharmacist. But also, jobs across the NHS; you can't just walk in and make a maximum contribution from day 1. Healthcare support workers, and similarly for the social care workforce—we're making steps in the right direction, but we shouldn't underestimate the scale of the challenge, and that longer term financial certainty, which we understand is difficult, is critical. Knowing what's coming next year is helpful, even if they're difficult choices that you've got to make, but anything that can be done to have longer term financial certainty, particularly on training and development of the workforce, is key.
I don't know if anybody else wants to come in, but before they do, Darren, just to you: the Minister, in her evidence to the Health and Social Care Committee, actually, talked about focusing on ways to deploy the existing and future workforce more effectively, what's your take on that?
We've got to get the maximum. We haven't talked a huge amount about it today, but the principles of value-based healthcare: what can we do with a finite resource? What's going to make the biggest difference to patients and service users? And there are all sort of innovative ways of doing that—using digital across the system for initial interactions where that's appropriate, to free up colleagues to do the higher value, more important pieces. But anything we can do to make the whole of the system work more effectively and focus on the areas where we can make the biggest difference.
I think the other challenge related to the budget is the financial well-being and health inequalities across communities in Wales. From a budget point of view, we've provided briefings to you and your colleagues on the importance of spending the Welsh pound effectively, the foundation economy, that £1 spent in the NHS—we've done some research—is £4 in value to the local community, because employees work locally, live locally, spend locally. The importance of good-quality procurement, where we're procuring and procuring locally. But also developing the workforce locally. I think that's something that we definitely need to do, because there's a load of evidence to show that, if you recruit and train people from the local community, they're more likely to stay. And that's why we're seeing people moving around. So, outside of the health portion of the budget in terms of education, training, local development, I think, really focusing on the difference that every public pound spent can make to the health and well-being of communities is key.
So, is there a long-term workforce plan?
Health Education and Improvement Wales are developing one. Health boards have their own longer term plans, but what we need to put that into action is longer term financial certainty, particularly that focus on training and development.
And have you had sight of it?
We haven't, and it's something that we've called for for a long time, not just from Welsh Government, but from UK Government, because lots of the workforce move between Wales, England, Scotland and Northern Ireland, so, it's a whole-UK issue, but each Government has got a responsibility and a role to play in it.
So, everybody's working on a plan, but they're not sharing it with the people who are—
I think they are sharing, but it's that financial certainty to commission the training and to say where we need to get to. And, as we've seen, demand has shot up much more than anybody anticipated in the last 12 months.
When do you think we'll have sight of a workforce plan?
I think that's a question for Government colleagues rather than myself, but it's urgent from our point of view in the longer term. We have a workforce plan, but it's a costed one. The health boards have put in training requirements and plans, but they can only ask for what's affordable at the moment.
Yes, the question is, I suppose, then: when you've asked the Government when you can expect, from them, to see a workforce plan, what do they say to you?
We haven't had a date. We keep reiterating the urgency. My colleagues in England are saying very similar things—that we need that long-term funding plan for the workforce across the whole of the NHS.
Yes, that's fine. And just to talk about spend on agency staff, a significant issue that we've talked about—we haven't mentioned that so far here, but I'm bringing in all of the witnesses on this question really, but what practical things can be done to reduce the spend on agency staff?
It is very much related to having the right numbers of people in the workforce to meet the demand that we've got. Unfortunately, we have seen—we've mentioned the industrial action, which is a sign that staff are not happy with the terms and conditions and the environment that they're working in, but we need a sustainable workforce. We need to be in a position where we're not relying on people doing overtime, double shifts, spending time away from their family, and also that they're able to make the contribution that they need to to people's well-being when they're at work to feel valued.
Yes, I suppose, because we're limited for time, I'll assume that we're all agreeing—the Minister will agree; we'll probably all agree—we'll all agree that we need to reduce the spend on agency staff. Tell us specifically, as briefly as you can, to all witnesses, what practical steps do you think need to be taken in order to achieve a reduced spend on agency staff—as pinpointed as you can?
There are two major streams in terms of agency spend: medical and nursing within health. In terms of medical, one of the drivers of agency spend is vacancies, so, being able to recruit in, but then also, that means that we need to retain our workforce. We know how long it takes to train a consultant. So, how do we retain our own workforce and how do we incentivise them to do additional sessions? At the moment, we are losing medical workforce significantly because of a UK-wide issue around the pension tax annual allowance issue. So, people get to a stage in their career where, actually, it is costing them to come to work and do additional sessions. So, we're losing capacity there and seeing people retire early—we're seeing people go in their fifties when they've got significantly more to offer for the rest of their careers, potentially.
So, just to be clear on that, what do you think needs to happen? What barrier needs to be removed?
I think there needs to be urgent action in terms of that pension issue, which is a UK-wide issue, because it is having a significant impact on our workforce.
And then in social services?
If I come in and then maybe Dave can cover it. I think we've got real challenges in terms of agency social workers. I think, actually, many of the points said already apply; we need to make sure that the offer to work is the right one so that we can retain the current workers. We also have to expand the pool of people we're able to recruit in—so, not only students coming through undergraduate courses, but people who choose to take a social work career up at a later stage n their careers. So, we need to make more avenues for people to enter the profession, so that we have sufficient workforce and the right terms and conditions for them.
Just to add to that, within the budget settlement, there was £70 million in terms of the real living wage payment, particularly to the lower paid carers—very welcomed. I'm sure that that will help with retention, but I'm not sure it'll have a huge impact on recruitment. I think, certainly, the ADSS Cymru view is that an hourly rate of around £14 an hour is going to be needed, really, to make this sector attractive and allow us to compete with retail and hospitality.
I think when you were in front of us last time, Dave, I think you said something around £12.55 an hour, so obviously, it shows the impact on inflation on that.
So, back to you, Russell. Sorry.
Can you both quantify the level of agency spend in your organisations, or in your sectors?
Certainly within my local authority, we have teams that are—. We certainly have our front-door team in children that is primarily staffed by agency workers, because of the challenge within those areas, and the spend is significant.
Probably to a lesser degree. I think we've been fairly fortunate in being able to retain and recruit, but we are seeing an increasing need to turn to agencies where we've got short-term pressures.
Thank you, both. And then—sorry.
I think Rhianon wants to—
Just very briefly, and in parallel to the conversation that we've had around the marketplace in that we have to have the available residential care for complex needs, looked-after children and others, and, of course, if that market's not there, you have to still do the job of work. So, how much of an issue is it that, increasingly, without wanting to spend more money on agency staff across the board—across the board—there is no choice, because the care needs are still there? I don't know what you think of that as a comment. Dave, do you want to say something?
Absolutely. I mean, there are roles that we have to cover; there are key roles. We don't do that casually. We are very aware of the cost of agency staff and the other challenges that they bring, because you don't always retain agency staff for as long as you like. An example is of agency staff jumping between authorities for increased salaries and hourly rates, so it's an extremely challenging area. But you're right: they are absolutely core roles that we have to cover, almost regardless of the cost.
Thank you. And a question to you, Alwyn, about the increase in the real living wage up to £10.90. Just to understand, will the additional cost be met from the funding within the provisional local government settlement, and if not, how are you able to determine what the gap is, I suppose?
Yes. Certainly locally within our council, the settlement will support us to actually achieve a real living wage, and that's probably because social care has been prioritised, so we're getting that support from the council. So, we will be able to meet the real living wage across the board.
As Dave alluded, though, whilst the real living wage is valuable, it doesn't allow us to be competitive in the marketplace. So, the reality being that the real living wage is really useful to continue what we're doing now, but it doesn't necessarily give a trigger in terms of change, and actually us being able to better reward that workforce to the levels that we think it needs to be better rewarded.
Thank you, Alwyn. I can see in your evidence, as well, that you've talked about an urgent focus on parity of esteem with health in relation to pay, terms and conditions and career progression, and then you go on to say that this requires additional investment now and over the next three years. So, what action do you think that Welsh Government needs to take, particularly in this draft budget that we're looking at, to achieve what you want?
I think in order to achieve what we want, we'd probably need to work as a sector—that's across health, social care—to talk about actually where long-term resources are best placed in order to ensure that we have the right workforce and in the right place. So, a lot of the conversation this morning has been about acute and community; it's about making sure that we have the right balance across both areas. I think, probably, this is a very mature conversation across the sector in terms of where money is best invested to ensure that we have the right quality of care in the right place. That's my view, and I think, therefore, we need a very mature conversation about where we best invest in the longer term.
Thank you, Russell. Mike.
I've only got, really, two questions, I hope. To the Welsh NHS Confederation, the Institute for Fiscal Studies told us it would be worth while doing more analysis of what can be done to improve the efficiency of the NHS, particularly learning from others. The things we know are that using LED lights saves you money, and we also know that there are hospitals who do it and hospitals who don't. We know the temperatures in hospital are quite often very high. Some have moved them down, some haven't. We know that, at one time, and it is still true, twice as many children have their tonsils removed in Ynys Môn as in Wrexham, despite both being in the same health board. I think that probably had more to do with individual surgeons than anything else. We also know that we've got a situation where, when things are done well in one health board, good practice in Wales does not travel. How can we ensure that good practice travels? Nuffield Health produced a report some years ago, and, again, it is probably out of date, but it showed that the number of patients seen by consultants had actually reduced quite substantially in Wales, and more in Wales than any other part of Britain.
Quite a few points there to cover, and I'll come to Sally in a second in relation to the infrastructure, hospital buildings costs. On the sharing of good practice, I think we at the Welsh NHS Confederation and with colleagues across the country do our best to share good practice, demonstrate what's going on. You've got NICE guidelines—the National Institute for Health and Care Excellence—ensuring that the most cost-effective and best value is got from the resource you have. But, sometimes, best practice isn't followed due to availability of specialities. I think, if you look at specialist vacancies in parts of Wales—orthopaedics, ophthalmology—there is a large number of vacancies, with a large proportion of the workforce in those particular specialities, so you have to deliver services differently.
In terms of the green agenda-type points you raised in relation to LED lighting, insulation, I've spoken to colleagues across the NHS about the cost of heating water, water delivery, oxygen. I've been quite staggered by the costs related to some of these things in terms of changing from your standard one. I live in the Bridgend area. All of the hospitals there are older than I am, and that's quite old now, but, genuinely, to upgrade to those modern and what we'd all expect as normal in buildings such as this, there are huge capital costs associated with them. But I'll hand over to Sally to give you some specifics in relation to that.
I'll pick up the first point about variation. So, we have the sharing of information across the NHS in Wales and, indeed, outside. So, in terms of that clinical variation and differences in terms of the number of people seen in a theatre session, for example, with the getting-it right-the-first-time team, which is working with the NHS, some of that is about cultural change, about working with clinicians and getting everyone to see how you can do things differently. So, those things take time, but those structures are there.
We have the great work the financial delivery unit have done around benchmarking, which we can all access via the vault. Those feed into our plans. So, when we look at our savings opportunities for the year, that variation, that benchmark will inform where we target. We also are working very closely on value-based healthcare and trying to stitch some of those things together so that, for example, we're looking at a scheme for next year, funded via value-based healthcare, which is working with housing associations to see if we can intervene early with people who are tenants where we're starting to see—. The housing associations know them best and know that they're starting to show distress. So, can we start to intervene early and deliver better value by secondary prevention, effectively?
In terms of the estates element, we are facing quite a difficult scenario, because inflationary pressures within that environment and the capital environment have been even more marked than in other areas. So, we are seeing huge increases in cost when we go to the market to test the market for schemes, but also, on occasion, we're not seeing people respond. So, firms do not want to take on the work, because I presume they're just trying to batten down the hatches, so to speak, and keep working. So, we have got schemes around, as you say, LED lighting, energy efficiency, but they are incidental to the real challenge of older hospital premises and updating them. The thing that we have to remember is it's not always about the scheme that's about a new area or something different; it's about some of our core infrastructure. Is the electrical infrastructure up to standard? Can we even put in electrical car charging points based on the current scenario? Those are expensive schemes. We've spent, at the Royal Glamorgan Hospital over the last couple of years, around £2 million just to upgrade the electrical infrastructure. That's just about standing still, really, and those costs are rising all the time. So, it's very much in our focus, but we are limited by the amount of capital available. We know that that's a real challenge for Welsh Government and for health boards as we move into the next few years, so we do need to be really targeted in terms of how we do that.
Just a really brief point, in terms of ballpark figures, our members are telling us that their capital requirements are around about £1 billion a year for the NHS. To give an example, on things like meeting the latest fire safety standards, the older buildings have a huge cost in installing things like fire doors and fire compartmentalisation. These are huge capital costs to stand still. They're not going to improve, necessarily, patient outcomes or patient services, but they are statutory requirements that are scarily massive.
Okay. I haven't got time to follow it up, but the fact is you're not very good at getting capital receipts into health.
A question for ADSS, because I know we're running quite short of time, do the draft budget allocations provide enough focus on prevention? Everybody talks about prevention. Is there enough being done in areas like housing, like dealing with obesity, and actually dealing with people early in terms of social care so they don't end up in hospital? Also—you'll tell me I'm wrong and it's just unusual in Morriston—a number of elderly widows end up going in for operations on their knees or hips, who are in pain—I'm not saying they're not in pain—but have the ability to look after themselves and do not need any support at all, but, once they've had that operation and they've spent their three weeks in hospital, they become de-skilled and they either need to end up in a nursing home, a care home or end up with a substantial amount of support from social services.
I'll start us off on that, if that's okay. I think your point is very well made. One of the concerns that I've got is there's a level of risk aversion when elderly people, particularly, go into hospital and need discharging. I think that risk aversion applies across those people in hospitals who do those assessments around discharge and, indeed, our own social workers, for the reasons that we've talked about over the last hour, really. There has to be an acceptance that, moving forward, people will only be able to have what they need as opposed to what they want. We do need to scale back that level of provision and that level of ambition. I think it's probably come from a time where the cost pressures weren't as acute as certainly they are now. Moving forward, that's a significant challenge to us.
In terms of prevention, I think my big fear in prevention is, of course, a lot of those preventative services, as you've quite rightly said, don't sit in social care; they sit in part of the broader local authority. They've probably been impacted financially even to a greater degree than social care. I think, as local authorities struggle to balance their budgets, we are going to see more of those preventative services fall by the wayside, with potential medium and long-term impacts from that.
Anything to add, Alwyn?
No. I think Dave's captured it, really. Thank you.
Right. Thank you very much. Russell, did you want to come in, just very briefly?
Yes, very quickly, I won't ask you all, but I'll just ask, perhaps, Darren, then. In terms of change in the Welsh NHS, for years we've heard about transformation and the need for transformation, and my concern is we don't really see the impact of that. There's been a bit of criticism of the integrated care fund and the 'A Healthier Wales' transformation fund. We see lots of small-scale schemes that are projects, but we don't really see the evidence of them really addressing some of the real pressures that we've got. So, your view on that. Who is responsible for change and what needs to happen to bring about the real transformation that we need? It's such a big question and, I'm sorry, because we're short of time, a tweet-size answer, if possible.
I'm glad we're short of time, because we could be here for quite a while.
I know. It's a big question, but I'm asking for the pinpoints.
I think it is easy to forget, and in preparing for today, some of the huge things in transformation that have happened, particularly around IT. It sounds like a simple thing to all of us who are based in office environments, but all staff have access to Office 365 across the NHS. And on the cost of that, citing back to Sally's point earlier in terms of upgrading the electricity supply into a hospital site, there are millions of pounds of things that are unseen; it's a sub-station box, it's running the cables. And a bit like the back-office bits of improving the IT infrastructure for the NHS, they are hugely expensive, they are delivering great improvements, but I think it's the responsibility of everyone. If there was a final point I could make, in terms of the prevention agenda and the transforming, every bit of the public service has an impact on keeping people well. I think we've worked more closely than ever with colleagues in social care and local government, and we're doing all we can. The service is in need of transformation, but it's a struggle to cope with increasing demand at the same time as delivering transformation within a—
So, in terms of transformation, what would be your message? What would be your ask of Government? What should Government be doing that they're not doing now?
There are some issues around capital; capital is needed to transform things. It's longer term financial clarity about what's coming down the tracks. And I know it's difficult for Welsh Government, I know it's difficult for UK Government, but if there was a funded workforce plan and clarity—. We had a time when there was no comprehensive spending review because of Brexit, no comprehensive spending review because of COVID. Now there is more certainty, the news is bad, but we need that clarity, costing and acknowledgement from Government about what needs to happen across social care, across local government, the whole of the public service. We need to work together in these difficult times more than ever before.
Just finally from me, and I know we've gone over by a couple of minutes. In your evidence, the ADSS said,
'Sector transformation requires strong, collective, compassionate leadership, a resilient and respected workforce and these need to be backed up by a long-term and sustainable funding settlement for the health and social care system'.
Is that leadership seen through this budget? It's probably a one-word answer. Alwyn.
I think this budget aims—. There are messages in this budget that the Government are committed to that. I think, actually, it requires more than one budget in terms of us achieving that sort of goal, because that's a very ambitious goal. It's the one that we share. I would say that we need consistent messages along now and into the future. So, I think this is a start, because some of the messages and the priority areas are there, however, that ambition is something that we need to have consistently as a narrative over the course of the next few years. I think colleagues in the room have alluded to it; I think we all need a consistent narrative actually around what quality services look like across acute services, community services and support we have for people in their own homes.
Would you agree with the statement and that assessment? Are we seeing leadership through this budget?
I think so, and it's about everything. It's about the education that people are getting, it's having the right jobs—it's a whole-Government approach. We've called for a whole-Government approach to reducing health inequalities. There are deep-seated issues here in Wales, in the communities that I live in and I was born and brought up in, that have been difficult pre devolution, post devolution, irrespective of what party we've had in power in Westminster or Cardiff. These are deep-seated issues and we need that long-term clarity and a plan, going forward.
Thank you very much.
Diolch yn fawr iawn i chi am eich amser y bore yma.
Thank you very much for your time this morning.
Thank you so much for your evidence. It's been a great session and I think we could have gone one for quite a number of hours discussing this. There will a transcript available for you to check for accuracy. Thank you very much. We'll go into private now for a few minutes.
Gohiriwyd y cyfarfod rhwng 10:34 a 10:40.
The meeting adjourned between 10:34 and 10:40.
Bore da. Rydyn ni nôl ar gyfer ein hail sesiwn sgrwtini y bore yma. Mae gennym ni dystion yma o Gymdeithas Llywodraeth Leol Cymru. Byddwn i'n hoffi i chi jest esbonio pwy ydych chi a phwy ydych chi'n ei gynrychioli. Pe buasem ni'n cychwyn yn yr ystafell.
Good morning. We're back for our second scrutiny session this morning. We are joined by witnesses from the Welsh Local Government Association. I'd like you just to introduce yourselves and who you represent. If we start in the room.
Jon, start with you?
Yes. Good morning, Chair. My name's Jon Rae. I'm director of resources at the WLGA.
Lyfli. Ac wedyn ar y sgrin, pwy sydd gennym ni? Lis.
And then on the screen, who have I got? Lis.
Bore da. I'm Lis Burnett. I'm leader of the Vale of Glamorgan Council and speaking on behalf of the WLGA as well.
Bore da. It's Anthony Hunt. I'm leader of Torfaen County Borough Council and also the WLGA finance spokesperson.
Diolch, Anthony. A Llinos.
Thank you, Anthony. And Llinos.
Bore da. Llinos Medi, arweinydd Cyngor Sir Ynys Môn ac yma ar ran Cymdeithas Llywodraeth Leol Cymru.
Good morning. Llinos Medi, leader of Isle of Anglesey County Council and here on behalf of the WLGA.
Mae croeso i unrhyw un ymateb yn Gymraeg neu'n Saesneg. Fe wnawn ni symud ymlaen yn syth at y cwestiynau.
You're welcome to respond in English or Welsh. We'll move on straight away to the questions.
As I said in the previous session, if we could keep our questions brief, so that we can hear from our witnesses, then that would be wonderful. I'd like to start to understand the level of financial pressure local authorities are experiencing now and face in future years. The Welsh Government says it's tried to prioritise public services within this budget. Your consultation response from November says that pressures in the system were starting to look catastrophic. To what extent does this budget adequately protect public services? If we start with Jon in the room, and then if anybody wants to answer.
Yes. Thank you very much, Chair. I'll let my political masters come in, really, on some of the political responses, but, generally, there was a positive response from the WLGA to the settlement. At the time we put the evidence in, obviously we didn't really know what was in the UK budget or what was going to be in the Welsh Government budget, so, by the time we got to the Welsh Government budget announcement on 13 December, I think our response through the press, from the WLGA leadership, showed that we were quite pleased with the outcome and the way that it also prioritised local public services.
Okay. Maybe to Anthony, who has the lead on finance.
Thank you. The provisional settlement was certainly welcomed and shows, I think, that the Welsh Government are trying their best to prioritise public services. The pressures on us are huge, so it doesn't mean it's going to be easy setting budgets. We estimated around £784 million of pressures by the end of the next financial year. That's a huge amount of pressure. In my own council, for example, our energy bill's going up by £4 million, our social care contracting bill by £4 million, our pay bill by just over £7 million. So, there are huge pressures in the system, but I think the settlement that we've got enables us to have a fighting chance of at least trying to address those pressures so that they don't become catastrophic for the future of the services that we provide.
Great. Thank you. Do either of the other two want to come in? Lis.
Diolch. My afternoon is going to be spent, actually, taking our budget proposals to cabinet. I think, as Anthony said, when we were discussing it—. We were working on shifting sands before the settlement announcement; we didn't know what was coming down from UK Government down to Welsh Government and, as a consequence, we couldn't even second-guess figures. In the Vale, we were looking at a £38 million deficit, and with what was predicted to come through initially, we then were looking at about a £28 million deficit after Welsh Government contributions and what we modelled as council tax. The difference that the actual Welsh Government settlement made is that, now, we're looking at how we manage a £10 million deficit, and so the steps that we're taking are still incredibly difficult, but an awful lot more manageable than the initial £38 or £28 million, depending which way you look at it, that we were dealing with pre Christmas. It remains a difficult situation for local government.
Dwi'n meddwl bod angen i ni hefyd fod yn ymwybodol ein bod ni'n gweld pwysau ychwanegol ar wasanaethau. Felly, mae chwyddiant, yn amlwg, fel sydd wedi'i nodi yn barod, ond rydyn ni hefyd yn gweld cynnydd mewn cymhlethdod anghenion, sydd yn creu pwysau. Mae COVID ac effaith COVID yn dal o'n cwmpas ni, ac mae'r argyfwng costau byw yn creu amgylchiadau bregus iawn sydd yn golygu mai ni ydy'r rhai sydd yn gwasanaethu hynny. Mae'n anodd iawn i ni ragweld beth fydd effaith hynny ar ein cyllidebau ni, ac rydyn ni'n ymwybodol o'r argyfyngau sydd yn bodoli yn y gwasanaethau cymdeithasol ar hyn o bryd. Mae hwnnw i gyd yn landio ar ein drws ni, felly. I ni fel arweinyddion—ac yn debyg i Lis, dwi newydd ddod o'n pwyllgor craffu ni rŵan, lle mae ein cyllideb ni yn cael trafodaeth yn fanno—mae'n rhaid i ni hefyd, yn amlwg, fod yn—. Mae unknowns o fewn y pwysau ar y gwasanaethau yna, ac rydyn ni'n gorfod buddsoddi yn y gwasanaethau cymdeithasol. Dwi ddim yn meddwl y gall yr un arweinydd ddweud heddiw a ydy o'n ddigon o bres, yr hyn rydym ni'n rhoi i mewn iddo fo, achos yr heriau annisgwyl yma rydyn ni'n eu hwynebu.
I think we also need to be aware that we're seeing additional pressures on services. So, inflation, as has already been noted, is a pressure, but we're also seeing an increase in the complexity of needs, which is creating pressures. COVID and the impact of COVID is still around us, and the cost-of-living crisis is also creating very fragile circumstances that mean that we are the ones who have to respond to that. It's very difficult for us to anticipate what the impact of that will be on our budgets, and we are aware of the crises that exist in social services at the moment. That all lands on our doorsteps, therefore. For us as leaders—and similarly to Lis, I've just come from our scrutiny committee, where our budget is being discussed—and we clearly—. There are unknowns in terms of the pressures on those services, and we do have to invest in social services. I don't think any leader could say today whether it's enough money that we're investing there, because of these unexpected challenges that we're facing.
Diolch yn fawr. Last year, the Welsh Government indicated an uplift of £177 million for 2023-24. In this draft budget, it's passing a consequential and increasing that to around £400 million in 2023-24. Your evidence sets out £784 million of pressures at the end of 2023-24. How will local authorities bridge that funding gap? I don't know who will start. Llinos.
Ie, medraf i ddod mewn. Mi fydd yn rhaid i bob awdurdod wneud hynny yn eu modd eu hunain. Fedraf i ddweud beth sy'n cael ei drafod yn craffu ym Môn y bore yma, sef toriadau gwasanaeth, defnyddio arian wrth gefn a chodi'r dreth gyngor. Fuon ni allan yn ymgynghori â'r cyhoedd ar ddechrau'r flwyddyn ynglŷn â blaenoriaethau'r awdurdod, a hefyd gofyn sut oedden nhw'n meddwl y buasem ni'n ariannu hynny. Mae wedi dod nôl o gyhoedd Ynys Môn eu bod nhw'n meddwl mai dyna'r ffordd fwyaf pragmatig ymlaen. Yr her yw mai unwaith fedrwch chi ddefnyddio arian wrth gefn, ac mae'n bwysig iawn ein bod ni'n nodi hynna yma heddiw. Os ydyn ni'n ei ddefnyddio fo eleni, bydd yn rhaid i ni ei ddefnyddio fo eto flwyddyn nesaf, ond dydy o ddim yn dod nôl i'r pwrs, nac ydy? Felly, mae'n rhaid i ni fod yn ofnadwy o aeddfed, ac mae'n bwysig ein bod ni'n pwysleisio nad ydy pob awdurdod yn yr un lle. Mae yna rai awdurdodau yn ffodus, efallai bod yna lywodraethiant cadarn ariannol wedi bod dros y cyfnod diwethaf, sydd wedi golygu bod yna arian wrth gefn i liniaru effaith chwyddiant, ond mae yna rai awdurdodau mewn sefyllfa hynod o fregus ac sydd yn gorfod gwneud toriadau mwy na'r lleill. Ac yn amlwg, y dreth gyngor sydd yn dreth rydyn ni i gyd—. Dyna ydy'r unig incwm go iawn sydd gennym ni fel awdurdodau lleol y medrwn ni fod yn ddibynnol arno fo, heblaw am yr arian sy'n dod gan y Llywodraeth. Mae'n rhaid i bob un awdurdod gosod honno fel maen nhw'n meddwl sy'n briodol iddyn nhw, a gan gofio bod pob awdurdod yn talu yn wahanol, beth bynnag, i mewn i hynny hefyd, sydd yn gwneud y canran yna yn bwnc annheg. Efallai bod eisiau trafod faint mewn gwerth ariannol y mae'n mynd i fyny, yn fwy na faint mewn canran y mae'n mynd i fyny, y dylem ni. Diolch.
I can come in there. I think every authority will have to do that in their own way. I can say what's being discussed in scrutiny in Anglesey at the moment, namely, cuts to services, using reserves and raising council tax levels. We went out to consultation with the public at the start of the year regarding the priorities of the authority, and asked how they thought we would fund those. It's come back from the public on Anglesey that they think that that's the most pragmatic way forward. The challenge is that you can only use your reserves once, and it's very important that we note that today. If we use that money this year, we will need to use it again next year, but it doesn't return to our coffers, does it? So, we have to be very mature in our approach, and it's important that we emphasise that not all authorities are in the same place. Some authorities have been lucky, they may have had robust financial governance during the recent period, which means that there is money in reserves to mitigate the impact of inflation, but some authorities are in very vulnerable positions and will have to make greater cuts than others. Clearly, council tax is a tax that we all—. That's the only real income that we have as local authorities that we can rely on, apart from the funding that comes from Government. Every authority has to set that in an appropriate way for them, bearing in mind that every authority pays differently into that as well, which makes that discussion on percentages unfair. Perhaps we need to discuss how much it's going up in financial terms rather than how much it's going up in percentage terms. Thanks.
Lis or Anthony. Anthony.
Yes, I very much agree with the point that Llinos made about reserves. They're unequally spread across Wales. You can also only use them once. It's also very difficult to predict what is an appropriate use of reserves. At the moment, for example, energy costs—no-one seems to know exactly what will happen for energy costs. If there's a spike going on at the moment then it's legitimate to try and use reserves to bridge the difference between when we hope those costs will start falling again. But no-one knows that for sure, so it's a difficult decision for councils to know when they can sustainably use their reserves. Because as Llinos said, once they're gone, they're gone, and they shouldn't be used irresponsibly, otherwise it just stores up problems for the future. We'll all be looking at efficiency programmes, although after a decade of austerity, there's very little juice to squeeze from that particular lemon. I'm trying not to use the 'blood from a stone' analogy. We're looking at things like property rationalisation—how we can use our estate better, how we can adapt to the difference in working patterns post pandemic. But, inevitably, there will be reductions in service levels, there will be headcount reductions, and we'll look to do whatever we can to avoid those through collaboration and through other things, but there's no single silver bullet that can help bridge that gap, but at least because of the settlement being better, we at least have a fighting chance of meeting the gap without measures that will decimate the local services that people rely on.
Thank you. Lis.
Thank you. I just wanted to mention, very much along the same lines as Llinos and Anthony, but I think it's worth saying that the collaborative approach that we have developed in Wales across local government and with the WLGA means that, as leaders, and also whether it be our section 151 officers, et cetera, have been constantly talking. There's been shared learning, there have been, 'Have you tried out such and such an area, what did you find, how did that work for you?' And so, the discussions have been frequent and ongoing across Wales, and it's very reassuring for me when I'm talking to people in my council that I can say, 'Well, actually, feedback from other local authority leaders would suggest that', and it's a much more effective way, rather than just trying to plan in a vacuum.
On that point, Lis, obviously you talk to your colleagues, leaders in other councils. Are you seeing similar themes coming through about where services have been cut already and have been cut further? Are there common areas that you're looking at, so that it's somehow by, not random, but by design that services are cut in a similar way in similar councils? So, for example, if there has been a cut in social services that next door is doing the same as well, so that you don't get that postcode lottery-type of situation, if you're on a boundary of a local authority.
I think there's part of that, but I think where it comes down to is more around agreement on strategic aims, and something, for example, that—. Protecting our most vulnerable. Now, everybody actually would agree that that is a key priority. We might then discuss what different people are doing in order to achieve that. We'll come on later to the social care crisis. That is a point of discussion about what initiatives have been found to work, what initiatives maybe need a bit more tweaking, what is the strategic direction in various councils. So, rather than say, 'We're all going to do the same thing', because our areas are actually diverse and they have different needs. But there is a really constructive dialogue ongoing between local government in Wales.
Sorry, I'll bring Llinos and Anthony in in a second. Is that being driven by the WLGA or is that being assisted by the Minister taking a lead in helping you to navigate through this budget, because, obviously, she's got the position of being the local government Minister as well as the finance Minister? Is she taking an active part in helping you to navigate some of these questions?
I'm sure Anthony will probably come in an awful lot more on this, but, actually, it's both. We're assisted by WLGA, but Ministers have been really productive. It's something that was developed over the pandemic. It was happening to a certain extent before, but since the pandemic, the actual conversations are much more frequent, much more regular, much more in depth, and there is a strong relationship between local government, whether that be officers and leaders, that we are able to go forward and have these conversations.
I'll bring Jon in, and then maybe if one of the other two want to comment briefly.
It was just to say that, over the course of the autumn, I think there were very regular meetings, not just with the finance Minister, but a number of Ministers, around the cost-of-living crisis. These were fortnightly meetings. It wasn't just about pressures for local government, it was about the impact on households as well, so they were really useful meetings. Plus, you would have had the ongoing cycle of WLGA meetings, the executive board meeting regularly—that's all our leaders. We've had special meetings as well. So, for example, the day after the autumn statement, all leaders, chief execs, finance directors, finance cabinet members as well, met up in Pontypridd to discuss the financial challenges. And that's how we're spreading, I suppose, good practice and common approaches. There are a lot of new officers and leaders out there as well, so I think they find that kind of support invaluable.
Llinos, wyt ti eisiau dweud gair?
Llinos, do you wish to say something?
Dwi'n meddwl bod yna ychydig o bethau wedi cael eu cyffwrdd yma, felly dwi eisiau trio—. Dwi'n meddwl ei bod hi'n bwysig—. Mae'r bartneriaeth y mae Lis yn sôn amdani yn andros o gryf rhyngom ni, a, fwy na thebyg, un o'r pethau positif a ddaeth allan o COVID, os daeth yna rywbeth, ydy'r ffordd rydyn ni wedi medru cydweithio. A hefyd, mae'r cyn-Weinidog dros lywodraeth leol wedi cefnogi'r cydweithio yna, ac wedyn mae hwnna wedi parhau, ac mae'n bwysig bod hynny'n cael ei nodi.
Ond roeddech chi'n gofyn y cwestiwn a ydym ni'n alinio'n gwasanaethau. Wel, dyna sy'n dda am lywodraeth leol ydy ein bod ni yn lleol, ac mi welwyd yn ystod COVID y ffordd roeddem ni'n gallu addasu'n gwasanaethau ni i ymateb i beth oedd yn digwydd yn lleol. Mae'n rhaid i hynny barhau, achos mae demograffeg yn fater mewn ardal fel Môn, gyda heneiddio yn uchel yma; yn amlwg iawn, fyddem ni ddim yn medru alinio ein hunain, efallai, â Fflint, er enghraifft. Felly, mae o'n bwysig, ond bod elfen strategol, fel roedd Lis yn ei drafod, o sut ydym ni'n amddiffyn y rhai mwyaf bregus mewn cymdeithas—bod yna aliniad o ran hynny. Felly, mae hi'n bwysig ein bod ni'n cael yr hyblygrwydd yna i wneud beth sydd ei angen yn lleol, ond ein bod ni'n uno'n strategol, a dyna sydd yn digwydd. Mae yna bartneriaeth rhyngom ni fel arweinyddion o ran dealltwriaeth o'r heriau rydan ni'n eu hwynebu—ac mae o ar draws y ffin. Rydyn ni'n ardal dwristiaeth, mae yna ardaloedd diwydiannol, onid oes? Felly, dyna sut rydan ni'n—. Ond rydan ni'n deall yr her rydyn ni'n ei hwynebu, ac rydyn ni'n edrych yn lot mwy strategol, gyda chefnogaeth, fel roedd Jon yn dweud, yr holl Weinidogion yn dod i drafod yn eu meysydd efo ni hefyd.
I think a few things have been touched on here, so I want to try to—. I think it's important—. The partnership that Lis was talking about is very strong between us, and probably that's one of the positive things that came out of COVID, if anything did, the way that we have been able to collaborate. And also the former Minister for local government has supported that collaboration, and then that's continued, and it's important to note that.
But you were asking the question about are we aligning our services. Well, what's good about local government is that we are local, and it was seen during COVID the way that we could adapt our services to respond to what was happening at a local level. That has to continue, because demographics are an issue in an area such as Anglesey, with an ageing population, and the figures being high; very clearly, we wouldn't be able to align with Flint, for example. So it is important, but that there's a strategic element, as Lis was talking about, of how we safeguard the most vulnerable in our society—that there is alignment in terms of that. So, it is important that we have that flexibility to do what's required at a local level, but that we unite strategically, and that's what is happening. There is a partnership between us as leaders of understanding the challenges that we face—and it is across borders. We're a tourism area, and there are industrial areas, aren't there? So, that's how we—. But we understand the challenges that we're facing, and we're looking much more strategically, with the support, as Jon was saying, of all the Ministers coming to discuss their fields with us too.
Ac rydych chi felly'n edrych y tu hwnt i'r flwyddyn ariannol yma; rydych chi'n dod at eich gilydd i edrych ar gyllidebau i'r dyfodol, ac yn edrych fwy ar beth sy'n mynd i ddod yn 2024-25, a thu hwnt, i wneud y gwaith y strategol yna, i weld, 'Wel, lle rydyn ni'n mynd efo hyn'. Ydy'r cydweithio yna'n gweithio'n well hefyd, o bosib, oherwydd technoleg, fel rydyn ni'n gallu cyfarfod heddiw—rydych chi i fyny yn y gogledd, ac rydyn ni i lawr yng Nghaerdydd?
So, therefore, you are looking beyond this financial year; you are coming together to look at budgets for the future, and looking more at what's going to arise in 2024-25, and beyond, to do that strategic work, to see, 'Well, where are we going with this'. And is that collaborative working possibly better because of technology, as we can meet today—you're up in north Wales, and we're down in Cardiff?
Mae o'n bwysig. Mae arweinyddiaeth gadarn a llywodraethiant ariannol yn hanfodol i wasanaethau cyhoeddus. Beth sy'n gryfder mewn llywodraeth leol ydy'n bod ni wedi ein hethol, a bod y llywodraethiant yna a'r accountability yna yn digwydd. Ac yn amlwg, rydyn ni'n cymryd y cyfrifoldeb yna, ac, o dan arweiniad Anthony yn gyllidol, rydyn ni'n cael y trafodaethau hirdymor yna. Ond efallai mai dyna'r pryder mwyaf i ni fel arweinyddion, achos mae'n deg dweud ein bod ni wedi gwneud toriadau ers 12 mlynedd. Dydy gwasanaethau cyhoeddus ddim yn lle fyddem ni'n dymuno iddyn nhw fod, achos buddsoddi y buaswn ni i gyd yn licio ei wneud, a chodi cyflwr ein lonydd a'n heiddo a'n holl wasanaethau. Ond rydyn ni ar hyn o bryd yn edrych ar sut rydyn ni'n mynd â'r gwasanaethau drwy'r storm, a dod allan o'r storm o leiaf yn gwneud beth rydyn ni'n gallu ei wneud yn yr amgylchiadau yna. Ond rydyn ni i gyd yn bod yn hollol onest—mae angen buddsoddiad enfawr yn y gwasanaethau cyhoeddus yng Nghymru, ac ar draws y Deyrnas Unedig, er mwyn i ni fedru gwasanaethu fel y buasem ni yn dymuno gwneud hynny. Ond mae'n rhaid i ni, yn gyfreithiol, falansio'r llyfrau, sydd yn golygu felly bod yn rhaid i ni edrych ar sut rydyn ni'n gwneud y toriadau. Ac mae hynny'n rhyfedd i ni fel gwleidyddion, yn amlwg, sydd efallai yn trio ffeindio ffyrdd creadigol o gadw ein pennau uwchben dŵr, a'r pryder mawr ydy ein bod ni'n gwybod, rhyw ddiwrnod, bod y gost o ailadeiladu gwasanaethu cyhoeddus yn mynd i fod yn un enfawr i ni.
It is important. Robust leadership and financial governance is crucial for public services. The strength of local government is that we are elected and that that governance and accountability is in place. And clearly, we take that responsibility, and, led by Anthony in budgetary terms, we have those long-term discussions. But that's perhaps our greatest concern as leaders, because it is fair to say that we have been making cuts for 12 years. Public services aren't where we would want them to be, because of the investment that we would all like to make in improving our roads, properties, and all our services. But we are currently looking at how we are taking those services through the storm, and getting out at the other end at least doing everything that we can under those circumstances. But we all have to be quite honest—we do need huge investment in public services in Wales, and across the UK indeed, in order for us to serve our people as we would like to do. But legally speaking, we have to balance our books, which means therefore that we do have to look at cuts. And that is difficult for us as politicians, obviously, who are trying to find creative ways of keeping our heads above water, and our great concern is that we know that, one day, the cost of rebuilding public services will be huge.
Diolch. Anthony, just on that point, how, as the finance lead, are you looking to help your colleagues in that strategic planning into 2024-25? Is it possible with the settlement that you've got now, and is it something that is happening?
Thank you, Chair. There are three aspects to it. First, it's keeping that dialogue going with Ministers. I think Rebecca, and Julie before her, deserve great credit for the way they've engaged with us. I speak with English leaders quite often over the border, and they don't have that kind of relationship. It doesn't mean the problems go away, but it means we're at least approaching them, in Wales, from an approach of talking to each other, even when those conversations are difficult. So, I think that's an important first aspect.
The work of the WLGA nationally to help councils plan, I think, is an important one too. Jon mentioned the finance summit that we had; I think we need to continue to do that, to bring people together, virtually or in a room, to talk through the different challenges we've got and to try and share common solutions, ideas that we've got, approaches that we can have that we can share and we can help reduce the problem. And also the regional work we do. In Gwent, certainly, and across south-east Wales, I'm speaking to lots of our neighbours on how we can do things differently. If we have a shortage of staff in one area, for example engineering, we've talked to some of our neighbours, who may be able to help us, and that reciprocal help arrangement is something that can bring good value, can help us to make those plans for the long term.
But what I would say is that this settlement at least gives us a chance to focus on the long term and not have all our bandwidth taken up with firefighting, and that's important, because—. You know, it's very important, I think, that we do plan for the long term, that we don't make cuts that have long-term implications. And we've seen this elsewhere in the UK, where lots of the services that are the fabric of early intervention and prevention in our communities have been stripped away, and then, lo and behold, in 10 years' time—. Let's say you cut all youth services, and then, in 10 years' time, you wonder why you've got a youth offending problem. You cut away some of the preventative social care services, and then, in 10 years' time, you wonder why the NHS is overwhelmed by people who haven't had that help further up the stream and end up falling into the river. Sorry, I've really ruined the Desmond Tutu quote there, but you know what I mean. We need to make sure that we take long-term decisions along the lines of the Well-being of Future Generations (Wales) Act 2015 that make sure that we can do things long term. That's only possible if we have the settlements that are needed to be able to put us into that space and not continually having to firefight.
We heard from the NHS earlier; it's having that stability to be able to do it in—. And we've just had so much churn and instability over the last few years, let alone the last 12 months. So, it's hoping to steer us into possibly a little bit of calmer water, so that we could actually do some of the stuff that you're saying. I'll bring Mike in.
First of all, can I thank you for what you're all doing to provide local services in very difficult times? I, and I'm sure most colleagues, really do appreciate it. I want to talk about capital expenditure. How has the provisional settlement affected your capital plans? I know capital costs are going up. What's your estimate of them? Are you seeing delays? There are easy delays, where you just pay for a school over two years rather than paying for it over one year, so all that happens is it opens two months later, but that has a knock-on effect, doesn't it, on further capital expenditure. And how are you getting on with capital receipts? That used to be—. I mentioned that to the NHS, and they looked at me blank. But that used to be very much a source of money for paying for important things, like selling off unused land—land that hasn't been used for a long time, especially in areas where house prices are high.
Who wants to go first? Anthony.
I'm happy to, if you want me to. The return to the historic levels of capital funding is welcome. Obviously, that's just one source of funding that we use for our capital projects. As Mike hinted in the question, the challenge that we have with the capital approach is the huge increase in costs for many of the capital projects that we need to do to improve our public services. Our school building costs have gone up massively, for example. In Torfaen, we don't have a lot of land to sell, unfortunately, that's in our ownership. I think a wider piece of work across the public sector needs to be driven forward on that, because I think other public sector organisations do have more land that can be used. Every penny of receipts that we've got from our capital receipts have gone back into our twenty-first century schools programme, because we think that's the right priority, but there is huge pressure on capital projects because of the inflation of construction costs in particular.
Rydyn ni yn gwerthfawrogi, fel roedd Anthony'n dweud, bod y gyllideb cyfalaf wedi mynd i fyny, ond mae ei werth o wedi diflannu, onid ydy? Rydyn ni yn ffeindio'r gyllideb cyfalaf yn fwy rhwystredig na'r gyllideb refeniw o ran medru cyflawni; mae o'n gyfyng iawn o ran beth rydyn ni'n gallu gwneud rŵan. Roeddech chi'n gofyn gynnau ynglŷn â'n cynllunio hirdymor ni, a'r arian cyfalaf yna sydd yn angenrheidiol er mwyn rhoi'r cynlluniau hirdymor yna yn eu lle. Felly, mae o'n rhwystredig eleni ein bod ni'n edrych ar y gyllideb cyfalaf ac rydyn ni ond yn gwneud y basics, achos mae pethau fel ein disabled facilities grant ni ynddo fo, mae arian tuag at gynnal y cytundeb priffyrdd ynddo fo. Felly, mae o'n gul ofnadwy. Ac, fel y nodwyd yn fanna, mae cynlluniau cyfalaf, fel roeddech chi'n dweud, ysgolion, ac unrhyw beth, mae eu costau nhw wedi mynd i fyny hefyd, a rŵan rydyn ni'n gorfod balansio effaith llog ar y gyllideb refeniw. Wedyn dydy o ddim mor gost-effeithiol i ni fod yn symud ymlaen â chynlluniau fel hyn oherwydd y gyllideb refeniw a'r effaith mae o'n cael yn fanno. So, mae hwnna'n heriol ofnadwy i ni wrth fynd ymlaen.
O ran y sylw ynglŷn â gwerthu, rydyn ni wedi gwneud hynny yn ystod y cyfnod sydd wedi bod. Felly, rydym ni wedi gwerthu lot i ffwrdd yn ystod y 10 mlynedd diwethaf er mwyn bod yn syrfeifio, os ydyn ni'n bod yn onest. Mae'n rhaid i ni hefyd fod yn ofalus efo'r farchnad. Felly, mae gennym ni strategaeth gyfalaf o ran gwerthiant er mwyn gwneud yn siŵr nad ydym ni'n fflydio'r farchnad. Mae eisiau sicrhau ein bod ni'n cael y gwerth gorau o arian yn ôl i goffrau'r cyngor pan rydym ni'n gwerthu hefyd, ac rydyn ni wedi bod yn ofalus ar werthu'n amserol, megis os oeddem ni'n cau ysgolion ac yn agor ysgol newydd, bod yr ysgolion yna'n cael eu gwerthu mewn drip feed i'r farchnad ac yn y blaen.
A hefyd, mae'n rhaid i mi nodi, gydag unrhyw adeilad sydd gennym ni, rydym ni yn rhoi'r cynnig yn fewnol hefyd, achos dydyn ni ddim eisiau gwerthu rhywbeth i ffwrdd a'n bod ni'n gweld yr angen mewn dwy flynedd am adeilad. Felly, rydym ni yn gofyn wrth yr adrannau'n fewnol o ran eu cynlluniau strategol, os ydyn nhw'n meddwl bod yna angen hefyd cyn i ni waredu unrhyw eiddo. Felly, mae o'n fwy cymhleth, fel rydych chi'n dychmygu, pan rydym ni'n trio gweithredu o ran cyfalaf. Ond, yn bendant, dwi eisiau dweud does yna ddim lot ar ôl rŵan yn y banc i ni fod yn gwerthu'n bellach, a dwi yn bryderus am ein gallu ni i flaengynllunio heb fod yna fwy o fuddsoddiad yn dod i mewn i'r gyllideb cyfalaf.
As Anthony said, we do appreciate that the capital budget has gone up, but its value has disappeared. We do find the capital budget more frustrating than the revenue budget in terms of delivery; it's very restrictive in terms of what we can do. You asked earlier about long-term planning and that capital funding that's necessary in order to put those long-term plans in place. So, it is very frustrating that we are looking at the capital budget this year and only doing the basics, because things such as the disabled facilities grant is included, it includes maintaining highways, so it's very restrictive indeed. And, as was noted, the capital budgets of schools, the costs have gone up too, and now we have to balance the impact of interest on the revenue budget. And then, it's not as cost-effective for us to be moving forward with plans such as these because of the revenue budget and the impact it has there. So, that is very challenging indeed as we move forward.
On the comment on sale of assets, well, we've done that; we've sold a great deal off over the past 10 years in order to survive, if we're perfectly honest. We also have to be very careful of the market. We do have a capital strategy in terms of sales here to ensure that we don't flood the market. We need to ensure that we get the best value for money into the council coffers when we do sell assets, and we have been careful in terms of selling in a timely manner. For example, if we close a school and open a new one, that those sites are drip fed into the market, if you like.
Also, I should note that any building we have, we do provide that internal offer, because we don't want to sell something off and then see that we need that building two years later. So, we do ask internal departments about their strategic plans and whether they have any requirements before we dispose of any property. So, it is more complex, as you can imagine, as we try to implement this in terms of capital. But, certainly, there isn't much left in the bank now for us to be making further sales of assets. I am concerned about our ability to forward plan without more investment in capital.
Jon, you indicated that you wanted to come in.
Yes, thank you, just to put some figures on what Councillor Medi was saying there. I think, before the financial crisis, going back before 2008, capital receipts were probably raising in excess of maybe £100 million a year. It took a while for that to recover, I think. The most recent high would have been around about 2013-14 or 2014-15, when it got back to about £80 million. But I think for the latest year for which we have data available, StatsWales shows that capital receipts are raising something like £30 million. So, it's certainly not as lucrative a source of funding as it used to be, Mike.
And Lis, if you want to come in briefly.
Diolch. I think it's quite interesting. Everyone always talks about capital receipts, but I think the problem over the years is that so much has been sold off that it's very difficult in terms of investment and growth going forward. As Llinos said, the market is low at the moment, and, from that perspective, what we have to look at is: is it better to mothball expensive buildings at the moment, rather than sell them off, so that we can consider what we do with them in the future? And that's something that we're looking at.
In terms of capital projects, we can't ignore the local economic benefit from capital programmes, and particularly, community benefits programmes that come alongside—local procurement, that sort of thing. So, that is really, really important, going forward. But if we borrow to undertake capital projects, we have to be mindful that there are revenue costs to capital borrowing, which then can cause problems.
And I suppose the only other thing that I would add is that there is evidence that, in the current situation, a number of building contractors across Wales have gone into administration, and we've just had a situation where a contractor has failed. It's a fairly small-scale development—it's 54 council properties that were being delivered. What we've had to do, because we know that, if we re-tendered for that programme, because it's probably about two thirds built at the moment, the cost would go up again. So, we've actually taken on all of the subcontractors and we are delivering that programme ourselves to keep it within an affordable range. But, if you add on decarbonisation, which is essential, if you add on sustainable drainage initiatives, and then you add on inflation, one of our new schools has doubled in price to get it off the drawing board. So, these are things that we are actually having to manage at the moment. Diolch.
Well, just following on from what you were talking about—borrowing—I'll tell you what I know, but everything is say is 13 years out of date, so tell me if it's still correct. You used to borrow from the Public Works Loan Board, and you used to borrow over 30 years. And for housing, you used to borrow over 60 years. What I'm asking is: are you going to increase the level of the borrowing planned this year and next year? And, isn't hindsight of wonderful thing—wouldn't it have been better if all of us had borrowed a lot more two years ago, before interest rates went up? What's the current Public Works Loan Board rate? And, is borrowing this year better than borrowing next year? Are you fearful that the Public Works Loan Board rate is going to go higher?
I think it's around 5 per cent at the moment—the Public Works Loan Board rate—although there is a lot of volatility, up and down, as you say. With a crystal ball and a time machine, I think we'd all buy a few lottery tickets to help fund our council services as well as putting some more borrowing. Now, obviously, all borrowing has to be appropriate for a purpose that's sustainable and prudent as well. Borrowing alone, I don't think, is the solution because, of course, it has to be paid off, but it's one of the mechanisms that councils have been able to use to fund work, and will continue to be so. The volatility doesn't help at the moment, because, of course, rates could go up as well as down, as the adverts always have to say, so it's a difficult calculation to make.
Thankfully, unlike England, you haven't been borrowing to buy shopping centres and leaving yourselves in very serious financial positions. Congratulations on that.
Llinos would like to come in.
Can I just finish this?
The prudent way that you've borrowed has been very, very good. The question is: have you scaled back your borrowing for this year with interest rates having gone up to 5 per cent?
Just quickly, can I just say 'thank you' for that comment, because I've sat with Audit Wales where they’ve been saying, 'Are you commercial enough?’ and trying to get them to understand that Ynys Môn is struggling to keep a corner shop open, let alone a shopping mall? So can I say ‘thank you’ because, obviously, our ability to manage public money and trying to do that in a safe way and not knowing what austerity was going to look like, let alone knowing that a world pandemic was on the way and then this? So, thank you for those comments.
I would say that the borrowing, at the moment, we were all in our plans—. The election also happened, didn't it, for us. So, we've been in that stagnant period of time where we were bringing our plans to an end and restarting our council plans, our strategic view, and all those strategic plans. But, now, as we're all tidying those up, I think the conversation is going to be around what we are able to achieve, and, then, the cost of borrowing on top of that. For us, here in Ynys Môn, we'd already made those decisions around schools and so on, but we have had to add money into our twenty-first century schools and so on. And we're actually looking, creatively, at extra care here in Ynys Môn, and being maybe the first that the housing revenue account is going to fund. So, looking at a way of using those sorts of funds that we have in a more creative way as well.
But, definitely, the borrowing one is going to be a discussion on the table, and it's the risk appetite, but, also, the recognition that we never know what's coming our way around revenue and service pressures. So, that's the challenge that we have to balance, and it's always around our treasury management plan as well. Diolch.
And, I think, finally from me—. You've also got council tax, fees and charges. I'm not going to ask you to tell us your council budget now—first, you wouldn't, and, secondly, it would be wrong for you to do so. But, are you giving serious consideration to the increases in fees and charges, and are you giving serious consideration to what level of council tax is affordable and needed? And the affordable and needed might not be equal.
Lis, to start with.
Diolch. I think therein lies the nub of the query. It is those balances that we are constantly trying to achieve. As I said, I've got a fees and charges report going to cabinet this afternoon. And, I think, what you have to work out are the underlying principles that you're going to adhere to, and, for us, non-statutory provisions, where they aren't aligned to the corporate plan, where they're not a priority for the council's corporate plan, we need to move them to cost neutral. So, we will be looking at full cost recovery—not all in one step—but we will be looking towards those.
Where they are provisions such as, say, adult community learning that helps people to get back on track in terms of employment or something, then we would be subsidising those. And the whole thing is about having the underlying principles and working. It might be: what do we do with certain car parking in light of decarbonisation? And, in terms of moving to a carbon-zero position, are there things that we should be doing? But, as I said, covering our costs, because we can't afford to subsidise areas. You've either got a choice that you stop doing it, or you have to find a way of it being cost neutral. And that is a big one, and it's also a very difficult conversation to have with residents. But, the question is: what else would you cut if you had to fund this?
Ie, jest yn sydyn, mae'r ffioedd yn un diddorol ofnadwy, ac mae hwn yn un rydyn ni'n cael her arno fo. Ac er fy mod i'n sôn ynglŷn â'n bod ni ddim yn edrych ar y siopau gynnau achos y sefyllfa, mae yna market failure mewn rai pethau ar Ynys Môn, ac rydyn ni'n gorfod plygio'r gap yna hefyd. So, mae'n rhaid i ni fod yn ofalus iawn, ac mae effaith economaidd ar rai o'r gwasanaethau rydyn ni'n eu gwneud, ac mae hamdden yn un o'r rheini. Yn amlwg, mewn ardaloedd difreintiedig, rydyn ni eisiau cadw'r costau yna'n isel er mwyn gwneud yn siŵr bod y defnydd yna, yn gymunedol, y gwaith ataliol, a chael pobl drwy'r drysau yna, nid yn unig ymysg pobl ifanc, ond ymysg pobl hŷn, mae'n bwysig ein bod ni'n cadw'r rheini'n agored. Ond, wedyn, rydyn ni efallai'n cario—achos ein bod ni'n edrych ar y cost neutral yna—rydyn ni'n ffeindio ein bod ni'n gwneud colled yn rhai o'r ardaloedd yna.
Ac mae yna hefyd ffioedd rydyn ni ddim yn cael cyffwrdd, megis cynllunio. A dwi'n herio hwn ychydig bach, achos os ydych chi'n rhoi ceisiadau cynllunio i mewn, ac rydych chi'n barod i wario degau o filoedd ar gais cynllunio ac adeiladu, rydyn ni wedi cael ein cyfyngu, ar rai o'r rheini, ar faint o ffi rydyn ni'n cael codi, lle y gallwch chi ddadlau efallai bod hwnna'n un sydd angen ei edrych arno fo. Felly, mae o'n faes hynod o gymhleth, a fedrwn ni ddim edrych arno fo fel un. A hefyd, effaith codi, efallai 3 y cant, ar ddefnydd gwasanaeth, o gymharu â 5 y cant ar dreth gyngor—efallai bod o'n rhatach codi'r 5 y cant ar dreth gyngor na'r 3 y cant yna ar ddefnydd gwasanaeth, i'r teuluoedd ac yn y blaen. Felly, jest cymhlethdod y sgwrs dwi'n trio amlygu yn y fan yma, a bod y sgyrsiau yna'n digwydd mewn 22 awdurdod, achos eu bod nhw'n deall eu hardaloedd a'r effaith yna ar eu hardaloedd.
Just quickly, the fees is an interesting point, and this is something that we have a challenge with. And, even though I was saying earlier that we weren't looking at shops, for example, because of the situation, market failure is responsible for some things in Ynys Môn, and we have to plug that gap as well. So, we have to be very careful, and there is an economic impact on some of the services we provide, and leisure is one of those. Clearly, in disadvantaged areas, we want to keep those costs low in order to ensure that the use is there, the preventative use, the community use, and get people through the doors, not just young people, but amongst the older generation, it's important that we keep those open. But, also, because we're looking at that cost-neutral element, we find that we're making a loss in some of those areas.
And, also, there are fees that we can't touch, for example, planning. And I challenge this a little, because, if you put planning applications in, and you're willing to spend tens of thousands of pounds on planning and building, we're restricted on some of those in terms of the fees that we can charge, and you could argue, perhaps, that that's something that needs to be looked at. So, it is a very complex field, and we can't look at it as one. And, also, the impact, perhaps, of raising 3 per cent on the service users, in comparison with 5 per cent in council tax—perhaps it would be cheaper to raise the 5 per cent on council tax rather than that 3 per cent on the use of services, for families and so on. So, just the complexity of the conversation is something that I'm trying to highlight here, and that those conversations are happening in 22 authorities, because they understand their areas and the impact on their areas.
Just from what you've said there, these are questions where I'm asking you do something—I was happier on your side than I am on this. The question is: why don't the WLGA make representation to have planning charges set by local authorities? It's something I've argued for in the past, and been told that local authorities aren't that interested in it. So, if you were to push for that, it would be very helpful. And my question to Lis is: adult education—why are you providing it, not Cardiff and Vale College? I think, sometimes, local authorities in general need to look at whether somebody else who is being funded differently could provide some of these services. I don't know if you have anything to add to that; I was just throwing that out as an idea.
Actually, I will answer it. Cardiff and Vale College do deliver some, and we deliver some, because sometimes, provision is better delivered within communities where people live, particularly in disadvantaged communities where people feel safe and confident in their own community, to get them to access that sort of support. They won't travel. They don't feel confident enough. So, we work very closely with Cardiff and Vale College on provision of services, and each one of us works to our strengths, really.
But there's no reason why Cardiff and Vale can't do outreach in any village or town, or anywhere else. It's your budget—I'm just trying to be helpful—but if somebody else can do the work and they're getting funded for it, are you making the right decision to fund it yourself? It's your decision, not mine. I'm just asking you to think about it.
Well, the types of ones that, currently, we're looking at, in terms of cost neutral, are—. As I said, for the get-back-on-track stuff, we get support from Welsh Government, so that's reduced. But, in terms of the other ones, it might be learn painting, make a felt rabbit, or learn woodwork-type stuff, which, in effect, are more of a pastime provision, that's very good for social isolation and those sorts of things, but actually, they're the types of things that we really can't afford to completely fund, so we have to look at fees on areas like that. Those sorts of things, it would be unlikely, within their strategic plan, that Cardiff and Vale College would deliver.
Thank you. I'll bring Peter in now. Welcome, Peter.
Good morning, all. Good to see you. Good to be amongst friends. Sorry that I wasn't here at the start of your session.
I'm sure that Mike might have touched on it, but I just want to touch briefly, Chair, on reserves, because I know that Andrew Morgan suggested that authorities are going to be drawing down on reserves. I think all would agree that the period we're in now and the next couple of years are likely to be an exceptional period, with, hopefully, a return to some stability afterwards. Now, we know that the use of reserves shouldn't be used for recurring expenses; it should be used for non-recurring expenses, really, or for transformational change. However, I think if there is a benefit that came out of COVID, and there aren't many, it's that it allowed authorities to accrue more reserves over the last couple of years. So, I think, looking through all of the councils'—or those who have produced them—draft statements of accounts for 2022, I see a significant increase in earmarked and usable reserves—somewhere approaching a 30-odd per cent increase, a nearly £600 million increase.
So, I think the useable reserves, which we know include general reserves, school balances, some capital, and earmarked reserves, is somewhere near £2.75 billion. I know that some authorities are better heeled than others, but don't you think that, through a time of such significant pressure on the cost-of-living crisis and on individuals, some of those reserves, where can be afforded—and some can do it more than others—should be mobilised to actually remove the need for council tax increases on some? I won't name specific authorities, but you'll know that there are authorities with circa £200 million-worth of usable reserves. Now, I know as well as you do that earmarked reserves are for that purpose—earmarked projects. But, sometimes, if they have not been drawn on or there's no pressure to draw on them, or there is an opportunity to hold back those investments, that money can be mobilised because it has the same status as a general reserve. I just wondered what—. At this time, such a challenging time, it would be totally appropriate to use more of those reserves. What are your views on that?
I'll bring Anthony in on that one.
Yes, I'm happy to come in first. Hello, Peter. Nice to see you again. Yes, it is an appropriate time to use reserves in an appropriate way. I talked earlier about energy costs, for example, and what of those energy costs could be considered a spike where we can try to bridge the gap with some reserve funding, and what other reserves can we use. We've got very limited reserves to use, and we do have to be very careful that we don't store up problems by using them for issues that are going to become recurring. One of the great challenges facing us is the unpredictability of what's going to happen over the next few years, for example with energy costs, and what of that will be a sustained increase and what of it will be a spike in costs. So, we will continue to use reserves for specific reasons and to try to bridge some of the gap, but we can't be overly reliant on reserves, otherwise we'll store up problems for the future.
Lis, anything to add? I know you had your hand up, but whether or not you've got anything further to add that's—. I'm just looking at the time, that's all.
Diolch, and thank you, Peter. Yes, I echo Anthony, so I won't repeat that. It's something that we have been called on to do every year for as long as I can remember, whenever we've been—'Oh, use the reserves.' And I wonder, if we had used the reserves all those years, where we would be now. There is a general lack of understanding about the different categories of reserves—which you would understand, obviously—in terms of, as you mentioned, general funds versus unrestricted, restricted, earmarked et cetera. And every year, to try and go through those categories of reserves in terms of what's available—.
Our reserves normally are around the Chartered Institute of Public Finance and Accountancy-advised 5 per cent of our budget. We are planning to use—I'm just looking at my notes for this afternoon—about 3.2 per cent this year, but that, as Anthony said, is going to be to smooth out spikes in energy costs, it's going to be in terms of invest-to-save. So, an example might be to develop children's social care facilities, which will not only improve the outcomes for children but will save us the costs of children going out of county. So, those are the types of things that we do.
In terms of chucking it into the mix to bolster up council tax, that is not a productive use, because, next year, when our costs have gone even higher, the ask is even bigger and the reserve is gone. So, it's an easy political fix, but, actually, if we're going to try and be prudent and sensible politicians, helping our local authorities through this challenge, just chucking in n number of million from reserves is not going to be helpful.
I'm conscious we've only got about 15 minutes left. It's fascinating, but we've got to cover social care and we've got to cover education. So, if we could move on.
Yes, we'll move on. It's a shame that, perhaps, the local government family can't mobilise some of the reserves it has got to create a floor that enables all authorities to protect citizens from the highest of council taxes. Anyway, I'll move on.
So, local authorities have access to other sources of funding, and the WLGA provided evidence to the committee inquiry into post-EU funding. The shared prosperity fund allocations were agreed in December. How are those plans being impacted by the pressures local authority budgets are coming under now?
Diolch. I think that the biggest impact we've got is that we don't have any laid out terms and conditions, so, if we were going to try and spend at the moment, it would be at risk, and that would be an impossible position for any local authority. You can talk about, as we go forward, trying to take on short-term staff—the timescales are very restricted on this. But the biggest thing is that we have plans, we know the way that we want to go forward, but, for some strange reason, we can't get the final sign-off, and so, to move ahead in funding, the first year of which is supposed to be spent by about March of this year, is pretty well impossible.
Okay. Thanks, Lis, for that. Just to explore a little bit more the pressures highlighted by yourselves, including social care and staff pay, in your evidence, you talk about the impact of the pandemic on existing challenges within social care, and I totally can see those. Pressures in the NHS are also being widely reported and, last week, Andrew Morgan said that local authorities are bending over backwards to support the health service. So, how are the challenges in social care manifesting themselves and does this budget do anything to alleviate some of those issues you're facing?