Last year’s financial accounts for Merthyr Tydfil Council were the “healthiest” for decades, a councillor has said.
Councillor Andrew Barry, cabinet member for finance, told full council on Wednesday, November 3 that the authority is in its “strongest financial position for decades".
His comments came as councillors discussed the council’s statement of accounts for the last financial year 2020/2021 which showed a budget surplus of £4.46m.
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Cllr Barry, Independent, said this was an “exceptional performance” during what could be argued is the most difficult year the council has had to face in its history with Storm Dennis, Brexit and Welsh Government.
Of the £4.46m, £3.83million is being transferred to earmarked reserves and £634,000 to general reserves.
This will increase general reserves to £5.33m which is the upper end of the council’s reserves policy (4% of the council’s net budgeted revenue spend).
School balances are currently worth £4.3m and there is £15.3m in the council’s earmarked reserves meaning the council has around £25m in its reserves in total.
Where the money left over will go
There is £779,000 going towards the individual schools budget to help create full time nursery places from September 2021 for Cyfarthfa Primary School and Ysgol Santes Tudful over a four year period.
The council’s Recovery, Transformation and Improvement Plan is worth £802,000 and social services will get £770,000 to deal with expected Covid pressures.
A fund of £696,000 has currently been set aside for the pay award and is currently enough to cover the 1.75% being proposed.
There will be £300,000 set aside for community groups to cover the transitional/legacy funding which ends on March 31 and £200,000 is going towards apprenticeships with five apprenticeships over two years.
The council has spent £27.6m on capital projects against a planned spend of £31.3m.
Cllr Barry described the figures as the “healthiest set of accounts by this authority for decades” but warned: “however we can’t take our foot off the gas.”
On homelessness, he said they are lobbying Merthyr for a continuation of the hardship funding.
He said: “We don’t want a smoke and mirrors settlement. We want clarity and clearly defined support for that particular issue.”
He thanked everyone who helped produce these “quite astonishing” set of figures in the face of adversity saying it was a “truly team Labour effort” to produce the “strongest financial position for decades".
The impact of the pandemic
In response to a question from Councillor Julian Amos about whether the pandemic had saved some money for the council, Cllr Barry said that it wasn’t business as usual so you can’t compare like with like.
But he said without the hardship fund support from Welsh Government they would have been in “dire straits” especially with the homelessness issue for which they’ve included £1.88m over the next three years.
Steve Jones, the council’s chief finance officer, said there were under spends in some services due to the reduction in demand as a result of the pandemic but there were additional costs and lost income.
He said the council received close to £9m from the hardship fund in 2021.
Councillor David Chaplin, Dowlais, said there was a lot of money saved during the pandemic because of the services they weren’t providing.
He said: “We had a favourable settlement which we know we can’t guarantee so the concerns are that a lot of our year-to-year stuff has been short term strategy on balancing the budget. We need some long term thinking here.”
But he said it was a good effort and thanked all who had worked hard in unprecedented times.
Where the council finances were previously compared to now
Councillor Kevin O’Neill, Independent, cabinet member for housing and public protection, said that three years ago they had a meeting where there was concern about general reserves coming down to 3.5%.
He said the medium term financial plan then said that today there would be a £23m overspend.
Cllr O’Neill said: “There was a change of leadership and there was a change of approach.
“They started looking from a basis of our ambition being fuelled by our budget, not being ambitious for things we couldn’t afford, cost cutting.
“Yes it happened but investment also happened, development also happened and yes we had the floods, we had the storms, we had Covid-19 and all those other things and I hear of £1m we might not have had otherwise but it’s not £23m that’s for sure.
“What I want to do is recognise again the work that was done together with the new chief executive, with Steve (Jones) and his team and with cabinet and particularly Andrew.
“What has happened is that the budget has become an enabler, not a weight, not a disabler.
“Who could forget all the money we got for our businesses working together with our revenues and budget team with Andrew, making sure that we were the best in Wales for getting money to our businesses at the most difficult time they have ever faced.
“So a £23m projected deficit comes down to a £4.5m surplus. A job well done I say.”
Councillor Geraint Thomas, Independent, cabinet member for regeneration, transformation and commercialisation, said: “There has been a lot of hard work by everybody on this.”
He said: “Steve Jones is like the Virgil van Dijk of the council. He is. He is super safe. Nothing gets passed him at all. Cllr Barry is like Alisson Becker.
“Liverpool brought two players that have changed their fortunes and we are lucky to have these two as well looking after our finance.”
Cllr Thomas said he was really impressed that they had invested the surplus back into the authority.
The need for the council to keep their eye on the ball
Councillor Clive Jones, Labour, welcomed that money has been put back into reserves and that there has been a £4.5m surplus.
But he said: “As the chair of the governance and audit committee I don’t think we can shy away from the fact that the settlement for the year 2021 of 4.85% was the best that we have had in the previous 13 years and then you throw into the mix the unusual year we have had with the pandemic and some of the explanations for the savings of monies.
“Yes, there was less demand on services because of the fact that the authority virtually had to shut down compared to what we normally do from day to day plus the furloughing of staff which was obviously a saving there and staff having to work from home.
“We can’t take our eye off the ball on particular issues.”
These issues are the budget for homelessness and the looked after children budget which he said has been a cause of anxiety for all administrations.
Councillor Julian Amos, Park and Dowlais Independent Group, said they shouldn’t lose sight of the fact that a few years ago they were in a dire situation dipping into their reserves and what happened to transform this was an exceptionally good settlement.
He said the council is in the best situation they have been in for many years but added: “I think it is worth remembering that the last independent administration I was in spent its time struggling with a deficit situation and also so did the last Labour administration.”
He said the accounts should be viewed in the context of the favourable situation they have found themselves in.
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