Agenda item

A report of the Strategic Director; Environmental and Corporate Services tracking the data on the Medium Term Financial Strategy.

The Strategic Director submitted a report tracking the data on the Medium Term Financial Strategy. (Item 6 on the agenda filed with these minutes).

Assisting with the consideration of the presentation: The Cabinet Lead Member for Finance and Property Services and the Head of Finance Services.

Summary, key points of discussion:

·         Historically, the Medium-Term Financial Strategy (MTFS) had been updated in the autumn with a view to informing budget setting, however, due to uncertainties surrounding the settlement it had been thought best to update the MTFS in March in common with most other authorities.  As a result, the meeting looked at an updated version of the previous MTFS

·         The figures from March had been used in terms of projections, following which the figures were examined in terms of performance against savings targets.  Key differences had been found, particularly with regard to the essential car user figures.

·         In terms of savings and progress against the budget the Council were £214k down, in terms of pressures the Council were £307k down.

·         It was predicted that the Local Plan would have an adverse impact in terms of the Transport Plan amongst other costs.

·         £1million worth of savings were being targeted in options developed terms of Options to Change.  Accommodation had been particularly placemarked for savings.

·         In the current financial year, more government funding in terms of Council Tax support had been received, and this income had been reflected on the report presented.

·         There had been a revised use of reserve projections and savings were needed to be inputted to bridge the gap.

·         The outturn had been examined and the outcome had been more favourable than projected.  The MTFS had been based on an iterim budget which had been negative due to the impacts of Covid-19.  However, some lines of income had held up better than predicted and Covid-support from the government had left the Council £2million better-off.  Additionally, the Business Rate retention had meant that the Council could settle and finalise the position on the Enterprise Zone.

·         Whilst expenditure outlook had been negative, use of reserves had been positive and savings and additional income were being sought to close the gap.  Figures would change based on what was agreed.

·         In terms of risks, the New Homes Bonus Scheme was finishing, and as such was on ‘legacy payment’.  £3million had been received from it in this financial year, however, only £998k was due next financial year and nothing the year after that.  Whilst it was thought unlikely than no further government funding would be received to help bridge the gap, such a scenario was not impossible and as such needed to be planned for.  If more needed to be saved as time progressed, the situation would become more difficult, as such a funding risk existed.  A further risk was the Environment Bill, risks from it included the possibility of the Council having to pay for garden waste collections, food waste collections and changes to recycling.  Currently the Council generated £4.3million from garden waste collections, if they were required to do them for free this income would be lost.  It was not yet known if the bill would pass and what amendments would be made if it did.  The Local Government Association (LGA) was lobbying ministers about the impact it would have on local government.  It was thought that government funding may be given to help cover the costs of the effects of the bill on Local Authorities, but it may not cover all costs.  Another risk was subsidy loss in supported living run by charities.

·         Three scenarios were being examined and planned for in terms of use of reserves: 1, Assuming positive factors only.  2, Assuming all factors in the report.  3, Assuming negative factors only.  If assuming negative factors only, £6.5million in reserves would need to be used in the 2023/24 financial year.  It was stressed that the worst outcome was unlikely but not impossible. 

·         Based on receiving government funding and the Environment Bill being benign, the approach was to identify £1million+ worth of savings and to review once it was known what the settlement was so that the Council could remain comfortable on budget.

·         In the worst case scenario, the Council would still be sustainable, but only able to provide basic services.

The Cabinet Lead Member for Finance and Property Services clarified that all possible scenarios were being shown, but it was not yet known what government funding would be available until December.  A series of options were being worked on so that action to reduce expenditure by the amounts necessary could be taken.  There was a need to avoid being in deficit and management action would be taken to avoid it. 

In response to a question from Councillor Parsons, The Cabinet Lead Member for Finance and Property Services added that a list of priorities for cuts matching the risk scenarios would be drawn up in time for the settlement in December.

RESOLVED

1.    that the Report be noted.

2.    That a Report be presented at the meeting of the Budget Scrutiny Panel on 8^th December 2021 providing the Panel with information on the settlement.

Reason

1.    To acknowledge the Panel’s consideration of the matter.

2.    So that the Panel could be provided with the context to make informed recommendations based on the settlement.