Decision details

Medium Term Financial Strategy 2023/24 - 2025/26 Update

Decision status: For Determination

Is Key decision?: No

Is subject to call in?: No

Decisions:

The Director of Finance submitted a report providing an update on the Council’s Medium Term Financial Strategy (MTFS) prior to public consultation on the Council’s proposed Budget.  The following documents were attached to the report:

 

·       Appendix 1 - Summary of Interim General Fund Budget 2023/24 to 2025/26

·       Appendix 2 - Summary of General Fund Budget Changes 2023/24 to 2025/26

·       Appendices 3a and 3b - General Fund and HRA Capital Programmes 2023/24 to 2025/26

·       Appendix 4 - Flexible Capital Receipts Strategy

·       Appendix 5 - Equality Impact Assessment

 

The report noted that the updated MTFS had been developed to reflect the changing landscape in which local authorities were now operating including the economic effects of the conflict in the Ukraine and uncertainty created by Brexit and a change in leadership of the UK Government.  The MTFS reports for the previous two years had been dominated by the impact of the Covid-19 pandemic which had increased costs and reduced levels of income.  Although the situation had improved, income levels had still not returned to pre Covid-19 levels in a number of cases.  The updated MTFS proposed further re-profiling of income targets to later years, although not on the scale previously required.  Initially the impact of lost income had been offset by grant funding from Central Government, but this was no longer the case. It was noted that the high levels of inflation currently being experienced might subdue economic activity and in turn a further reduction in income levels to the Council.

 

The report explained that there were significant pressures in the social care system and that the updated MTFS included an increase of just over £4m in the budget for Adult Social Care services for next year to fund the impact of those cost pressures, including the ongoing commitment to fund care providers at a level that allowed them to pay staff at the rate recommended by the Living Wage Foundation rather than the lower national living wage rate set by central government.  In addition, an initial assessment had been undertaken of the financial impact of Adult Social Care funding reforms, which were included as cost pressures in year 3 of the MTFS following the announcement to push back the reforms to 2025/26.  The MTFS also assumed that the Business Rate reset originally assumed to happen in 2022/23 would not now happen until 2024/25 at the earliest.  The proposed budget also included an increase in the Brighter Futures for Children (BFfC) contract sum for 2023/24 of £2.2m. This included inflationary increases and a growth pressure in respect of Home to School Transport that had previously been assumed to be absorbed by BFfC. Bids for additional discretionary funding had not yet been agreed and negotiations are ongoing.

 

Appendix 3 attached to the report set out the draft capital programmes, the financing cost of which would be included in the revenue budget.  The Department for Levelling Up, Housing & Communities had published a consultation on changes to the capital framework for Minimum Revenue Provision (MRP proposed to become effective from April 2023 onwards.  The outcome of this consultation was still outstanding and the draft MTFS assumed that the changes would not be implemented.

 

The report outlined other considerations in drafting the MTFS including the impact of the Environment Bill proposals on Waste Operations which was included as a cost pressure in Year 3, and the removal of the 1.25% increase in employers National Insurance contributions and other funding in respect of the Health and Social Care.  A general Council Tax increase of 1.99% and an additional Adult Social Care precept of 1% were assumed across each of the three years.  There was an estimated funding gap of £2.394m in 2023/24 which would need to be addressed to comply with the legal requirement to set a balanced budget.

 

The report explained that a period of public consultation on the budget would commence on 19 December 2022 and conclude on 19 January 2023.  Following the conclusion of the consultation a further report would be submitted to the Committee on 20 February 2023 recommending approval of a balanced budget to Full Council in order that it could approve its budget, associated Council Tax level and precept for 2023/24 at its meeting on 28 February 2023.

 

Resolved –

 

          That the Draft Medium Term Financial Strategy as set out in the Appendices to the report be noted, including:

 

a)     the Council’s General Fund Budget Requirement of £158.825m for 2023/24 and an assumed increase in the band D Council Tax for the Council of 1.99% plus an additional 1.00% Adult Social Care precept, or £54.71 per annum representing a band D Council Tax of £1,884.43 per annum as set out in paragraphs 12.1 to 12.3 of the report;

 

b)     the proposed service savings and efficiencies of (£3.7m) and additional income of (£1.5m) currently proposed in 2023/24 and set out in Appendix 2;

 

c)     the overall savings currently proposed within the MTFS of (£9.6m) (of which changes to income, fees and charges was (£3.0m));

 

d)     the Housing Revenue Account budget for 2023/24 to 2025/26 as set out in Appendix 3;

 

e)     the General Fund and Housing Revenue Account Capital Programmes as set out in Appendices 3a and 3b;

 

f)     the Strategy for the use of flexible capital receipts to deliver future transformation and ongoing savings as set out in Appendix 4.

Publication date: 23/01/2023

Date of decision: 15/12/2022

Decided at meeting: 15/12/2022 - Policy Committee

Accompanying Documents: