This report provides an update on the Draft Medium-Term Financial Strategy prior to a public consultation.

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

·       Appendix 1 - Summary of Interim General Fund Budget 2022/23 to 2024/25

·       Appendix 2 - Summary of General Fund Budget Changes 2022/23 to 2024/25

·       Appendix 3 - Current Housing Revenue Account Budget 2021/22 to 2023/24 and Reserves as approved in February 2021.

·       Appendix 4 - General Fund and HRA Capital Programme 2021/22 to 2023/24

·       Appendix 5 - Flexible Capital Receipts Strategy

·       Appendix 6 - Equality Impact Assessment

The report noted that the updated MTFS had been developed to reflect the changing landscape in which Councils were now operating. The Covid-19 pandemic had had a significant impact on Council budgets, with increased costs and reduced levels of income. There was still huge uncertainty around how long these will continue to impact on budgets.  Income levels had still not returned to pre Covid-19 levels and the updated MTFS proposed a re-profiling of income from 2022/23 to later years on the assumption that the majority of that income would recover over time.  The impact of lost income had previously been offset by grant funding from Central Government, but indications were that there would be no more funding available to Councils after the current financial year.

The report noted that there were also significant pressures in the social care system and explained that the updated MTFS included an increase of almost £5m 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; these were included as cost pressures in years 2 and 3 of the MTFS but were assumed to be fully mitigated by new funding allocated by central government.  Brighter Futures for Children (BFfC) had requested a £1.1m increase in the contract sum for 2022/23, related to inflationary increases that had previously been assumed to be absorbed by BFfC rather than being a cost pressure for the Council. This proposed increase had not yet been agreed and negotiations were ongoing.

The report set out other cost pressures and assumptions including proposed changes by government to the capital framework for Minimum Revenue Provision (MRP), the impact of the Environment Bill proposals on Waste Operations.  The 1.25% increase in employers National Insurance contributions was not currently included in the MTFS expenditure figures as it was assumed that additional funding would be received to cover this.  The MTFS currently assumed a general Council Tax increase of 1.99% and an additional Adult Social Care precept of 1% across each of the three years.

The report summarised the overall impact of these changes across the three years of the MTFS and noted that the estimated funding gap of £3.316m in 2022/23 would need to be addressed in order to comply with the legal requirement to set a balanced budget.  A period of public consultation on the budget would commence on 14 December 2021 and conclude on 14 January 2022.  A further report would be brought to Policy Committee on 14 February 2022 recommending approval of a balanced budget to Full Council in order that it could approve its budget, associated Council Tax level and precept for 2022/23 at its meeting on 23 February 2022.

Resolved –

That the Committee note the Draft Medium-Term Financial Strategy as set out in the Appendices to the report, including:

a)       the Council’s General Fund Budget Requirement of £148.137m for 2022/23 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 £53.12 per annum representing a band D Council Tax of £1,829.72 per annum as set out in paragraphs 12.1 to 12.3;

b)       the proposed service savings and efficiencies of (£6.1m) and additional income of (£0.8m) currently proposed in 2022/23 and set out in Appendix 2;

c)       the overall savings currently proposed within the MTFS of (£15.6m) (of which changes to income, fees and charges is (£1.9m));

d)       the Housing Revenue Account budget for 2021/22 to 2023/24 as set out in Appendix 3;

e)       the General Fund and Housing Revenue Account Capital Programmes as set out in Appendices 4a and 4b; (to follow)

f)        the Strategy for the use of flexible capital receipts to deliver future transformation and ongoing savings as set out in Appendix 5.