Councillor Lovelock / Director of Resources

This report sets out the Council’s draft Medium Term Financial Strategy and associated spending plans for the three years 2019/20 to 2021/22.  The report covers all aspects of the Council’s spend: General Fund revenue expenditure funded by the council tax payer, government grant and other sources of income, Housing Revenue Account (HRA) expenditure, funded by council tenants’ rents, and the Council’s Capital Programmes (General Fund and HRA) funded by grants and contributions, capital receipts, revenue and prudential borrowing.

The Director of Resources submitted a report asking the Committee to recommend to Council, on 26 February 2019, the draft 2019/20 Budget and Medium Term Financial Strategy (MTFS) and associated spending plans for the three years 2019/20 to 2021/22.  The report covered all aspects of the Council’s spend: General Fund revenue expenditure funded by the Council tax payer; Government grant and other sources of income; Housing Revenue Account (HRA) expenditure, funded by Council; tenants’ rents; and the Council’s Capital Programmes (General Fund and HRA) funded by grants and contributions, capital receipts, revenue and prudential borrowing.  The proposed Medium Term Financial Strategy had been informed by and supported delivery of the Council’s Corporate Plan priorities and sought to ensure that the Council was “fit for the future” with sound finances that allowed the Council’s future funding challenges and spending pressures to be met.

The report stated that the MTFS 2019 - 2022 provided for a balanced budget position across the three years, as well as making a net contribution to reserves over the three years of £2.4m by using part of the benefit from the business rate pilot, which would enable reserves to move back towards a more robust level.  The Strategy provided for a robust financial position going forward, which relied on significant service transformation to drive increased efficiency savings and income generation in order that service reductions could be minimised.  In particular it assumed:

a)    Revenue Support Grant from Government had effectively reduced to zero in 2019/20 due to the Business Rates pilot and would remain at zero following the Business Rates reset;

b)    Council Tax increases of 2.99% in 2019/20 and 1.99% in both 2020/21 and 2021/22;

c)    The benefit of Business rate growth forecast in 2019/20 had been discounted in 2020/21 because the impact of the planned business rate reset was as yet unknown;

d)    £27.5m of efficiencies and increased income across the period;

e)    A contingency provision over the three years (£4.4m 2019/20; £4.1m 2020/21; and £3.4m 2021/22) to mitigate possible slippage or non-achievement of higher risk savings and budget pressures over the period;

f)     Capital investment of £464m over the period 2019/20 to 2021/22 of which £249m would be for invest to save purposes;

g)    £6.4m of transformation funding (over the period 2019/20 to 2021/22) to support delivery of efficiency savings assumed within the MTFS; and

h)    Service reductions of £2.6m.

On 1 December 2018, the Council had incorporated a Local Authority Company, Brighter Futures for Children, to provide services previously delivered directly by the Council.  The cost of providing those services, as well as funding for transformational change (an additional £2.1m in 2019/20) had been included in the Medium Term Financial Strategy.

The report had appended:

Appendix 1   Summary of General Fund Budget 2019-20 to 2021-22;

Appendix 2   General Fund Revenue Budget by Service 2019-20 to 2021-22;

Appendix 3   Detailed General Fund Budgets 2019-20 to 2021-22;

Appendix 4   Housing Revenue Account Budget 2019-20 to 2021-22;

Appendix 5   General Fund and HRA Capital Programme 2019-20 to 2021-22;

Appendix 6   Flexible Capital Receipts Strategy;

Appendix 7   Fees and Charges;

Appendix 8   Dedicated Schools Grant 2019/20;

Appendix 9   Equality Impact Assessment.

Recommended to Council –

That the proposed 2019-20 General Fund and Housing Revenue Account budgets, draft Capital Programme and Medium Term Financial Strategy as set out in Appendices 1-9 be approved, noting the following:

(a)           the Council’s General Fund Budget Requirement of £139.5m for 2019/20;

(b)           the proposed service savings and efficiencies of £10.5m together with additional income of £4.4m in 2019/20 required to achieved a balanced budget for that year;

(c)           the proposed growth in 2019/20 service budgets of £12.5m;

(d)           the overall savings proposed within the MTFS of £30.1m (of which changes to income, fees and charges was £6.2m) and three-year growth changes to service budgets of £30.9m;

(e)           the increase in the Band D Council Tax for the Council of 2.99% or £47.24 per annum representing a Band D Council Tax of £1,627.23 per annum as set out in paragraph 15.1;

(f)            the Housing Revenue Account budget for 2019/20 of £42.7m as set out in Appendix 4 and a reduction of 1.00% (£/wk) in social dwelling rents from April 2019 giving a revised weekly average social rent of £99.39 as set out in paragraph 19.3;

(g)           the General Fund and Housing Revenue Account Capital Programmes as set out in Appendix 5;

(h)           the Strategy for the use of flexible capital receipts to deliver future transformation and ongoing savings as set out in Appendix 6;

(i)            the changes to Fees and Charges outlined in Appendix 7 of the report;

(j)            the allocation of the £76.4m dedicated schools grant as set out in Appendix 8;

(k)           the Equality Impact Assessment requirements as set out in Appendix 9.