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Medium Term Financial Strategy 2022/23 - 2026/27
- Meeting of Policy and Resources Committee, Wednesday 21st July, 2021 6.30 pm (Item 39.)
- View the background to item 39.
The Director of Finance and Business Improvement introduced the report and reiterated the £1.2 million underspend from the 2020/21 financial year. However, there was still a significant level of uncertainty moving forward due to the possible resurgence of Covid-19.
As part of reviewing the Medium-Term Financial Strategy (MTFS), projections based on freezing council tax and an increase in council tax of 2%, within neutral scenarios, were outlined in Appendices to the report. In the short term, a balanced budget could be produced in 2022/23 without increasing council tax, which was a more favourable position than previously expected. This was due to the government having rolled forward the existing financial settlement for local authorities, which meant that the council would continue to retain a share of business rate growth. However, it was likely that this would disappear in 2023/24, once the business rates baseline was re-set and the overall local government settlement was reviewed by the government.
In updating the MTFS, it was likely that any changes would need to fall within the existing budget envelope, but there was scope to assess the budget against the achievement of the Council’s strategic priorities. Any suggestions to provide budget savings or growth would be fed into the detailed proposals that would be presented later on in the Municipal Year.
In response to questions, the Director of Finance and Business Improvement confirmed that the Revenues and Benefits Team undertook substantial exercises to ensure that all new developments were recorded accurately. The Council’s previously projected £7-8 million financial loss from the pandemic highlighted the need for a suitable reserve level, given that the current £8 million reserve level may not have offset that projected loss, if realised.
In addressing the Committee as the Section 151 Officer it was advised that in considering the effects of the pandemic, a reduction in the level of reserves to the minimum level of £4 million was undesirable. The £13.595 million in funding for future collection deficits did not belong to the Council, and would have to be paid out to preceptors, such as Kent County Council in the current financial year.
In response to questions on the scenarios as shown in the appendices to the report, it was confirmed that the 2% inflation estimate had been applied to the neutral scenario but that it was possible for inflation to rise beyond that point. The method of financial reporting regarding the leisure centre was explained, with future capital investment likely to be required to maintain the level of service provided once the current contract with Serco ended in 2024. The cumulative effect of freezing council tax was noted.
The Committee expressed their thanks to the Officer.
1. The issues and risks associated with updating the Medium-Term financial Strategy, be noted;
2. The assumptions described in this report for planning purposes and to establish the remit for detailed budget development, be noted; and
3. The approach outlined to development of an updated Medium-Term Financial Strategy for 2022/23 -2026/27 and a budget for 2022/23, be agreed.
- Medium Term Financial Strategy 2022/23 - 2026/27, item 39. PDF 307 KB View as HTML (39./1) 248 KB
- Enc. 1 for Medium Term Financial Strategy 2022/23 - 2026/27, item 39. PDF 25 KB View as HTML (39./2) 10 KB
- Enc. 2 for Medium Term Financial Strategy 2022/23 - 2026/27, item 39. PDF 25 KB View as HTML (39./3) 10 KB