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COMMUNITIES HOUSING &
ENVIRONMENT COMMITTEE

1 December 2020

Is the final decision on the recommendations in this report to be made at this meeting?

No

 

Draft Medium Term Financial Strategy 2021/22-2025/26

 

Final Decision-Maker

Council

Lead Head of Service

Director of Finance and Business Improvement

Lead Officer and Report Author

Director of Finance and Business Improvement

Classification

Public

Wards affected

All

 

Executive Summary

This report sets out a draft new Medium Term Financial Strategy (MTFS) for the Council.† The new MTFS updates the existing strategy to cover the five-year period 2021/22 to 2025/26 and to reflect changes in corporate priorities and the impact of the Covid-19 pandemic.

 

 

This report makes the following recommendation to this Committee:

1.   That it considers and comments on the Draft Medium Term Financial Strategy 2021/22 Ė 2025/26.

 

 

 

Timetable

Meeting

Date

Communities Housing & Environment Committee

1 December 2020

Strategic Planning & Transportation Committee

8 December 2020

Economic Regeneration & Leisure Committee

15 December 2020

Policy & Resources Committee

10 February 2021

Council

24 February 2021



Draft Medium Term Financial Strategy 2021/22-2025/26

 

1.       CROSS-CUTTING ISSUES AND IMPLICATIONS

 

Issue

Implications

Sign-off

Impact on Corporate Priorities

The Medium Term Financial Strategy and the budget are a re-statement in financial terms of the priorities set out in the strategic plan. They reflect the Councilís decisions on the allocation of resources to all objectives of the strategic plan.

Section 151 Officer & Finance Team

Cross Cutting Objectives

The MTFS supports the cross-cutting objectives in the same way that it supports the Councilís other strategic priorities.

Section 151 Officer & Finance Team

Risk Management

This has been addressed in section 5 of the report.

Section 151 Officer & Finance Team

Financial

The budget strategy and the MTFS impact upon all activities of the Council. The future availability of resources to address specific issues is planned through this process. It is important that the committee gives consideration to the strategic financial consequences of the recommendations in this report.

Section 151 Officer & Finance Team

Staffing

The process of developing the Strategic Plan and the associated budget strategy will identify the level of resources available for staffing over the medium term.

Section 151 Officer & Finance Team

Legal

The Council has a statutory obligation to set a balanced budget and development of the MTFS and the strategic revenue projection in the ways set out in this report supports achievement of a balanced budget.

Legal Services

Privacy and Data Protection

Privacy and Data Protection is considered as part of the development of new budget proposals.† There are no specific implications arising from this report.

 

Policy and Information Team

Equalities

The MFTS report scopes the possible impact of the Councilís future financial position on service delivery.† When a policy, service or function is developed, changed or reviewed, an evidence based equalities impact assessment will be undertaken.† Should an impact be identified appropriate mitigations will be identified.

 

Equalities and Corporate Policy Officer

Public Health

 

 

The resources to achieve the Councilís objectives are allocated through the development of the Medium Term Financial Strategy.

Public Health Officer

Crime and Disorder

The resources to achieve the Councilís objectives are allocated through the development of the Medium Term Financial Strategy.

Section 151 Officer & Finance Team

Procurement

The resources to achieve the Councilís objectives are allocated through the development of the Medium Term Financial Strategy.

Section 151 Officer & Finance Team

 

 

 

2.           INTRODUCTION AND BACKGROUND

 

2.1        The Medium Term Financial Strategy (MTFS) sets out in financial terms how the Councilís Strategic Plan will be delivered over a rolling five-year period.† †The MTFS is reviewed annually and the Committee is invited to consider and comment on the draft MTFS for 2021 to 2026.† The MTFS remains subject to finalisation of the Strategic Plan refresh and the governmentís announcement of the Local Government Finance Settlement 2021/22, which is expected in December 2020.

 

2.2        The vision and priorities set out in the Councilís existing Strategic Plan are clear and remain relevant. However, considering the Covid-19 pandemic and its significant impact, work has been carried out to review our outcomes for 2019/24 and to produce a refreshed set of outcomes for 2021/26.† The first steps in the Strategic Plan review, including engagement with all councillors, were undertaken in August and reported to the Policy and Resources Committee at its September meeting.† Decisions were made then about key areas of focus for cost reduction and approaches to leveraging resources to complement the councilís spending and investment.† It is intended to bring a refreshed Strategic Plan to the Policy and Resources Committee Committee in January 2021 prior to approval by Council in February 2021.

2.3        The draft MTFS is attached as Appendix A.† It sets out in financial terms how it is intended to deliver the Strategic Plan, given the Councilís capacity and capability.† It builds on the existing MTFS, but reflects the impact of Covid-19 by incorporating the re-prioritisation of Strategic Plan objectives described above, together with proposals for transformational budget savings to address the financial challenges that the Council now faces.

 

2.4        A key outcome of the process of updating the MTFS is to set a balanced budget and agree a level of council tax for 2021/22 at the Council meeting on 24 February 2021.†

Revenue Projections

 

2.5        The MTFS incorporates revenue projections for the five year planning period.† Various potential scenarios were modelled, described as adverse, neutral and favourable.† Key assumptions made in the projections are as follows.

 

Council Tax Ė It has been assumed that the government continues to set a limit of 2% to increases, above which a referendum would be required (as in 2020/21), and that the Council increases Council Tax to this limit.† If the government sets a different referendum limit, this assumption will need to be reviewed.

 

Business Rates - The Business Rates baseline, which dictates the amount of business rates that local authorities may retain locally, will be increased in line with inflation in 2021/22, as part of the expected one year roll forward of the existing 2020/21 financial settlement.

 

Covid-19 Ė In the neutral scenario, income from Council Tax, Business Rates and Sales, Fees and Charges will bounce back from the levels experienced in 2020/21 but full recovery will not be seen until 2022/23.† There will be no further general government compensation for the effects of Covid-19 after the end of the current financial year.

 

This would leave a budget gap of £2.4 million in 2021/22 in the neutral scenario, before taking account of any new savings.

 

2.6        The MTFS proposes that the budget gap is addressed through a combination of strategic plan re-prioritisation, transformation savings and increasing income.† To date approximately £2 million of savings have been identified.† These savings will be delivered over a period of 3-4 years, so in the meantime it will be necessary to deploy revenue resources hitherto earmarked for other purposes, such as New Homes Bonus and uncommitted Business Rates Growth proceeds to achieve a balanced budget.† This is a departure from the Council's existing policy but is considered to be justified given the scale of the budget gap and uncertainties in financial forecasts that the Council faces.†

 

 

3.           AVAILABLE OPTIONS

 

3.1        The Committee is asked to consider and comment on the draft MTFS attached at Appendix A.† Any changes and comments will be considered by Policy and Resources Committee at its meeting prior to recommending a final MTFS to Council for approval in February 2021.

 

3.2        The Committee could choose not to comment on the draft MTFS.

 

 

 

 

4.              PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS

 

4.1           The Committee is asked to consider and comment on the draft MTFS.† This will ensure that its views are taken into account as part of the development of the MTFS.

 

 

 

 

5.              RISK

 

5.1           There are a number of risks and uncertainty surrounding the Councilís financial position, as described in the MTFS.† In order to address these in a structured way and to ensure that appropriate mitigations are developed, the Council has developed a budget risk register.† This seeks to capture all known budget risks and to present them in a readily comprehensible way. †The budget risk register is updated regularly and is reviewed by the Audit, Governance and Standards Committee at each meeting.†

 

 



6.              CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK

 

6.1           Policy and Resources Committee reviewed the background to setting a new Medium Term Financial Strategy at their meeting on 21 July.†

 

6.2           The three Service Committees Ė Economic Regeneration & Leisure, Strategic Planning & Infrastructure and Communities, Housing & Environment Ė are considering the draft MTFS in the current cycle of meetings.† The outcomes will be reported back to Policy & Resources Committee when it is asked to consider the MTFS again for recommendation to Council.

 

6.3           A survey has recently concluded, in which residents were consulted on what they wish to see in the budget.† This is attached as Appendix C.

 

 

7.              NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION

 

7.1           An outline timetable for developing the Councilís Strategic Plan and the associated Medium Term Financial Strategy and budget for 2021/22 is set out below.

 

Date

Meeting

Action

December 2020

Service Committees

Consider draft MTFS

December 2020

 

Finalise detailed budget proposals for 2021/22

January 2021

Policy and Resources Committee, Service Committees

Consider the updated Strategic Plan and 21/22 budget proposals

10 February 2021

Policy and Resources Committee

Agree Strategic Plan, MTFS and 21/22 budget proposals for recommendation to Council

24 February 2021

Council

Approve Strategic Plan and 2021/22 budget

 

 

 

 

 

8.        REPORT APPENDICES

 

The following documents are to be published with this report and form part of the report:

         Appendix A: Draft Medium Term Financial Strategy 2021/22 Ė 2025/26

         Appendix B: Strategic Revenue Projection 2021/22 Ė 2025/26

         Appendix C: Budget Consultation Report

 

 

9.        BACKGROUND PAPERS

 

None.