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Medium Term Financial Strategy 2020/21 - 2024/25 Initial Scoping & Assumptions
- Enc. 1 for Medium Term Financial Strategy 2020/21 - 2024/25 Initial Scoping & Assumptions, item 27 PDF 844 KB
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- Copy of Enc. 3 for Medium Term Financial Strategy 202021 - 202425 Initial Scoping Assumptions, item 27 PDF 25 KB
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The Director of Finance and Business Improvement introduced the report, with the Council’s current financial position outlined within Section 3 of the report. A projected deficit of £8.5million for 2020/21 was shown, with Council to respond by use of unallocated reserves, government funding and mitigations, with the reserves to be reduced to an estimated £4.298million. This was in part due to the additional government funding that had been received after the publication of the report, that amounted to £274k rather than the estimated £100k.
The Director of Finance and Business Improvement informed the Committee that the Council would likely face a deficit in the next financial year and that it would not be advisable for the reserve levels to fall below £4 million despite the £2 million minimum as previously set by Members. Appendix C to the report detailed the strategic revenue projections for 2021/22-2025/26 under adverse, neutral and favourable scenarios.
Particular attention was drawn to the neutral position, whereby the Council would likely have a £3.3 million budget deficit on an ongoing basis that would take one to two years to close. As part of the Medium-Term Financial Strategy (MTFS), more transformative methods would be needed to achieve the necessary savings, with suggestions for these shown in the report. Reference was made to the prioritisation of services, as previously mentioned within the Response to Recovery report presented to the Committee in June 2020.
The Council’s reserves would continue to be drawn upon during this time. A report that contained a draft MTFS would be presented to the Committee in November 2020.
In response to questions, the Director of Finance and Business Improvement confirmed that the Council had collectively engaged with the Local Government Association (LGA) alongside other Kent and Medway Councils, to argue for a greater level of funding. It was likely that the £2 million minimum reserve level would be revisited with a view to having the level increased. The future of the capital programme would be considered by officers in the Autumn of 2020 with a report presented to the Committee in January 2021.
The Committee were informed that the last tranche of government funding is the commitment to fund 75% of the losses that had arisen on sales, fees and charges. The Council had not received clarification on how long this support would be available, as no commitments had been made.
1. The impact of Covid-19 on the Council’s financial position in 2020/21 be noted;
2. The proposed deployment of reserves and other budget variations to accommodate the projected impact, as set out in paragraph 3.36 of the report, be agreed;
3. The approach outlined to development of an updated Medium-Term Financial Strategy for 2021/22 – 2025/26 and a budget for 2021/22 be noted;
4. The assumptions described in this report for planning purposes and to establish the remit for future budget development be noted; and
5. The principles for transformation initiatives set out at paragraph 5.11 of the report, as the basis ... view the full minutes text for item 27