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Medium Term Financial Strategy
- Enc. 1 for Medium Term Financial Strategy, item 119 PDF 427 KB View as HTML (119/2) 286 KB
- Enc. 2 for Medium Term Financial Strategy, item 119 PDF 23 KB View as HTML (119/3) 10 KB
- Enc. 3 for Medium Term Financial Strategy, item 119 PDF 451 KB View as HTML (119/4) 120 KB
The Director of Finance and Business Improvement introduced the report and referenced the influence of the Council’s four strategic priorities as part of the budget setting process. In addition, the ‘1000 Homes Initiatives’ and Town Centre Strategy were strategic projects that would need to be considered.
It was noted that whilst the Local Government Finance Settlement was yet to be released, the current financial projections suggested that the Council would experience a balanced revenue position for the next financial year but could experience a deficit in the 2023-24 financial year. This was due to issues such as the new waste contract and the possible loss of the benefit of business rates growth.
The results of the Budget Survey as attached at Appendix 3 to the report were highlighted. The respondents’ top three priorities were environmental enforcement, housing and homelessness and parks and open spaces.
The Committee commended the information included within the Budget Survey results and requested that further information on local variances be provided in the future. The Director of Finance and Business Improvement stated that the New Homes Bonus (NHB) could be used for revenue expenditure, as opposed to capital expenditure, if required. Several Members expressed concern that whilst the NHB could be included within the revenue budget it should not be relied upon.
It was felt strongly that the inflationary estimates within Table 5, Appendix A to the report should be higher, to properly reflect the likely increase in inflation above two per cent. The Director of Finance and Business Improvement stated that the two per cent base inflation estimate was an appropriate figure, as it coincided with the government’s inflation assumption. The £500,000 ‘Contingency for Future Pressures’ included within Appendix B to the report was highlighted as it would provide flexibility if the inflationary estimate was higher than expected.
The Chief Executive provided reassurance that varying levels of inflationary estimates for different elements, such as the eight per cent shown for contract costs, had been included within the report’s appendices. Staff costs and employee turnover were benchmarked on the financial reward provided by the public, private and not for profit sectors. The Council would aim to be placed at the median.
The Director of Finance and Business Improvement advised against a wholesale increase of the inflation assumptions, due to inflation affecting various sectors differently and the perceived increase in budgets that would be assumed by the Council’s contractors. The proposed approach of a set of core assumptions alongside a contingency fund was reiterated, however the Committee’s comments would be considered as the Council moved to the next stage of the budget setting process.
1. The Draft Medium Term Financial Strategy 2022/23-2026/27, as attached at Appendix A to the report, be endorsed subject to further consultation and development; and
2. The Draft Medium Term Financial Strategy 2022/23-2026/27 be re-presented to the Committee in January 2022 with a fourth case scenario based upon a five per cent inflation rate guidance figure.
Note: Councillor Brice left ... view the full minutes text for item 119