Budget Strategy - Risk Assessment
The Committee considered the report of the Director of Finance and Business Improvement setting out the risk analysis produced by the Finance Service for the Budget Strategy 2017/18 onwards. It was noted that:
· A Medium Term Financial Strategy and Efficiency Plan had been approved by the Council in September 2016. The Officers had subsequently developed detailed budget proposals for 2017/18 and the remaining four years of the Medium Term Financial Strategy. To manage the overall risk of non-delivery of savings a blended approach had been adopted incorporating efficiency savings, income generation, transformation and business improvement and service reductions. Service reductions had been included within the budget proposals, but remained a last resort.
· Cumulative savings of £3.2m had been identified compared with a budget gap over the same period of £4m. However, the savings, if adopted, would allow a balanced budget to be set in 2017/18 since the budget gap of £1.5m was covered by proposed savings of £1.5m. Further work would be required to identify means of closing the budget gap over the five year period of the Medium Term Financial Strategy as a whole.
· The budget risks were described in the form of a risk register and it should be recognised that risks were not usually discrete. There were inter-relationships between the risks such that, for example, inaccurate inflation projections could impact the overall risk of failing to deliver a balanced budget.
· The biggest risks were those associated with the delivery of planned savings/increased income.
· The process of risk identification provided the opportunity to take steps to mitigate the risks.
During the ensuing discussion, reference was made to the following issues:
· The risk register was well researched and balanced, but some of the risks which had been identified such as changes in government economic strategy were out of the Council’s control, and the impact was difficult to assess.
· The section of the risk register relating to funding the Capital Programme should be amended to include the Community Infrastructure Levy as a source of funding.
· The commercialisation agenda should focus on costs as well as income.
· The risk matrix and register should be updated and reported to each meeting of the Committee taking into account the changing economic environment.
In response to questions, the Director of Finance and Business Improvement explained that:
· Provision had been made in the strategic revenue projections to mitigate the impact of changes in government economic strategy post 2019/20.
· The risks identified were residual risks having taken a high level overview of the Medium Term Financial Strategy. Detailed consideration had been given to individual budget items. Taking a different approach to the Medium Term Financial Strategy could increase the level of risk.
· The commercialisation agenda was now focused on housing and regeneration having regard to lessons learned and appropriate mitigation.
· Information could be provided in future reports to quantify risks.
· There was a risk that other members of the Business Rates Pool might require support from the Council as membership of the pool precluded access to the central government safety net. The risks associated with other members of the pool being reliant on a particular business for income from business rates would be examined.
RESOLVED: That subject to the points raised in the discussion, the risk assessment of the budget strategy provided at Appendix A to the report of the Director of Finance and Business Improvement be noted, but the risk matrix and register should be updated and reported to each meeting of the Committee for consideration due to the changing economic environment etc.
- AGS 16-01-17 - Budget Risks, item 60. PDF 102 KB View as HTML (60./1) 70 KB
- AGS 16-01-17 - Appendix A, item 60. PDF 372 KB