Agenda item

Councillor Perry, the Cabinet Member for Corporate Services, introduced the report setting out the background to be considered and the proposed approach to development of an updated Medium-Term Financial Strategy for 2024/25 – 2028/29 and a budget for 2024/25.

The Cabinet Member explained that:

·  Notwithstanding this period of financial uncertainty, the Council’s balance sheet position remained strong.  Given the financial uncertainty, for planning purposes, it was appropriate to model the impact of different scenarios on the Council.  It was considered prudent at this stage to adopt Scenario 4 as it represented a combination of continued high inflation and tight constraints on the Council’s revenue raising capacity.  However, the other scenarios would be modelled, and the implications considered when developing the detailed Medium-Term Financial Strategy.

·  The revenue outturn for 2022/23 was a small underspend against the budget.  Overspends, most significantly on temporary accommodation for homeless families, were more than offset by underspends elsewhere.  Nevertheless, for next year, a budget gap of just under £1m was projected assuming that Council Tax increases are maximised within the constraints of the referendum limit (currently 3%) and that overall other income would increase by 5%.

·  The usual pattern was for the Government to announce the local government finance settlement just before Christmas, which did tend to delay the budget setting process, but this year it was proposed to start the process much earlier with information brought to the Policy Advisory Committees and the Cabinet in September.

·  Unallocated reserves totalled around £11m which exceeded the £4m minimum.  However, he believed that the level of reserves should be higher to keep the Council’s finances in a strong position and that the reserves should not be used to support the revenue budget.

·  The report also included details of the current five-year capital programme, but this could change as there were a number of risks; for example, in connection with property acquisition.

·  To conclude, given the considerable uncertainty about the future, a prudent approach to budget setting was required.

During the discussion:

·  Members welcomed the proposal to start the budget setting process earlier than usual this year.

·  A Member sounded a note of caution about the projections going forward being inflated to suggest a worse financial position than would actually be the case at the end of the financial year.

·  Reference was made to the need for analytical data to inform decisions on the savings required and income generation over the next few years; the need to maintain a good level of reserves; the need to build up the Housing Investment Fund to ensure that the necessary subsidy is available to enable the Council to achieve the targeted number of affordable homes; and the need to make provision in the Capital Programme for a completely refurbished Leisure Centre or a new build.

·  Reference was also made to the implications of the previous decision to fund ongoing new revenue budget expenditure in 2023/24 from one-off sources, which created further pressure to deliver savings in future years.

·  The Director of Finance, Resources and Business Improvement advised the Committee that the Capital Programme set out in Table 6 of the report was the current Capital Programme agreed by the Cabinet and Council in February 2023 so one would not expect to see any new provision for the Leisure Centre in that Table.  A Member reiterated the need to make provision for the future of the Leisure Centre in the Capital Programme.

·  The Cabinet Member and the Finance Team were thanked for their work on the Council’s finances.

RESOLVED to RECOMMEND to the CABINET:

1.  That the issues and risks associated with updating the Medium-Term Financial Strategy be noted.

2.  That the assumptions described in the report for planning purposes and to establish the remit for detailed budget development, in particular the assumptions set out in paragraphs 2.21 (Council Tax increases), 2.30 (Fees and Charges) and 2.40 (Housing Investment Fund), be approved.

3.  That the proposed approach outlined to development of an updated Medium-Term Financial Strategy for 2024/25 – 2028/29 and a budget for 2024/25 be approved.