STRATEGIC PLANNING AND INFRASTRUCTURE COMMITTEE

7 January 2020

 

Medium Term Financial Strategy and Budget Proposals

 

Final Decision-Maker

Council

Lead Head of Service/Lead Director

Mark Green, Director of Finance and Business Improvement

Lead Officer and Report Author

Mark Green, Director of Finance and Business Improvement

Classification

Public

Wards affected

All

 

Executive Summary

This report forms part of the process of agreeing a budget for 2020/21 and setting next yearís Council Tax.† Following agreement by Council of an updated Medium Term Finance Strategy at its meeting on 18 December 2019, this report sets out budget proposals for services within the remit of this Committee.† These proposals with then be considered by Policy and Resources Committee at its meeting on 12 February 2020, with a view to determining a budget for submission to Council.

 

 

This report makes the following recommendations to this Committee:

1.   That the revenue budget proposals for services within the remit of this Committee, as set out in Appendix A, be agreed for submission to Policy and Resources Committee.

 

 

Timetable

Meeting

Date

Strategic Planning, Sustainability and Transportation Committee

7 January 2020

Communities, Housing and Environment Committee

14 January 2020

Policy and Resources Committee

22 January 2020

Heritage, Culture and Leisure Committee

28 January 2020

Policy and Resources Committee

12 February 2020

Council

26 February 2020



Medium Term Financial Strategy and Budget Proposals

 

 

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 budget strategy will identify the level of resources available for staffing over the medium term.

Section 151 Officer & Finance Team

Legal

 

Under Section 151 of the Local Government Act 1972 (LGA 1972) the Section 151 Officer has statutory duties in relation to the financial administration and stewardship of the authority, including securing effective arrangements for treasury management.† The Medium Term Financial Strategy demonstrates the Councilís commitment to fulfilling itís duties under the Act.

The Council is required to set a council tax by the 11 March in any year and has a statutory obligation to set a balanced budget.† The budget requirements and basic amount of Council Tax must be calculated in accordance with the requirements of sections 31A and 31B to the Local Government Finance Act 1992 (as amended by sections 73-79 of the Localism Act 2011).

The Council is required to determine whether the basic amount of council tax is excessive as prescribed in regulations - section 52ZB of the 1992 Act as inserted under Schedule 5 to the Localism Act 2011.† The Council is required to hold a referendum of all registered electors in the borough if the prescribed requirements regarding whether the increase is excessive are met.†

Approval of the budget is a matter reserved for full Council upon recommendation by Policy and Resources Committee on budget and policy matters.

Mid Kent 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 with 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

 

Medium Term Financial Strategy

 

2.1 † At its meeting on 18 December 2019, Council agreed an updated Medium Term Financial Strategy (MTFS) for the next five years. The MTFS sets out in financial terms how the Strategic Plan will be delivered, given the resources available.†

 

2.2†† The MTFS builds on the previous yearís MTFS, which was developed in parallel with the Councilís new Strategic Plan.† There were relatively few new developments to be incorporated in the updated MTFS, given the recent adoption of a Strategic Plan and the delay in the introduction of a new local government funding regime from 2020/21 to 2021/22.† This means that, broadly speaking, a real terms Ďstand-stillí budget could be set for 2020/21.† Members have agreed that the principle of maintaining the level of Council Tax in real terms be adopted.

 

2.3 † At the time of writing, the Local Government Finance Settlement for 2020/21 has yet to be announced, so late changes in the proposals set out in this report may be required.

 

2.4 † The financial projections underlying the MTFS were prepared under three different scenarios Ė adverse, neutral and favourable.† All three scenarios assumed that budget proposals for future years which have already been agreed by Council will be delivered, and that Council Tax is increased by 2% in 2020/21.† Existing budget savings proposals are shown in Appendix A for this Committee and total £3.4 million for all Committees over the MTFS period.

 

2.5 † The outcomes for the Councilís budget gap, before allowing for any further growth or savings, are set out below.

 

 

20/21

21/22

22/23

23/24

24/25

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Scenario 1 Ė Favourable

 

 

 

 

 

Budget gap / (surplus)

-179

774

1,121

1,385

1,177

 

 

 

 

 

 

Scenario 2 Ė Neutral

 

 

 

 

 

Budget gap / (surplus)

-96

946

1,568

2,119

2,212

 

 

 

 

 

 

Scenario 3 Ė Adverse

 

 

 

 

 

Budget gap / (surplus)

400

1,923

3,276

4,604

5,525

 

2.6†† It can be seen that next yearís budget showed a small surplus in the neutral scenario, given the various assumptions underlying the projections.† However, in 2021/22 the budget gap will be significant under all three scenarios.† It is essential that the Council starts planning now for 2021/22, taking account of announcements from central government about the likely shape of future local government funding.

 

Revenue Budget Proposals

 

2.7 † As the MTFS Ďneutralí revenue projections indicate a broadly balanced position for 2020/21, no specific targets were set for savings or increased income generation in this year.† Service pressures, or new initiatives with revenue expenditure implications, will have to be funded from within the overall budget envelope, meaning savings or additional income growth to offset the expenditure growth.

 

2.8†† In subsequent years, the projections indicate a likely requirement either to make savings or generate increased income.† The MTFS strategic revenue projections include a contingency for future pressures of £1.6 million that can potentially be released in 2021/22 to avoid a cliff-edge where savings need to be made at short notice.

 

2.9†† Amended and new budget proposals for services within the remit of this Committee are set out in Appendix A.† As indicated above, they are confined to changes required to address new initiatives or budget pressures that cannot be accommodated.

 

Planning Support Ė reduction in management costs

-      A restructure of the management arrangements for this team allows a saving of £21,000 to be made.

Planning Services

-      A number of savings, totalling £100,000, were originally envisaged for 2020/21.† In the light of a review of projected actual planning income in 2019/20, it appears unlikely that the service will be able to deliver these savings as well as delivering against existing income budgets.† An amendment of £100,000 has therefore been made to leave budgets as they are currently.† To the extent that budgets for individual income categories are unrealistic, they will be adjusted and offsetting increases in income budgets, or decreases in expenditure budgets, will be made elsewhere.

Parking Services

-      The target for existing savings, totalling £150,000, was set when the parking income was growing much more quickly than is now the case.† Accordingly, a reduction of £95,000 has been made to align the parking income budgets with the proposals for increases in charges that have been made elsewhere on your agenda.

2.10†† Budget amendments have been developed, following the same principles, for services within the remit of the other Service Committees.† Whilst the net effect of the budget changes is negative for the Strategic Planning and Infrastructure Committee, the totality of savings proposals would allow a balanced budget to be set for 2020/21.

 

 

 

3. †††† AVAILABLE OPTIONS

 

3.1 ††† Agree the budget proposals relating to this Committee as set out in Appendix A.

 

3.2† †† Propose changes to the budget proposals.

 

3.3†††† Make no comment on the budget proposals.

 

 

4.††††† PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS

 

4.1†††† The Policy and Resources Committee must recommend to Council at its meeting on 12 February 2020 a balanced budget and a proposed level of Council Tax for the coming year. The budget proposals included in this report will allow the Policy and Resources Committee to do this.† Accordingly, the preferred option is that this Committee agrees the budget proposals at Appendix A.

 

 

5.††††† RISK

5.1†††† The Council's MTFS is subject to a high degree of risk and uncertainty. In order to address this 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 of its meetings.

 

 

 

6.††† CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK

 

6.1†† Policy and Resources Committee received an initial report on the MTFS at its meeting on 23 July 2019 and it agreed the approach set out in that report to development of an MTFS for 2020/21 - 2024/25 and a budget for 2020/21.

 

6.2†† Service Committees and Policy and Resources Committee then considered a draft MTFS at their meetings in November 2018, and this was agreed for submission to Council. Council agreed the MTFS at its meeting on 18 December 2019.

 

6.3† Public consultation on the budget has been carried out.† Details are set out in Appendix B.† It can be seen that slightly more residents agreed that the Councilís budget provides value for money than disagreed.

 

6.4† There was resistance to the idea of Council Tax increases; this is an understandable stance to take, but if applied in practice would risk cuts to services, given that Council input costs continue to increase in line with inflation.† The Councilís position is that we will maintain a constant level of Council Tax in real terms, in other words it will increase by no more than the projected rate of inflation.

 

6.5† The most popular area for new investment was infrastructure.† This will be addressed as part of the updated capital programme, which will be considered by Policy and Resources Committee at its meeting on 22nd January.

 

 

7.††† NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION

 

7.1†††† The timetable for developing the budget for 2020/21c is set out below.

 

Date

Meeting

Action

January 2020

All Service Committees

Consider 20/21 budget proposals

12 February 2020

Policy and Resources Committee

Agree 20/21 budget proposals for recommendation to Council

26 February 2020

Council

Approve 20/21 budget

 

 

 

8. †††† REPORT APPENDICES

 

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

         Appendix A: Budget Proposals 2020/21 Ė 2024/25

         Appendix B: Residentsí Survey

 

 

9. †††† BACKGROUND PAPERS

 

There are no background papers.