Issue - meetings

The Council’s Medium Term Financial Strategy (MTFS) covering the period up to 2025/26 rolls forward the data in the existing approved MTFS. The strategy amends certain assumptions contained in it to reflect changes in the Council’s circumstances and other issues that have a strategic bearing on the Council’s financial prospects.

The Cabinet

            RESOLVED – That

(1)          The core assumptions set out in the Medium-Term Financial Strategy and the current financial position be agreed;

(2)          The significant risks to local government finance that have been clearly outlined in the report be noted and agreed;

(3)          The Medium-Term Financial Strategy be approved and be used to set up the Budgetary framework in preparing the 2021/22 Budget.

The Deputy Leader of the Council and Cabinet Member for Corporate Support introduced the Financial Prospects report covering the financial forecast for the next 5 years.

            He outlined that the Council was facing significant financial challenges as core Government grant funding was being eroded and replaced with more volatile and uncertain funding based around the growth of the District.

The Group Head of Corporate Support then worked through aspects of the report that needed to be brought to Members’ attention.

The huge uncertainty that the Council was facing over Government funding was unprecedented coupled with significant issues connected with the Covid-19 crisis. The key areas brought to the Cabinet’s attention were:

·         The Government had confirmed that there would be no return to austerity yet the redirection of resources within the public sector would most likely mean that there would still be cuts in lower priority areas.

·         There was endless speculation in the media in terms of how Covid-19 grants the knock-on effect was still unknown.

·         The reset of business rates needed to be flagged. Over the last 7 years the Council had benefited from growth in this area due to the proliferation of supermarkets in the District which had been a stimulus for the Council’s finances.  Government had been threatening to remove this for some time and this had been delayed due to Brexit and now Covid, but it could not be ignored that this reset would occur eradicating a lot of growth in 2022/23. 

·          Looking at the capital programme, the Council had not been able to complete a majority of this and there could be the need to reduce next year’s programme to allow catch up to take place on all repairs and projects. 

·         It could be confirmed with certainty that the New Homes Bonus would be reduced to zero in the future and that this had been a buoyant source of income for the Council. 

·         There were further risks for the Council to be aware of.  One was the collection rate from Council Tax as the potential effect of unemployment including the winding down of the furlough scheme was likely to result in an increase in arrears which could be permanent or just delayed.

·         Particular attention was focused on mitigations and the need to do this as and where possible. This came with a stipulation that any proposed scheme or project had to be supported by a robust business case as it was imperative to preserve the scare resources that the Council had available.

·         The effects of the assumptions outlined had been set out in Table 2.2.1 of the report and this showed an increasing deficit but also declining balances. Steps were being taken to address the sizeable deficit but the reduction in New Homes Bonus to zero in the future and business rate reset, as mentioned earlier, would this make very difficult to achieve.

·         Officers were actively working on a comprehensive savings exercise which although would assist the indicative projections, would not be able to tackle  ...  view the full minutes text for item 210