Agenda item

This document sets out the updated Medium-Term Financial Plan (MTFP) forecast for the period 2024/25 to 2028/29 as set out in Appendix A. It represents the latest view of the Council’s financial position and is subject to several factors that may affect the Council’s finances over this period, such as local government funding reforms and the continuation of certain non-ringfenced government grants.

The Group Head of Finance and Section 151 Officer presented to Members his report providing an update on the Council’s Financial Forecast for 2024/25 to 2028/29 which had first been presented to the Committee at its meeting held on 26 October 2023. It was confirmed that regular updates would be provided to the Committee together with progress reports on the delivery of the Council’s Savings Strategy [the next item on the agenda].

The report provided a summary of the updated Medium-Term Financial Plan (MTFP) forecast for the period 2024/25 to 2028/29 and represented the latest view of the Council’s financial position. This was subject to several factors that might still affect the forecasts, such as local government funding reforms, business rates review and the continuation of certain ring-fenced government grants.

The Group Head of Finance and Section 151 Officer confirmed that the report did include 2024-25 budget figures which were still draft and subject to further changes before being presented to the Committee on 8 February and ultimately a Special Meeting of the Council on 21 February 2024.  Paragraphs 4.1 to 4.11 of the report detailed the areas of the budgets that had been updated since 26 October 2023. The Local Government Finance Settlement was still in its draft format with figures still needing to be confirmed by the DLUHC once the consultation period concluded on 15 January 2024.  Appendix A summarised the estimated budget requirement for the next 5 years with Appendix B summarising the impact of that forecast on the Council’s usable revenue reserves. The Group Head of Finance and Section 151 Officer highlighted that the funding gap had reduced since the last report provided in October 2023. The table at paragraph 4.1 of the report summarised the changes that had been incorporated into the 2024/25 revenue budget which would achieve a net reduction of £1.6m.  The Group Head of Finance and Section 151 Officer then explained some of the changes listed.

Turning to the Local Government Finance Settlement for 2024/25, the Group Head of Finance and Section 151 Officer confirmed that the announcement had been made on 18 December 2023, however, this was a provisional settlement and was subject to a consultation period which would finish on 15 January 2024. Paragraphs 4.12 to 4.16 provided the detail of the draft settlement. 

As had been reported previously, the Council currently had no general fund debt although the capital programme did include some schemes which would be funded from future borrowing. The table at paragraph 4.18 set out some indicative high level financial costs if the Council were to take on additional financial investment.  These figures had not been included in the budget forecasts.

The Committee’s attention was then steered towards Appendix B of the report, which set out the impact on the Council’s Usable Revenue Reserves based on the updated MTFP forecasts.  The latest projections indicated that by 2028/29, the balance of reserves was forecast to be only £218,000 if no further decisions were made to address the budget shortfall. The Group Head of Finance and Section 151 Officer stressed the importance of addressing the challenges ahead for the Council and that if these challenges were not addressed the ultimate outcome would be the need to issue a Section 114 notice. He explained that the implications of this were very serious. Section 25 of the Local Government Act 2003 required the Section 151 Officer to produce a statement regarding the adequacy of a Council’s reserves. This would be formally reported to this Committee on 8 February 2024 as part of the revenue budget setting process.

Members were reminded of the resolution approved at the last meeting of the Committee on 26 October 2023 regarding Budget consultation literature.  The budget consultation document had been agreed with the Chair of the Committee in early December and the consultation survey was available for all to access on the Council’s web site so that the Council could receive feedback and comments. The deadline for responses was 21 January 2024 and it was confirmed that the results of this consultation would be presented to the Committee’s next meeting on 8 February 2024. 

The risks detailed in the previous forecast reported to the Committee in October 2023 remained and had been reiterated in paragraphs 8.2 to 8.7 of the report. This section of the report provided a good indication of the challenges ahead and of the difficulties in forecasting the budget over the next 12 months and 5 years.

The Chair having thanked the Group Head of Finance and Section 151 for his presentation invited questions from Members.

Varying questions were asked. Turning to the table provided summarising the changes that had been incorporated into the 2024/25 revenue budget since the MTFP forecast had been reported to the last meeting of the Committee, a breakdown of what the figures for Temporary Accommodation and Supported Housing Payments represented was sought. The Group Head of Finance and Section 151 Officer confirmed that he did not have that level of information to hand and a written response would be provided outside of the meeting.

A question was asked regarding the West Sussex Business Rates Pool and whether any funds from the pool would be spent in the district. The Group Head of Finance and Section 151 Officer confirmed that he had recently attended a meeting of West Sussex Finance Officers and felt confident that progress had been made in establishing some principles around accessing funds. A meeting of West Sussex Leaders was due to take place shortly and so further information would be available following that meeting.

Looking at Appendix A to the report, a question was asked about the Council Tax increase assumptions. Looking at the savings set out in paragraph 4.1, a question was asked on the timing of those savings as it looked like they would be achieved next year. The Group Head of Finance and Section 151 Officer outlined that the Council Tax forecasts assumed a maximum increase of 2.99 % and it was assumed that this would be the case for future years. It was stated that there would always be delivery risks in achieving to make savings and it was intended that the savings highlighted would be achieved in 2024/25. A question was also asked about the impact on the forecasts of freezing Council Tax. It was agreed that this information would be provided to the Committee outside of the meeting as well as an update following the West Sussex Leaders meeting regarding the business rate pool.

The Committee then noted the content of the report.