Agenda item

That the Medium Term Financial Strategy 2016-20 be approved.

The Assistant Director Finance & Audit introduced a report that set out the medium and longer term financial planning assumptions of the Council contained in the Medium Term Financial Strategy 2016-20.

The final Local Government Finance Settlement had only been published earlier in the evening, and a preliminary assessment of the settlement was that there were no significant changes for Slough.  It was noted that following representations, including by authorities across Berkshire, the Government had made additional funds available to rural areas and those authorities with the steepest funding reductions.  This additional funding was likely to benefit some neighbouring authorities but not Slough.

The key elements of the MTFS approach were summarised and it was noted that strong growth was forecast in Council Tax income and this would, along with Business Rates revenue, account for the vast majority of the Council’s revenue in future years.  The Revenue Support Grant from government was forecast to reduce from £40m two years ago to £6m by the end of the MTFS period in 2019-20.  This shift in income sources was reflected in the Five Year Plan which sought to protect and grow income by supporting housing and business growth where appropriate.  A cautious approach had been taken in assessing the likely future income from Council Tax, Business Rates and through Slough Urban Renewal.  The Cabinet noted the risks in the strategy, including the under delivery of savings targets and exposure on income generation such as the strategic asset purchase scheme, and the approach to managing these risks was noted.

In response to a question, the Assistant Director stated that the Council’s revenue budget was £125m in 2010-11.  By 2020 it would have risen to £150m if it had increased in line with inflation, but the MTFS forecast was for it to be £95m.  Commissioners felt that this real terms budget reduction of £55m underlined the significant financial challenge faced by the Council, particularly in view of the increased demand for many services.  The Council had until October to agree a four year settlement with the Government and it was generally considered to be best to take this option to provide greater budget certainty.

(Councillor Hussain joined the meeting)

Commissioners discussed a range of other issues including collection rates, links between the revenue budget and capital strategy, and the impact of the changing and uncertain policy outlook, citing the Governments decision to reduce council housing rents by 1% each year for the next five years which would have a significant impact on the Housing Revenue Account budget.  It was noted that the MTFS was primarily focused on delivering future savings through transformation rather than cuts to services, however this was harder to achieve.  Commissioners supported this approach and felt that strong financial management in recent years had put the Council in a relatively good position to respond to the future budget challenges.

At the conclusion of the discussion, the Cabinet agreed to recommend the MTFS 2016-2020 to full Council on 25^th February, subject to any minor adjustments arising from the final Local Government Finance Settlement.

Recommended –  That the Medium Term Financial Strategy 2016-20 be approved.