Members were provided with an update regarding the Council’s latest Medium Term Financial Strategy (MTFS) forecasts for the years 2020/21 to 2022/23, including the targeting of resources to meet the Council’s priorities in 2020/21 and proposals for a range of savings required to balance the budget.
The MTFS brought together all known factors affecting the Council’s financial position and its financial sustainability into one process. This included the national funding context set by government. A one year Spending Review in 2020/21 had been announced, with a primary focus on providing additional resources to local authorities with social care responsibilities. Funding to address national homelessness, rough sleeping and town centre regeneration had also been announced. The distribution of the additional resources to individual authorities was not yet known. In addition, local authorities had been given powers to raise Council Tax by up to 2%, plus an additional 2% adult social care ‘precept’ before requiring a local referendum be held. The MTFS assumed that the additional tax raising powers were fully utilised; however this had not yet been agreed by the Council.
There was considerable financial uncertainty in the forthcoming years - 2021/22 and 2022/23, particularly in relation to the arrangements for New Homes Bonus funding, the revised Business Rates retention system and the outcomes of the Fair Funding Review. Therefore, years two and three of the MTFS had been modelled as a scenario, for planning purposes; however the position would remain under review in light of these ongoing unknown factors.
The Chair then invited comments and questions from Members.
During the course of the discussion, the following points were raised:
On behalf of the Committee, the Chair thanked the Service Lead Finance (Deputy Section 151) for the report and presentation.
Resolved – That the Overview and Scrutiny Committee noted:
(a) The revised Medium Term Financial Strategy had been approved by Cabinet on 16th December 2019, as the basis for considering 2020/21 budget options.
(b) The 2020/21 budget had been modelled on the basis of a Council Tax increase of 3.99% for 2020/21 (which included the government’s 2.00% adult social care precept) for resource planning purposes; the 3.99% was for modelling purposes only at this time. The decision on the Council Tax to be set for 2020/21 would be made by Members in February 2020 and may not be at the maximum figure included in the MTFS once the budget work had been finalised.
(c) The ongoing uncertainty regarding the extent to which the Council may retain a share of Business Rates growth and the way that central government assessed the authority’s need to spend in the future. This had made medium term financial planning more difficult than usual.
(d) The timing of the provisional local government finance settlement and that it would be announced later than normal (due to the 2019 General Election), so the time for scrutinising budget proposals would be less than usual.
(e) The initial savings proposals (and additional income generation proposals) as they had been designed primarily to fund some of the additional 2020/21 spending pressures generated by SCST.