Agenda item

To agree the medium term financial planning and strategy for the organisation.

The Council considered a report (Agenda Item 14) concerning the rolling three year financial strategy which was designed to ensure that the financial resources, both revenue and capital, were available to deliver the Council Strategy. It enabled the Council to forecast and plan income and expenditure over a longer period than the annual budget. The Medium Term Financial Strategy (MTFS) should be read in conjunction with the Revenue Budget 2017-18, Capital Strategy and Investment and Borrowing Strategy reports.

MOTION: Proposed by Councillor Anthony Chadley and seconded by Councillor Gordon Lundie:

That the Council:

“approves and adopts the Medium Term Financial Strategy 2017/18 to 2019/20.”

Councillor Anthony Chadley stated that it was anticipated that £340m would be spent over the following three years. It was therefore vital that a strategy was in place to direct that expenditure in order to ensure that essential services continued to be provided for the District’s 150,000 residents. He acknowledged the volatility around budget setting in the current climate but stated that the Council, since 2010, had an excellent team, with a proven track record, for doing so. On average budgetary expenditure was within 0.35% of the budget and he thanked the Finance Team for ensuring that decisions were based on solid foundations.

Where possible the authority welcomed stability and had therefore accepted the four year settlement from Central Government. The Strategy also made sensible allowances for increases in inflation and pension costs and made provision for the revenue funding element of the Council’s Capital Programme. The Portfolio Holder for Finance and Transformation explained that the Council had a legal obligation to set a balanced budget annually.

The MTFS assisted in identifying key areas of income, for example Council Tax and Business Rates, and planned expenditure, and this in turn assisted with identifying the funding gap. Opportunities were sought to identify innovative solutions while transforming the way services were delivered as well as ways to generate income.

Some of the areas being focussed on were detailed at section 8.3 (Appendix A), and included:

·         investing in commercial property with the aim of generating income;

·         investing in residential property with the aim of being more cost effective in the provision of our statutory housing duties; and

·         working with communities, Parish and Town Councils and neighbouring authorities in order to deliver services in a more cost effective way.

The MTFS also considered the Council’s reserves. The Authority’s S151 Officer recommended a minimum level of 5%, which equated to £5.8m. Reserves were designed to ensure that the Council could meet unexpected and unforeseen demands and pressures. While it would be an easy choice to fund the gap by using reserves it was felt that this was a risk that the Council should not take. Councillor Chadley was therefore pleased to confirm that the reserves were being replenished and maintained at this prudent level.

Councillor Lee Dillon noted the financial challenges that the Council was facing and in particular the £23m funding gap over the following three years. He felt that the Council needed to look for more opportunities for income generation and stated that incorporating realistic income targets in the Strategy would be helpful. He also noted that on the table on page 59 of the agenda, reference was made to 0% increases in Council Tax and the Adult Social Care Precept in 2018/19 and 2019/20. While he did not want to burden the local tax payer he noted the need to balance reality and optimism.

Councillor Pamela Bale congratulated Officers and Members for producing the Strategy. She noted the reference to Business Rates Retention in paragraph 5.2 of the Executive Summary. She noted that in 2017/18 the Council would only retain 22.7% of the Business Rates it collected. An increase in the percentage the Council could retain would have a significant impact on the Council’s finances. She therefore urged Members and the local Members of Parliament to continue to lobby Central Government on the issue of Business Rate retention.

Councillor Graham Jones noted that, in response to comments from Councillor Dillon, the MTFS did include income targets but that these were expressed as a net figure. These could be looked at more explicitly. In respect of comments on increases to Council Tax, he did not want to institutionalise Council Tax increases and that other methods of reducing costs needed to be explored. This included asking Parish Councils to take on some of the burdens. He wished to record his thanks to the Parish Councils that had already or were considering taking on some of the burdens once they had identified issues that were important to their communities. He recognised that they did not take on these burdens lightly.

Councillor Gordon Lundie stated that in his opinion the MTFS was the most important of all the Council’s financial documents. It told the story of where the Council’s funding came from and predicted the future spending envelope. The Council anticipated revenue expenditure of £117m in 2017/18 and would be investing £150m in the Capital Programme over the next five years. He noted that funding was a difficult story for local government. In 2010 the Council had received £32m in Revenue Support Grant, in 2017/18 this would have dwindled to £3.7m and it would have completely disappeared by 2019/20. There had also been a steady decrease in the level of New Homes Bonus received and by 2018/19 the Council would no longer receive any Education Services Grant.

Councillor Lundie thanked the Executive and Officers for producing the MTFS which set out a balanced budget, invested wisely while keeping Council Tax as low as possible.

Councillor Chadley stated that the MTFS set out guiding principles and valuable information for the Council to base its decision making on and therefore urged all Members to support it.

The Motion was put to the meeting and duly RESOLVED.