Agenda item

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

The Council considered a report (Agenda Item 15) 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 2018-19, the Capital Strategy and Investment and Borrowing Strategy reports.

MOTION: Proposed by Councillor Anthony Chadley and seconded by Councillor Graham Jones:

That the Council:

“approves and adopts the Medium Term Financial Strategy 2018/19 to 2020/21.”

Councillor Anthony Chadley reported that the MTFS enabled the Council to forecast and plan income and expenditure over a longer period than the annual budget. It assisted in identifying key areas for income, for example Council Tax and Business Rates against planned expenditure. The table at paragraph 9.2 condensed information from all over the Council into a relatively easy to understand format. It was an essential tool to identify the possibilities of a gap in funding, and set in place strategies on how the Council intended to close that gap and ensure that a balanced budget was set every year.

Lines 12, 13 and 14 represented ‘budget growth’ - what the increase in cost would be for the Council to do the same thing every year, for example wage increases and pension costs, contract inflation, the expected increases in costs due to changes in the number of children with learning difficulties, or elderly residents requiring additional care. All three of these areas were difficult to predict but Councillor Chadley commended Officers and Members for the added modelling that had been undertaken to ensure that data was reliable and that adequate resources were allocated. These items alone equated to an increase of just under £21m to the budget over the next three years.

Line 16 ‘savings or income requirement’ was fully identified for 2018/19 and was contained within the Revenue Budget paper. For 2019 to 2021, the Council had identified significant sums already, however, the MTFS was not the method to analyse those savings and income, but rather a method of recording it.

Councillor Chadley drew attention to paragraph 4.3 on page 44 of the agenda which related to what had become known as ‘Negative Revenue Support Grant’ The formula for calculating Revenue Support Grant had resulted in the Council having to pay Central Government £3.5m over the two years 2019 to 2021. Whilst these figures were contained within the MTFS, the Council strongly contested the rationale behind this, and with the support of the local MPs, and other similarly affected Councils from all political persuasions, would be lobbying to have this removed.

Councillor Chadley also referred to item 4.5 on page 45 of the agenda ‘Retained Business Rates’. He reported that Officers and Members had worked extremely hard to benefit from this pilot. He reminded Members that this was only a one year pilot but that the Council would work to see if it could be extended for an additional year which would then potentially generate a further £2m.

The MTFS also allowed the Council to look at reserves and the Administration had opted to adopt a sensible approach to the use and levels of reserves. The S151 Officer recommended a minimum of 5%. Reserves were there to ensure that the Council could meet unexpected and unforeseen demands and pressures and Councillor Chadley was therefore pleased to confirm that the reserves were replenished and maintained at this safe level.

Councillor Lee Dillon questioned the Council Tax Collection Fund deficit/surplus as this was zero in 2019/20 and 2020/21. As a deficit had existed for the previous few years he felt that this was not a realistic assumption albeit that it might be aspirational. He felt that this line should therefore be removed.

Councillor Dillon also commented that Line 9 (use of capital receipts) was also shown as zero across the three years, however the Capital Strategy and Programme report (agenda item 16) made reference to the use of capital receipts to fund the revenue cost of transforming Council services in 2018/19 and 2019/20. He felt that the paper was therefore factually inaccurate and was not representative of the true position of the Council going forward.

Councillor Graham Jones accepted that there were some large unknowns to be dealt with in the future. For example if the lobbying in respect of the Revenue Support Grant was successful this would have a significant impact on future iterations of the MTFS.

Councillor Chadley stated that there was a set formula in place for the collection of Council Tax and this was reflected in the MTFS. He also confirmed that the text in relation to Capital Receipts was correct and that he would ensure that Councillor Dillon was provided with an explanation outside of the meeting. (Post meeting note an explanation was sent to Councillor Dillon on 8 March 2018).

The Motion was put to the meeting and duly RESOLVED.