Agenda item

Purpose: To set out the financial planning assumptions for future years and align these with the Council Strategy to ensure that the Council Strategy will be delivered. The MTFS highlights the overarching key issues facing the Council’s finances as well as how there are many different scenarios and uncertainty concerning the future revenue streams for the Council in the future.

The document will enable the Council to commence the next four years of the MTFS from a strong financial base and this position and future projections are highlighted in the report.

The Council considered a report (Agenda Item 16) which set out the financial planning assumptions for future years and aligned these with the Council Strategy to ensure that the Council Strategy was delivered. The MTFS highlighted the overarching key issues facing the Council’s finances as well as how there were many different scenarios and uncertainties that concerned the future revenue streams for the Council in the future.

The Council was able to commence the next four years of the MTFS from a strong financial base and this position and future projections were highlighted in the report.  The full MTFS was set out in Appendix A.

MOTION: Proposed by Councillor Ross Mackinnon and seconded by Councillor Lynne Doherty:

That the Council:

“approves and adopts the Medium Term Financial Strategy 2021/22 to 2024/25”.

Councillor Mackinnon in introducing the report stated that the MTFS four year programme had been built to ensure that the Council had the financial resources to deliver the Council Strategy. A key element of financial planning was that the forecast included a number of assumptions and uncertainties around both income and expenditure. The Local Government settlement for 2021/22 was broadly similar to the previous year but there were uncertainties around a number of income elements going forward such as the Fair Funding review, Adult Social Care and the New Homes Bonus. There were also unknowns in terms of expenditure particularly in relation to demand led services such as Adult Social Care and Children’s Services.  With so many uncertainties any four year forecast was going to be wrong but it was a key element of effective financial planning. Based on the assumptions that had been made it would be necessary for the Council to bridge a funding gap of £13.2m over the next three years. These savings would have to be met by transformation, digitisation and commercialisation. However, the Council had an excellent track record of delivering required savings in recent years without any cuts to frontline services. The key point was that the Council needed to have adequate reserves in place to smooth what would undoubtedly be an irregular pattern of savings. If the authority did not do this exercise and it just budgeted on a one year basis it would be in a precarious position if unexpected events were to occur or required savings proved to be temporarily unachievable.

Councillor Jeff Brooks stated that he could remember a time when there was not MTFS and it had muddled along. It was a useful planning exercise but only if it was accurate or as accurate as possible and within fairly tight parameters. In that way it would be possible to review what it was said would be done against what had actually happened. It would have been useful therefore to see a paragraph included in the report of outcomes against the MTFS over the last three years.

Councillor Tony Vickers noted that when reading the papers it had become apparent that half of the income received was not in the control of the Council but it was dependent on the Government’s long term strategy for local government. He queried when local government was going to get a proper settlement as the Council had a business rate system which was not fit for purpose. It was difficult for the public to understand the finances but he asked if the MTFS included an indication that the Government would sort out the long term financial strategy.

Councillor Lee Dillon noted that Councillor Mackinnon had stated that the budget had been set without cutting any frontline services but he referred to proposals to cut Planning Enforcement Officers which he would class as a frontline service. The report also stated that the Council’s general reserve was forecast to be above the minimum level required by the s151 Officer and he therefore queried why it was proposed to hold onto more of the residents’ money than what the s151 Officer indicated was financially prudent.

Councillor Graham Bridgman said that the MTFS was in a large part an accumulation of individual service or departmental budgets. He pointed out that there would always be fluctuations in individual budgets going forward over the years but that did not mean that there should be no financial planning. He was supportive of financial planning but agreed with Councillor Brooks to some extent that it was necessary to test what had happened against the plan and to learn lessons for the future.

Councillor Lynne Doherty stated that this time last year it would not have been possible to predict the horrendous year that lay ahead as Covid took hold. The Council had needed to respond to meet the needs of residents as a result of the pandemic. It had been a difficult year and it had highlighted why sound financial planning was so critical when it came to local government finance. The MTFS was a key document as it gave a clear message on the actions required to ensure the long term financial sustainability of the Council. It sat at the heart of good public financial management and that had never been more important than in the current year. She was sure that amendments would be put forward from the Opposition in relation to revenue and capital spend but these could not be considered in isolation and it would be necessary to consider the impact they would have on the future financial stability of the Council and on the MTFS. Any alteration to the budget would ultimately change the MTFS. Councillor Doherty echoed comments made by Councillor Tony Vickers in relation to the uncertainties still facing the Council as the impact of Covid-19 would be felt for a number of years and it would likely change how public services would be delivered in the long term. The Local Government Settlement announced in November 2020 was for one year only and there had been assurances from MCHLG that a longer term settlement was proposed in the forthcoming year. A report on the review of Business Rates would be published in the Autumn and there was currently an ongoing consultation with regards to a replacement for the New Homes Bonus. Whilst there was a desire to keep any Council Tax increase as low as possible there still remained uncertainty over the financial position of the Council for 2022/12. This risk had been taken into account and the Council Tax increase was considered to be at an acceptable level for the coming year.

Councillor Ross Mackinnon advised that the financial position that the Council was in at present was very different from that in the 1990’s. The Conservative Administration supported good financial planning. He did not agree with the statement made by Councillor Vickers in relation to not being in control of the majority of the Council’s finances. 75% of the Council’s funding came from Council Tax and the Adult Social Care precept for which the Council was in control of the rates set. In terms of the level of reserves the report stated that this was the minimum recommended level of reserves - it was not the recommended level.

Councillor Lee Dillon referred to the point made in relation to the lack of an MTFS in the 1990’s. This was a CIPFA guideline that required an MTFS and that had not been a requirement when the Lib Dems had been in power.

The Motion was put to the meeting and duly RESOLVED.