Agenda item

Purpose: The purpose of the Medium-Term Financial Strategy (MTFS) is to determine financial planning assumptions for future years and align these with the Council Strategy to ensure that the strategy will be delivered. The MTFS highlights the overarching key issues facing the Council’s finances and references the many different scenarios and wider uncertainties concerning the Council’s future revenue streams.

Council considered a report (Agenda Item 4) concerning the Medium-Term Financial Strategy (MTFS) 2025/26 to 2028/29.

MOTION: Proposed by Councillor Iain Cottingham and seconded by Councillor Jeff Brooks:

“That Council approves the Medium-Term Financial Strategy as set out as Append A to the report.”

Councillor Cottingham introduced the report and highlighted that it set out the Council’s financial plan for next four years and was aligned to the delivery of Council’s strategy. He indicated that it had been a challenge to forecast financial performance, especially during the current period risk and uncertainty. In particular, Councillor Cottingham highlighted that adult social care, children’s services, home to school transport, and homelessness support were all areas where the Council had seen a substantial increase in cost pressures. These increasing costs effected many other authorities around the country who were also struggling to set balanced budgets. It was publicly known that the Council’s finances had been strained for a number of years as a result of the increased costs in those areas and it was indicated to Council that the costs of adult social care, children’s services, and home to school transport had risen by £20.7m (25.4 per cent) over the last two financial years.

Despite the Council working to reduce costs since taking office in 2023, such as reducing agency spend by £4m per annum, the Council had requested Exception Financial Support (EFS) from the Ministry of Housing, Communities and Local Government (MHCLG). These funds, amounting to £16m, would be used to strengthen the Council’s reserves in 2024/25 (by £13m), and thereby increase its resiliency, and also support the 2025/26 revenue budget (by £3m). This Council was notified that the request for EFS had been granted, and the Service Director for Finance, Property & Procurement and Section 151 Officer would be working with the MHCLG to determine the optimum method of accessing these funds and understanding the conditions applied to the funds.

Members discussed the EFS, and although satisfied that it had been secured, noted that the Council would be effectively bankrupt if it was not granted or was withdrawn. Although the cost pressures the Council was experiencing were not unique to West Berkshire, some Members wanted the Council to do more to attempt to address these pressures, rather than relying on intervention from Central Government. In response to these points, it was clarified that the Council would not be bankrupt if it did not receive EFS, although it would be forced to make an addition £5m worth of cuts, significantly harming Council services across the district.

Some Members noted that the £13m of EFS that would be used to bolster the Council’s reserves would take the Council above the minimum recommended level set by the Section 151 Officer of £9.3m. As there was no detail about what the reserves over that minimum level would be used for, it was proposed that they would be used to support the revenue budget.

The repayments on the EFS were raised as an area of concern. Assuming a current rate of interest, it was indicated that the Council could need to pay £1.5m per year until 2050 to service this financial support, putting even greater financial pressure on the Council. Therefore, some Members criticised the Administration for seeking EFS as it was a short-term solution which could cause long term financial pain.

Some Members opposed the MTFS as the proposed Revenue Budget (agenda Item 7) made up part of the report, and that they found the proposed budget unacceptable.

Overall, the majority of Members recognised the uncertainty of demand for key service areas, such as adult and child social care and home to school transport, had driven the need for the Council to secure EFS. They also noted that the conditions applied to the EFS would mean that the Council could not use the newly bolstered reserves to support an unbalanced revenue budget. Unless local government funding was reformed, it was agreed that local authorities across the country would be short on funds to provide for their most vulnerable residents.

Overall, as Council was satisfied with the proposals outlined, they agreed to approve the MTFS.

The Motion was put to the meeting and duly RESOLVED.