Agenda item

To receive the information, consider the risks arising from the Medium-Term Financial Plan, and scrutinise the Cabinet’s decisions

DECISION:

·          To accept the report.

·          To note the relevant risks that derive from the Medium Term Financial Plan.

·          To support the Cabinet's decision (14 May 2024).  

The report was submitted by the Cabinet Member for Finance in response to the financial challenges facing the Council. The purpose of the plan is to set out projections for the Council's position over the next three financial years, and offer assumptions as well as proposals to address the financial deficit faced by the Council. It was highlighted that the plan had been approved by the Cabinet (14 May 2024).

The Chief Executive explained that finding cuts in the Council's budget and services was not a new process since cuts had been introduced annually for 18 years. It was commended that the Council had managed to maintain services despite the reduction in the departments' budgets but the need to bring some services to an end in the future was acknowledged.

It was confirmed that the budget for this year had been set and a significant shortfall in Council income by 2027/38 was anticipated, therefore work was underway to try and fill the gap through a factual plan. It was emphasised that the projections were based on the information in the past years and that it was an initial plan to address the medium-term budget.

Reference was made to the summary of the plan by noting that it elaborated on the known factors that impacted the Council's financial situation during the medium term (between 2025/26 until the end of 2027/28). It was detailed that inflation was anticipated on the salaries of Council staff in addition to the prices of goods, as well as the increase of levies impacting the Council's budget within this period. However, it was emphasised that there was no agreement to increase salaries with the unions at present.  It was also emphasised that no detailed consideration had been given to adjusting Council tax levels, and that any adjustment would require Full Council approval.

It was explained that the rate of inflation that was used in the Plan was based on the outlook of the Bank of England and advice by Arlingclose company, which were the Council's treasury advisers. It was noted that the officers had based the anticipated inflation rate at 2% for the number of years in the medium term to plan to address that gap. It was acknowledged that there was an annual demand for an additional budget above inflation in some fields and it was anticipated that £3 million a year would be required to deal with this demand. It was emphasised that this was a prudent provision, not an expenditure target, and any financial bid would receive careful consideration.

It was reported that the Plan suggested a financial deficit of £36.2m (before considering any Council Tax increase and savings that had already been identified) during the medium term based on assumptions and estimates. It was confirmed that the hope was to present various options on the next steps in the future, and the need to find a balance between maintaining services and adapting the levels of Council tax was noted.

The Cabinet had resolved to commission the Chief Executive to establish and lead on a range of measures and work packages, to prepare in advance for dealing with the significant gap in our budget over the next three years. The work will also consider the named methods of funding services, providing a clear picture of the Council's sustainability over the next three years and assisting to make decisions at a difficult time. It was reiterated that the Plan was a live plan that would be updated as information came to hand.

Members gave thanks for the report – it was a key plan which set a picture of the situation for the future.

In response to a question regarding whether it was possible to hold specific sessions with the Members of the Committee on medium-term plans as a basis to discussions, the Chief Executive noted, following the success of the briefing sessions during 2023/24, that a new series of sessions would be arranged – these sessions would highlight the challenges facing the Council. It was reiterated that clear communication was a core part of the process.

Matters arising from the ensuing discussion:

·         That the report was timely

·         That they agreed with the recommendations and the commission brief for the Chief Executive

·         That it was essential to consider new ways of providing services (statutory and essential) – private sector and the third sector

In response to the comment regarding the commission, the Chief Executive noted that various fields were being addressed. Despite their experience of considering ways to change services, £17 million had to be found through alternative means. The Government was unlikely to fund the financial deficit and therefore the Local Authorities were required to deliver and offer the services. The hope is that this plan will offer options to members.

RESOLVED:

·         To accept the report

·         To note the relevant risks that derive from the Medium Term Financial Plan.

·         To support the Cabinet's decision (14 May 2024).