Issue - meetings

REPORT OF THE SERVICE DIRECTOR – RESOURCES

To consider the Medium Term Financial Strategy.

RECOMMENDED TO CABINET: That Cabinet note and comment to Council on the Medium Term Financial Strategy, as attached at Appendix A.

REASON FOR REFERRAL: Adoption of a MTFS and communication of its contents will assist in the process of forward planning the use of Council resources and in budget setting for 2024/2025 to 2028/2029, culminating in the setting of the Council Tax precept for 2024/25 in February 2024. This will (alongside the existing Council Plan) support the Council in setting a budget that is affordable and aligned to Council priorities.

Audio Recording 16 minutes 4 seconds

The Service Director – Resources presented the report entitled ‘Medium Term Financial Strategy (MTFS) 2024-29’ and highlighted that:

·       The medium term in Local Government was meant to be the period up to five years.

·       Assumptions had been made to set a balanced budget for the next five years and included some draw down of reserves as part of the strategy.

·       The MTFS had a target level of savings that would need to be achieved over the five years.

·       The budget for 2024-25 would be set in February and the Finance Audit and Risk (FAR) Committee would see the draft budget report before the budget was considered by Cabinet and approved by Council.

·       The MTFS sits alongside the Council Plan.

·       Appendix A is the MTFS and includes a number of assumptions, such as government funding and the Council Tax increase, these items would be flagged and monitored on the final report as being best estimates.

·       The General Fund balance was estimated at £12.7M at the end of March 2023, which was well above the minimum recommended value, and this allowed some headroom to balance out any future shortfalls, however once the reserves had been used, they would be gone.

·       There were some business rates reserves that could be released over the next two years.

·       There were no ongoing provisions regarding Covid 19, but car parking fees had still not recovered, and remained a risk and would be highlighted in the budget.

·       The uncertainty of inflation had impacted the funding, income and expenditure of the budget.

·       Current indicator values had been applied to the new waste contract as precise numbers would not be known until May 2024, especially in relation to fuel costs.

·       The events in the Middle East may have an effect on the global commodity price of fuel and energy.

·       The pay award for 2023/24 had now been agreed and would be paid in November. Negotiations would now commence on the 2024/25 pay award with an assumption in the budget for around 4% decreasing to 2% over the following years.

·       Appendix A showed the assumed modelling for fees and charges, and these would become more detailed as the budget process progressed.

·       The cost of living crisis had impacted on the new Council Tax Reduction Scheme (CTRS) which had cost more than forecasted, and had impacted on the Council Tax base. The Council Tax base would usually increase each year with new homes but likely to be no increase this year, but with assumed growth again in later years.

·       The impact of interest rate changes had not yet been factored in. Interest rates have stayed higher for longer than expected which had generated an income from our investments, however a need to borrow funds was expected in later years in the MTFS.

·       There were some uncertainties regarding the recent Waste Legislation Changes and the impact this would have on our waste streams and funding, especially regarding the deposit return scheme and extended producer responsibility.

·       The  ...  view the full minutes text for item 7