Agenda item

REPORT OF THE STRATEGIC DIRECTOR OF FINANCE, POLICY AND GOVERNANCE

To consider the Medium Term Financial Strategy 2018-2023.

RECOMMENDED TO COUNCIL:  That the Medium Term Financial Strategy 2018-2013, as attached at Appendix A to the report, be adopted.

REASON FOR DECISION: To assist in the process of forward planning the use of Council resources and in budget setting for 2018/19 to 2022/23, culminating in the setting of the Council Tax precept for 2018/19 in February 2018.

The Executive Member for Finance and IT presented the report of the Strategic Director of Finance, Policy and Governance in respect of the Medium Term Financial Strategy (MTFS) 2018-2023.  The following appendix was submitted with the report:

Appendix A – Medium Term Financial Strategy 2018-2023.

The Executive Member for Finance and IT advised that the MTFS derived directly from the Corporate Plan, which put in place the Council’s high level strategic direction. The MTFS was concerned with the infrastructure underneath the Corporate Plan to ensure that the Council had in place the necessary finances to deliver the Plan.

The Executive Member for Finance and IT stated that the financial position continued to be uncertain.  There was a financial settlement in place for three years, but beyond that timeframe the position was unclear.

The Executive Member for Finance and IT explained that it was forecast that the Council would need to reduce its expenditure or generate additional income of £4.2Million per year by 2021/2022.

The Executive Member for Finance and IT outlined some of the key points contained in the MTFS, as follows:

·         The MTFS now assumed a 3% staff pay increase in 2018/19 and 2019/20, followed by a 2% increase each year thereafter, it had previously assumed a 1% increase in each year.  This would require a change to the current national 1% public sector pay cap policy for these pay increases to take place.  If this cap was not lifted, then this pressure would reflect the cost pressures to maintain the staff resources to deliver services.  The combined effect financially would be an additional £750,000 over 4 years;

·         Last year’s MTFS had assumed 0.5% growth in the Council Tax base (i.e. number of Band D equivalent properties paying Council Tax).  Actual growth in the Council Tax base in recent years had exceeded 1% per year.  It was expected that this level of growth would continue going forward and therefore the assumed growth had been changed to 1% per year;

·         In respect of the New Homes Bonus, the 0.4% baseline was assumed each year.  The figures in the MTFS were based on the assumption that the Local Plan was adopted.  If it were not adopted then housing growth was likely to be much lower;

·         Over the life of the MTFS, the available capital resources would be substantially diminished.  After this, the cost of capital investment would be substantially higher as it would incorporate borrowing charges and Minimum Revenue Provision.  The Capital Programme (for all projects that were not committed to start) would be reviewed to ascertain whether each project was necessary for continued service provision and, if the project were for investment, what return would it provide (and would it still provide a positive return if were necessary to borrow money to fund the project); and

·         Officers (including Corporate Board) would continue to review current models of service delivery, and put forward proposals as to potential changes and the savings that could be achieved.  This would include the determination of what non-statutory services were being provided (including services that exceeded the statutory level of provision) to ensure that there was a case for continued delivery.

RECOMMENDED TO COUNCIL:  That the Medium Term Financial Strategy 2018-2013, as attached at Appendix A to the report, be adopted.

REASON FOR DECISION: To assist in the process of forward planning the use of Council resources and in budget setting for 2018/19 to 2022/23, culminating in the setting of the Council Tax precept for 2018/19 in February 2018.