Agenda item

Medium Term Financial Plan and Budget Strategy 2020/21


(Link to Council Priorities: All)


The Portfolio Holder for Resources introduced the report and reminded Members that the Council took a multi-year approach to its budget planning.


Following the agreement of the Medium-Term Financial Strategy (MTFS) by Council in February 2019, Members considered a report that consolidated and updated the financial strategy of the Council in readiness for the preparation of the 2020/21 revenue and capital budgets.  The timetable that the budget process would follow in order to present the 2020/21 budget to Council in February 2020 was also provided and it was recognised that this would be subject to the Spending Review announcements that were due later in the year.


While the Council had set a balanced budget for 2019/20 and was working from a sound financial base, a very challenging period continued to face the public sector, including local authorities.  The Portfolio Holder reported that this was due to the severe reduction in funding from central Government.  Further complications also existed following the recent change in Government and the announcement on 4 September 2019 that there would not be a four-year spending review as anticipated, but a one-year spending round.  As only high-level figures for the Local Government sector had been provided, this made it impossible to determine what the final settlement figure would be.


The Portfolio Holder updated that the Business Rates pilot was due to end in March 2020 and at this time it was unclear as to the position from 2021 onwards.  The Government was also likely to propose a 2% cap on Council Tax increases together with a further 2% in respect of any Adult Social Care precept.


In respect of the Fair Funding Review and the 75% Business Rates Retention Scheme, the Portfolio Holder updated that decisions in this regard had now been postponed until 2021 or even later.


The Portfolio Holder provided an update in respect of the known additional spending pressures for 2019/20 which included a reduction in the waste and recycling funding from Surrey County Council, possibly the support for some of the services provided for the elderly, and the triennial valuation of the Local Pension Scheme, which could result in the Council being expected to increase it’s contributions by up to £240,000 a year.


The Cabinet noted that there was a need to make new savings and identify additional income annually in order to meet the challenge of rising costs and reduced external funding.  It was acknowledged that fees charged for services should be continually reviewed, benchmarked and revised as appropriate.


The Portfolio Holder reported that the MTFS had been updated and the funding gap for 2020/21 was a minimum of £1.3 million which was dependent on the local government finance settlement, and in particular the position with regard to a possible negative Revenue Support Grant.  The aim was to be in a position where the Council could continue to provide the essential services that the residents of the Borough expected, whilst minimising the need to draw on reserves.


In this regard, the Portfolio Holder drew Members’ attention to an important comment that had been included within Grant Thornton’s 2018/19 Audit Findings report, which stated:


‘Although adequate arrangements are in place to support your medium-term financial position, we will continue to review any reliance placed on the continued use of reserves for on-going expenditure.  As part of this we will continue to review your approach to setting fees & charges and council tax increases.  It is important you achieve a strong financial position for the medium-term given the funding uncertainties faced by the sector.’


On consideration of the report, the Deputy Leader invited Councillor Mrs. R. Mitchell, a Hersham Village Ward Councillor, to address the meeting.  Councillor Mrs. Mitchell advised that the Performance and Finance Standing Panel had met the previous evening and had recognised the challenges facing the Council with regard to the funding gap of up to £5 million in the medium-term.  The Panel discussed these challenges in detail and it had been agreed that a report outlining a number of ideas in this regard would be presented to the Overview and Scrutiny Committee in November 2019.


Recommended: that


(a)      the budget principles on which the Budget Strategy report was based and the approach to meeting the budget reduction requirement in 2020/21 and across the period of the Medium-Term Financial Strategy be agreed;


(b)      Officers liaise with relevant Portfolio Holders to identify potential savings and additional income to assist in addressing the budget gap to enable a balanced budget to be set aside for 2020/21 and the period of the Medium-Term Financial Strategy;


(c)      in principle, any growth in individual service areas will need to be funded by corresponding savings / incomes;


(d)      the budget timetable, as set out in Section 8 of the report, be adopted and the work outlined be progressed with a view to informing budget preparation subject to Spending Review announcements; and


(e)      authority be delegated to the Strategic Director and Deputy Chief Executive, as Section 151 Officer, in consultation with the Leader and the Portfolio Holder for Resources, to submit an application to be part of a 75% business rates retention pilot (or pool) for 2020/21, following careful consideration of the implications, if these arrangements are available.

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