Agenda item

The Council's Medium Term Financial Strategy 2021/22 - 2023/24

 

The Committee will receive, for information only, the Council’s Medium Term Financial Strategy 2021/22 – 2023-24 detailing the Budget, Council Tax and Treasury Management Strategy and Policy Statement 2021/22 as approved by the Council at its meeting on the 25th February, 2021.

Minutes:

The Committee received, for information, the Council’s Medium Term Financial Strategy 2021/22 – 2023/24 detailing the Budget, Council Tax and Treasury Management Strategy and Policy Statement 2021/22 as approved by the Council at its meeting on the 25th February, 2021.

 

In the ensuing discussion, the following matters were highlighted:

 

·         One Independent Member thanked the Service Director Finance and his Team for the recent discussion held on various aspects of finance

·         There was a discussion of Council debt and the implications of PFI debt on the finances of the authority.  Within the Council’s overall debt, which equated to £1bn, approximately 30% related to PFI but this was a notional accounting debt and the cost of servicing that was met from PFI credits

·         Arising out of the above, there was a discussion of the ownership of the PFI assets following the end of the 25 year PFI contract.  It was noted that neither the authority nor schools could borrow finance using the schools as assets/security.  There was also a discussion of local authority borrowing procedures/regulations and it was noted that Council’s borrowing was not secured against any assets

·         Reference was made to the assumptions outlined within the report and the potential implications for the Council of any deviations from those assumptions.  The Service Director Finance stated that he felt that the Council had a sound budget in place for next year together with a robust three-year plan but he acknowledged that this was predicated on some significant assumptions.  He did not see any significant issues in delivering the plan the main caveat, however, was the issue of future local government funding as no information had been forthcoming about the finding allocations beyond 2021/22.  The next government spending review in the Autumn would obviously be undertaken in the light of significantly damaged public finances, but he felt that the assumptions made around a cash standstill position was prudent.

 

Written responses to questions asked by Members of the Committee were provided as follows:

 

·         Comments made with regard to local government finances, forecasted problems and the issues with regard to delivering services to match expectations were noted

·         Questions were asked in relation to rising unemployment and the potential impact on Council Tax receipts.  It was noted that provision had been included within the budget for a continued reduction in the tax base as a result of the economic impact of COVID which manifested itself in the form of higher than normal levels of universal credit and local council tax support claimants

·         The -5% business rate assumption referred to the estimated reduction in the tax base / net collectable debt as a result of the impact of the pandemic on the local economy. The forecast collection rate was 95% of the revised net collectable debt

·         There is no direct impact on the Council’s forecast after the extension of the business rates holiday ended in June and the 75% discount after that.  The net collectable debt reduced [amount to collect] but as in 2020/21 this was funded directly by the Government via a Section 31 grant

·         The reserves strategy was planned over a 3-year period matching future expected movements in reserves to strategic priorities.  Future reserve levels included estimates for future allocations of, for example, New Homes Bonus.  The narrative meant that spending commitments could be identified but not released until those estimates were confirmed and banked

·         The majority of the savings / efficiencies planned for 2021/22 had already been delivered e.g. a substantial proportion related to a reduction in pension fund deficit payments which had been confirmed for some time

·         Reference was made to efficiencies proposals and to whether further efficiencies could be brought forward if needed.  It was reported that efficiencies were the generic term given to any proposal that reduced the net revenue budget e.g. general increases in revenue or fees and charges that impacted the net budget in the same way as a cost reduction measure

·         Council tax collection was forecast at 95%.  However, this was applied to a lower overall net collectable debt to reflect that there were fewer taxpayers liable to pay the full bill than pre pandemic [due to the higher than normal levels of universal credit and local council tax support claimants]

·         In relation to reserves, a full update would be provided in the annual accounts but the minimum working balance [contingency for emergency events] was not impacted by the current year outturn and would remain at £20m, at the higher end of the range advised by the Section 151 Officer

·         Reference was made to the financing of the Stronger Towns Initiative.  This sum had been awarded to develop the wider [Goldthorpe] Stronger Towns Master Plan. The Council had been awarded £23m from its subsequent bid [out of a request of £30m+] with scheme details for the reduced resource envelope currently being developed

·         The Council’s debt levels were at the higher end of the range as compared to statistical neighbours [CIPFA’s financial resilience index showed this].  This was largely due to the significant Building Schools for the Future PFI programme [which was treated as Council debt even though it was largely funded through PFI credits] together with the decision to invest £200m in the regeneration of the town centre

·         In relation to the Glassworks Project, there had been a negligible impact on the construction timeline and cost.  The key impact was with regard to the economic impact of COVID on the retail, leisure and hospitality sectors. As discussed at previous Committee meetings, the leasing strategy had been continually updated to reflect these changing circumstances

·         Market Shaping was an area raised at the Adults and Communities Departmental Management Team during the plan consultation process. It was a new area.  The indicative scope discussed with management was to provide independent advice, support and assurance to management with regards to "Market Shaping". Reference to Market Shaping had been raised within the Care Act 2014 - The Market Shaping and Commissioning duty (section 5 of the Care Act 2014 and section 4 of the statutory guidance).  A more detailed scope would be discussed and agreed with management should this particular piece of work be approved for inclusion in the prioritised IA plan 2021/22

 

RESOLVED that the report be received.

Supporting documents: