Agenda item

Mr. N. J. Rushton CC, the Leader of the Council, and Mr. J. B. Rhodes CC, Cabinet Lead Member for Finance and Resources, have been invited to attend for the Medium Term Financial Strategy (MTFS) items together with other Lead Members as appropriate.

The Commission considered a report of the Director of Corporate Resources which provided information on the proposed 2021/22 to 2024/25 Medium Term Financial Strategy (MTFS) as it related to Corporate and Central items, provided an update on changes to funding and other issues arising since the publication of the draft MTFS and provided details of a number of strategies and policies related to the MTFS.  A copy of the report marked ‘Agenda Item 8’ is filed with these minutes.

The Chairman welcomed the Leader of the Council, Mr N J Rushton CC, and the Cabinet Lead Member for Resources, Mr J B Rhodes CC to the meeting for this item.

Before the Director introduced the report, with the permission of the Chairman Mr Rhodes, the Cabinet Lead Member for Resources, advised the Commission that the budget as presented did not include any decision regarding the ability of the Council to levy an additional 3% precept for Adult Social Care.  Having had regard to the significant financial pressures facing the Council the Cabinet at its meeting on 5^th February would be recommended to opt to levy the additional Adult Social Care precept thereby resulting in a total council tax increase of 4.99%. The additional 3% precept would generate approximately £9.6million.  The Commission was advised that the Council was reliant on council tax for funding 80% of its expenditure and received no Revenue Support Grant from the Government.

The Director of Corporate Resources in introducing the budget highlighted the significant uncertainty facing the Council going forward.  Whilst the Council had prepared a four year MTFS, it was highlighted that the government settlement was for one year only and within that there were some grant funding streams which were yet to be agreed.

The Leader also emphasised the level of uncertainty facing the Council at this time.  Costs were increasing, and demand for services was also increasing.  As a result of the Covid 19 Pandemic it was highly likely that there would be further demands on Council services as families struggled to cope with the effects.  He said the Council should, however, be proud of the support it had provided to residents and businesses during the pandemic through business support grants and funding for school meals. 

Arising from discussion and questions, the following points were raised:

Revenue Budget

(i)          The pressures on the budget would largely depend on how the Government chose to address the national deficit which currently stood at over £2 trillion.  Even if the Government were to seek to borrow to fund the deficit, there would still be significant pressures for a reduction in public spending.

(ii)         Unemployment was likely to increase significantly as a result of the Covid 19 pandemic which in turn would reduce the level of revenue generated from council tax as more people would become eligible for support.  In the current year Government support, in particular the furlough scheme, had cushioned the economic impact of the pandemic.  Given the Council’s reliance on council tax revenue this was a concern, particularly for the County Council though it was acknowledged that district and parish councils would also be affected.

(iii)       The budget for 2021/22 was a balanced budget but looking ahead there was a significant gap of some £92million.  Of this £30million of savings had been identified.  A sum of £36million had yet to be identified.  £26million related to Special Educational Needs.  The Lead Member for Resources advised the Commission that the Council, together with a number of other Councils, had made strong representations to Government regarding SEN spending pressures.  A response had been received from the Department for Education indicating they were aware of the issue but could not address it in the coming year but had offered a meeting to discuss the issue.

(iv)       Members of the Commission noted the challenging financial position and the significant uncertainty facing this and all other Councils.  The need to address cost pressures arising from SEN and securing Fair Funding for the Council which remained one of the lowest funded Councils in the country, were of paramount importance.

Central Items, Growth and Savings, Council Tax and Business Rates and Reserves

(v)            Given the level of uncertainty faced by the Council over the coming 12 months, a contingency of £8million was being held in 2021/22, reflecting the difficulty delivering savings and resolving other financial issues, which if not required would be used for the Future Development Fund.

(vi)           The contingency for inflation and pay awards which was held centrally would be allocated to departmental budgets.  The MTFS assumed £15m would be required for an increase in pay over the 4-year MTFS.  If the public sector pay freeze was extended beyond 2021/22 this would mean a reduced need in the contingency to some £3million.

(vii)         It was difficult to predict the impact of the pandemic on funding realised from council tax, particularly the increase in the Local Council Tax Scheme to support households facing unemployment.  The budget proposals had built in an estimated shortfall of £14million in the coming year with smaller amounts in the following two years reflecting the expected economic recovery.

(viii)        Clinical Commissioning Groups (CCGs) were under significant pressure facing growing demand for services arising from the pandemic.  The Council had a good working relationship with the local CCGs and the Council was supporting them in improving the discharge of patients from hospitals, this was only possible with significant Government funding which had not been announced for 2021/22.

(ix)           Each Overview and Scrutiny Committee had been advised of work being undertaken to identify additional savings to meet the shortfall in subsequent years.  Much of this work was at an early stage but included reviews across several departments of their operating models to identify efficiencies. Given that the Council had already saved over nearly £200million since 2010 the opportunities for efficiency savings were limited and unless there was additional support and fair funding from Government there would be an adverse impact on services to the public.

Capital Programme

(x)            With regard to forward funding of capital schemes:

·         Work was on-going to develop a policy that would apply to all future projects across the County where the Council was required to forward fund a scheme.  This would require consultation with district councils and a report would be brought to the Cabinet and a future meeting of the Commission regarding the proposed way forward.

·         There were risks associated with the forward funding of capital schemes as it relied on having robust and enforceable agreements with district councils.  District councils were the authority responsible for the granting of planning permissions and setting conditions to such permissions including the application and agreement of Section 106 agreements on which the County Council would be reliant to meet the cost of infrastructure, particularly roads and schools, but also other service requirements such as waste disposal and libraries.

·         Whilst forward funding of infrastructure such as roads and schools is something County authorities are able to do, to ensure continuity of funding is available to support this approach on a County wide basis further legal advice was being sought from Counsel on the mechanics of using Section 106 agreements with developers and relevant district councils. This would inform the development of the policy.

(xi)           The Disabled Facilities Grant figure included in the Capital programme was passported in its entirety to district councils.

RESOLVED:

That the comments now made be submitted to the Cabinet for consideration at its meeting on 5^th February 2021.