Agenda item

Mr N. J. Rushton CC, the Leader of the Council, and Mr L. Breckon CC, Lead Member for Resources, have been invited to attend for this and other MTFS items below.

The Commission considered a report of the Director of Corporate Resources which provided information on the proposed 2023/24 – 2026/27 Medium Term Financial Strategy (MTFS) as it related to Corporate and Central items.  The report also 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, the Deputy Leader, Mrs D. Taylor CC, and Cabinet Lead Member for Resources, Mr L. Breckon CC, to the meeting for this item.

 

In introducing the report, the Director of Corporate Resources highlighted that the Council’s medium term financial position had improved slightly as a result of the Government’s Autumn Financial Statement.  This had meant that a balanced budget could be delivered, but this would still be dependent on some difficult decisions having to be made over the period of the MTFS.

 

The Leader commented that:

 

·       Whilst the increased funding allocated by the Government was welcomed and a balanced budget had been set, the position remained very challenging.  Ongoing impacts from the Covid-19 pandemic, the war in Ukraine, rising energy costs and staff shortages continued to add pressure on the Council and added to future uncertainty.  This would be particularly difficult to manage and forecast given these were factors outside the Council’s control.

·       It was disappointing that discussions regarding Fair Funding had been pushed back, but a planned meeting with the Chancellor in April was very welcome.  The Leader thanked local MPs for arranging this.

·       Population growth was a key factor causing problems with the current funding system.  Census data showed some parts of London declining by more than 20%, whereas areas such as Leicestershire with increasing populations, had not received a commensurate rise in Government funding to support this.

 

Arising from discussion, the following points were made:

 

MTFS Summary and changes to the Revenue Budget

 

(a)           Although the Council’s financial position had improved the specific savings identified in the report to Cabinet in December had not been adjusted or reduced.   Members noted there was £1m of funding that had been allocated to lessen service reductions that could be offset against those savings identified.  This was under consideration and the Lead Member for Resources welcomed suggestions from the Scrutiny Commission.

(b)           The £4.0m adult social care sustainability and improvement fund detailed in the report was good news.  Whilst referenced with a ‘minus’ (for accounting reasons) this would in fact be additional money received by the Council.  Members noted, however, that detail and grant conditions relating to how these funds could be used were still awaited.  

 

Corporate and Central Items and Corporate Growth and Savings

 

(c)           Contingencies for pay awards (£34m) and national living wage (£52m) increases were significant and outside the control of the Council.  Concern was raised at how the Council could continue to absorb such additional costs without further support from the Government.

(d)           There was very little, if no tolerance in the estimates made within the MTFS.  It was recognised that inflation last year had been much higher for longer than expected.  This had significantly affected the Council’s budget across all service areas over the last year.  Members noted that any similar unexpected impacts would affect the MTFS and require more savings to be made. 

 

Adequacy of Earmarked Reserves and Robustness of Estimates

 

(e)           There had been some confusion regarding reference in the media to £25m savings being made within the Special Educational Needs and Disability (SEND) budget.  The Deputy Leader clarified that this was not a saving, but that a service transformation programme had been put in place to bring the Council’s spend on SEND services in line with the grant allocated by Government (the High Needs element of the Dedicated Support Grant).   The Council’s spend was significantly higher than the grant received.  Members noted that the Council could not legally add funding to the High Needs budget and so had to address the deficit through a reduction in costs.

 

Capital Programme 2023/24 – 2026/27

 

(f)             Members were reassured that the contractual arrangements regarding the Freeport included a ‘no detriment’ clause which would ensure that all councils affected (including the County Council) would retain the existing level of business rates from the Freeport tax site locations.  Whilst an issue for some larger authority areas, it was not expected that there would be any displacement of businesses from Leicestershire to the Freeport area. 

(g)           Members expressed frustration that whilst the Council’s capital programme was affected by inflation rises, Government grants to support large scale projects were not index linked and so did not similarly go up to reflect the rise in costs. Grant funding was fixed at the point it was allocated.   However, it was recognised that projects might not begin for some years after that point, given the work involved.

(h)           There were two key infrastructure demands arising from existing and emerging local plans – school places and highway infrastructure.  The County Council would need to prioritise developer funding allocations to support the delivery of school places given its statutory responsibilities in this area.  It was recognised that the timely delivery of highway infrastructure could therefore suffer as a result.  The Council would now be reliant on developer contributions before being able to deliver future major road schemes.

(i)             Members were assured that equality and human rights impact assessments would be undertaken as part of the development of each savings proposal following agreement of the MTFS.  These would be considered by Members as proposals were individually put forward for consideration in more detail through Scruitny and the Cabinet as appropriate.

 

RESOLVED:

 

(a)           That the report and information now provided be noted;

(b)           That the comments now made be submitted to the Cabinet at its meeting on 7^th February 2023.