Agenda item

To consider the initial development of the Medium Term Financial Plan 2018 onwards and to consider the factors that will influence its delivery and that of the annual budget strategy 2019/20.

RECOMMENDED:

a)   That the revised Medium Term Financial Plan, as outlined in Report Item 5 to the Cabinet and Appendix 1 to that Report be adopted;

b)   That the reporting timeline as set out in section 7 of Report Item 5 to the Cabinet be agreed; and

c)   That the “Actions Required” as set out in Report Item 5 to the Cabinet, be progressed.

The Cabinet was advised of the financial assumptions being used to develop the Medium Term Financial Plan for 2018 and beyond.  A summary of the budget projections up until 2022/23 was attached as Appendix 1 to Report Item 5 to the Cabinet.  The context included the continuing Fair Funding Review and also the review of the Business Rates Retention Scheme, where the latest information suggested that the formulation would be based on a 75% retention rate, rather than the 50% currently.

All the assumptions were made on a realistic basis on what should be achieved.

The assumptions on the funding available to the Council were set out in section 3 of the report.  Business Rates Collection was expected to see overall growth of £1m beyond baseline for 2019/20; and the combined Hampshire Authorities were also working on a bid for a business rate pilot for 2019/20, which could result in additional funding being retained within Hampshire.  At present it was assumed that a baseline reset would take place in 2020/21, but in accordance with prudent financial planning, at this time all growth beyond the annual inflation increases had been removed from the assumptions.

By 2019/20 Revenue Support Grant would cease and this Council, in common with some others, was expected to be affected by “negative Revenue Support Grant”, in this Council’s case to the value of £612,000.  It was hoped that this would be addressed through the Fair Funding Review.

It was also expect that New Homes Bonus would cease to be a reliable source of funding, and was likely to cease entirely by 2022/23.

Increased costs to the value of £3.2 million had been identified for the next 4 year period, as set out in paragraph 4.1 of the report.  This would be partially offset by the savings and income adjustments identified in paragraph 4.2.  There would also be new budget requirements for additional staffing in planning and open spaces; and there would be an electoral review of the District.

The forecast budget deficit in each of the forthcoming years to 2022/23 was set out in Section 5 of the report, and would total £1.35 million to 2023.  Action to address the deficit was already underway, with a number of reviews and strategy developments needed to maintain the current process.  Further details were set out in paragraph 5.5 of the Report.

Investment in 2 capital projects originally reported in February 2018 would continue, with the outline business cases, confirming the level of investment required, currently being produced for submission to the Cabinet in due course.  These projects were projected to achieve annual savings to contribute to closing the identified budget deficit.

The timeline for the development and reporting of the Medium Term Financial Plan was set out in Section 7 of the report.

The Cabinet thanked the officers for their hard work to address the continuing reductions in funding, while continuing to provide front-line services within a balanced budget.

RECOMMENDED:

(a)          That the revised Medium Term Financial Plan, as outlined in Report Item 5 to the Cabinet and Appendix 1 to that Report be adopted;

(b)          That the reporting timeline as set out in section 7 of Report Item 5 to the Cabinet be agreed; and

(c)          That the “Actions Required” as set out in Report Item 5 to the Cabinet, be progressed.