Agenda item

Finance, Qualis Client & Economic Development – (C-020-2021-22) – review an updated Medium-Term Financial Plan (MTFP) for 2022/23 to 2026/27.

1)         The Cabinet noted the contents of the report, including:

•           The General Fund element of the updated Medium-Term Financial Plan (2022/23 to 2026/27);

•           The Housing Revenue Account element of the updated Medium-Term Financial Plan (2022/23 to 2026/27), including the anticipated impact on the 2021/22 budget outturn; and

2)         The Cabinet discussed and agreed actions required, including the assumptions contained in the MTFP and the potential options for addressing the underlying budget deficit in order to set a balanced budget for 2022/23.

The Finance, Qualis Client and Economic Development Portfolio Holder, Councillor Philip introduced the report. He noted that the Cabinet approved an updated Financial Planning Framework (2022/23 to 2026/27) at its meeting on 13th September 2021 and committed to receiving and considering and updated Medium-Term Financial Plan (MTFP) for 2022/23 to 2026/27.

The preparation of an MTFP provides the cornerstone on which the Council can build and deliver services in accordance with its aims and objectives. It also provides an early warning sign of potential budget pressures that lie ahead.

This was the first iteration of the MTFP within the 2022/23 budget cycle. It was a forward-looking document which provided a tentative look at the Council’s financial picture over the next five years (2022/23 through to 2025/26) and set the scene by providing a framework for developing both the General Fund and Housing Revenue Account (HRA) budgets for 2022/23.

The General Fund element of the MTFP could be found at Appendix A of the report. It revealed a projected deficit of £1.504 million for 2022/23. This primarily reflects the impact of losing Government Support for Covid-19 (£1.263 million) and the contribution from the General Reserve (£1.350) compared to 2021/22. Estimated net expenditure in 2022/23 is £16.022 million, compared to available funding of £14.518 million.

Looking further ahead, a further budget gap was expected to open-up again from 2023/24, with a peak annual budget pressure of £1.139 million occurring in 2025/26, following the letting of the new Waste Management contract.

Councillor Patel noted that the report had highlighted some key points particularly on how difficult things would be going forward and showed the greater reliance on the success of Qualis in order to sustain our front line services; also key in moving forward was the ability of maximising our assets such as renting out the space on the upper floor. He was looking at his portfolio with his lead officers to see where they could make some savings.

Councillor S Kane agreed it would be a very difficult year but looking at a suggested deficit of £1.5m and talking about a maximum £5 increase on council rates, how much of the £1.5m would be affected by this raise and how much more will we still have to do. Councillor Philip said that this would generate about £400k; the £1.5m was on top of this and this could go up as there were a number of things that were not yet definite such as the staff salary rise.

Councillor Murray asked how concerned did we have to be about the stalling of the discussions with the potential tenants, and were we certain to receive any money for 2022/23?  Councillor Philip said that this was uncertain, as there was a delay in contracting with potential leaser of the top floor due to delays in the fit out, but all indications were that we would sign with a delay of the start of the payments of three months, we are also extending the contract by an extra three months to get us the ten years of revenue as originally expected.

Councillor Murray noted that we would have some really difficult decisions as a council as a minimum we will have to find £1.5m. When would you as a group make a decision on this. What will be your timeline? Councillor Philip replied that he would be taking a similar approach to the budget this year as last year. He would aim to get to a point where we did not have to make big decisions. Unfortunately, there were still a lot of unknowns facing us. He had asked each Portfolio Holder to look at their service areas and see what they could do but still keep their services going. He was not looking for large scale cuts as that was not an effective way of doing things.

Councillor Patel asked about utility costs and could we be doing something about this. Mr Hartgrove replied that we had bought some energy on the forward market and officers were looking further into this at present. Fortunately, our premises costs as a whole had reduced considerably as a result of new use of the civic offices.

Councillor Lea noted that this council had always done well with its finances she thought that with getting rid of the Conder building this would bring in extra revenue; is this not bringing in what we thought. We must think of our residents who will face higher utility bills this winter. Councillor Philip said that we also had higher utility costs along with the cost of staff, which was one of our biggest costs. The Conder building was now available for development which would give us a capital receipt and not a general fund receipt, but this was dependent of the timing of building the new building and renting it out. We are always looking at how we could generate more income which was one of the reasons we had seconded out our asset management team to Qualis for a year to look to see if we could get more revenue from the assets, but it was still to early to see results as yet.

Councillor Murray said he did not know that we had seconded out our asset team to Qualis and he would like to know where it was reported. He was told that it went to full council with the Qualis four year business case. It was a decision of full council.

Decision:

1)         The Cabinet noted the contents of the report, including:

•           The General Fund element of the updated Medium-Term Financial Plan (2022/23 to 2026/27);

•           The Housing Revenue Account element of the updated Medium-Term Financial Plan (2022/23 to 2026/27), including the anticipated impact on the 2021/22 budget outturn; and

2)         The Cabinet discussed and agreed actions required, including the assumptions contained in the MTFP and the potential options for addressing the underlying budget deficit in order to set a balanced budget for 2022/23.

Reasons for Proposed Decision:

To provide an updated financial position for the Council based on latest available information, allowing Cabinet to consider the implications and potential options available, and provide strategic direction to senior officers in preparing a (balanced) draft budget for 2022/23.

Other Options:

There are no matters for decision in this report.