Agenda item

To consider the attached update on the Medium Term Financial Plan.

A Small introduced the report. This was the first iteration of the Medium Term Financial Plan (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 forecast within the MTFP revealed a projected deficit of £1.504 million for 2022/23. This primarily reflected the impact of losing Government Support for Covid-19 (£1.263 million) and the contribution from the General Reserve (£1.350 million) compared to 2021/22. Estimated net expenditure in 2022/23 was £16.022 million, compared to available funding of £14.518 million.

Looking further ahead, a further budget gap was expected to open-up on the General Fund again from 2023/24, with a peak annual budget pressure of £1.139 million occurring in 2025/26.

Councillor H Kane asked about the dates mentioned at the bottom of page 45 of the agenda, they were clearly wrong. She was told that it should have read 2026/27 not 2016/17.

Councillor Bassett asked if the figures were just a guestimate, how possible would these figures turn out to be? Mr Small noted that this was one of the more difficult years for preparing a budget, these were the assumptions that we were working on at this time. There were a number of significant risks such as inflation, including pay inflation. We also do not know what the Government would be doing over the next year, we should find out by mid-December. So, they were essentially trying to second guess the government here. He would not like to put a percentage on the degree of certainty for the figures.

Councillor Bassett added that in these circumstances the officers had done a good job. Councillor Philip agreed, this was the difference between a guesstimate and an informed guess. It had the potential to vary quite considerably; all we could do was just take a balanced view on this. The bottom line was that we would have a gap to fill of around £1.5million.

Councillor Bassett noted that the report mentioned savings but went on to say there were no savings assumed within the projections. And that the view of members would be sought; that was very vague. Did we have any ideas to what area we were to look at. It talks about members, but he did not think members got much say in this. Councillor Philip replied that there would be a report going to Cabinet in December, looking at these things. He would listen to what his colleagues had to say about where we could make savings and in what service areas. He noted that the Council would have to raise the Council Tax to its maximum this time around. A large percentage of the cost to the Council was due to salaries. We had a choice in meeting the pay settlement and reducing numbers or not meeting the pay settlement. We shall have to look at how we could do this; they did not know for now. We may have to choose between the least worst options.

Councillor Jon Whitehouse acknowledged that the financial information was getting better in the reports, but he could not find a table that showed the movement in reserves over the medium term. He noted the Qualis breakdown of income; was that just the income from the interest rates plus rent or did it include dividend income as well. He also hoped that we did not need the maximum Council Tax increase but that would depend on the government settlement. Mr Small said he would put that table in the Cabinet papers in December. The general fund balance was now lower than we had assumed it would be when we set the current years budget, so that created a problem that we needed to resolve. We need to watch our balances and protect them as we had a stated minimum of £4million and needed to stay above that. The Qualis income was just interest, the margin on loans; no dividends assumed at this point in time.

Councillor Philip added that it was never part of our plan to be taking dividends out of Qualis at this stage it was important to make Qualis successful. Once they start making significant profits we could judge if the right thing to do was to take a dividend or reinvest that money.

RESOLVED:

The Committee considered the Updated Medium-Term Financial Plan 2022/23 to 2026/27 as presented to Cabinet on 11th October 2021 and made comments as appropriate.