Agenda item

To consider the contents of the report and make any comments on the Council’s Medium Term Financial Strategy. 

The Committee received the report of the Council’s Chief Finance Officer, which asked Members to consider the content of the report and make any comments on the Council’s Medium Term Financial Strategy.

Officers explained that the report presented an update to the Medium Term Financial Strategy (MTFS) covering both the General Fund and Housing Revenue Account (HRA) prior to consideration by Council later that month. The key assumptions that underpinned the strategy had been updated.

The MTFS highlighted the delays to the Fair Funding Review and the reform of the Business rates Retention system, following HM Treasury’s announcement there would be a one year settlement for 2020/21 and that the system would be reviewed in 2020. It was assumed that the settlement for 2020/21 would be a roll-forward from 2019/20 which could result in a further year of the renewable energy business rates windfall. Should the Local Government Finance Settlement be announced earlier, any necessary changes would be incorporated into the draft Budget as part of the process during the autumn.

The MTFS identified risk and uncertainty around business rates retention, on-going reductions to Government funding and wider economic uncertainty at the prospect of a no-deal Brexit.

The MTFS confirmed the Council’s strategic approach to continuing to reduce its base revenue budget and investing ‘one-off’ or finite resources to stimulate local economic growth, and achieve sustainable income through Council Tax and Business Rates growth. It also set out the Council’s reserves strategy which sought to set aside sums to cover known commitments, and cover financial risk as well as earmarking resources to support delivery of the Council’s Corporate Plan.

Following the district elections in May 2019, a number of emerging cost pressures had been identified; some resources were available for allocation from the Special Projects Reserve in 2020/21, but these were not recurring and therefore any additional on-going costs would increase the need for base budget savings.

Progress was being made against savings targets but was lagging behind profile, and therefore additional drawdown from the Business Rates Equalisation Reserve was expected. Based on the assumptions within the MTFS, the savings requirement was estimated to rise to £2.4m over the next 3 years.

Members asked a number of questions on the report in relation to council tax increases, the effect of inflation and a no-deal Brexit on the Council’s finances, levels of car parking and planning incomes, investment of the Council’s reserves and the budget process.

Members requested that budget workshops for Councillors be considered and that the review of the Corporate Plan be added to the committee’s work plan; it was confirmed by Officers that workshops could be looked into and that the review of the Corporate Plan had already been added to the work plan.

Some Members were concerned about the potential for a rise in council tax rates due to pressures which the County and District councils were under, and felt that other savings should be thoroughly investigated before increasing the council tax levels. Other Members felt that it was important to increase council tax by the rate of inflation to maintain the base amount.

The following recommendation to the Executive was proposed and seconded regarding council tax levels:

‘The Policy Review Committee consider that council tax should be set at a level to maintain the base, taking into account the level of increased inflation, and supported the Officer view on the matter.’

A vote was taken on the recommendation with 5 in favour and 3 against; the recommendation was carried.

RESOLVED:

i.       The Committee considered and commented on the Council’s Medium Term Financial Strategy.

ii.     That the provision of budget workshops for Councillors be looked into.

iii.    That the following be recommended to the Executive:

‘The Policy Review Committee consider that council tax should be set at a level to maintain the base, taking into account the level of increased inflation, and supported the Officer view on the matter.’