Issue - meetings

To consider the Medium Term Financial Plan that was adopted by Executive in July 2020 as the framework for the budget elements of service and financial planning for 2021/22 onwards.

Members considered the Medium Term Financial Plan 2021/22 to 2025/26 (MTFP). This Plan was adopted by the Executive in July 2020 as the framework for the budget elements of Service and Financial Planning for 2021/22 onwards.

Councillor T. Schofield, Portfolio Holder for Finance, introduced the item. It continued to be a challenging financial situation as government funding reduces further. Local authorities have to use resources efficiently and seek new sustainable funding streams. Budget preparations for next year had started well despite the extra work going into the emergency response to COVID-19 which had added further complexity. It was uncertain yet how much government funding for COVID-related income losses would be.

Members had asked 32 Advance Questions. These ranged from fees and charges, investments and commercial opportunities, council tax, revenue reserves balances and the impact of COVID-19. Written responses had been provided to Members. More answers would be given as part of the budget scrutiny process. Councillor T. Schofield confirmed that both Service and Central budgets would be presented in the November budget report (where available) this year for review by the Budget Scrutiny Panel meeting in early December. It was noted that the MTFP forecasts did not yet include any forecast income in relation to any future new investments that might be made.

Members raised questions and made comments on the following topics:

·         Commercial investments –Members asked if the £50m budget allocated for investment opportunities (for consideration by the Commercial Ventures Executive Sub-Committee) would be spent this year. Councillor T. Archer, Executive Member for Investments and Companies,  said that the Council was being prudent about its assumptions for increasing new commercial income streams. It was noted that the Council was benefiting from previous investments with a return of around £4m a year. The Sub-Committee would continue to look cautiously at investment opportunities. It was confirmed that part of the £50m budget allocation in the Capital Programme will fund Project Baseball (an initiative to build a crematorium in the Woodhatch area which was announced earlier in the week and was now open to public consultation).

·         Government funding assumptions – Members asked about planning for reduced government funding (such as business rates income) which was predicted to be £2.3m in total over the next three years. This was not a confirmed figure, but it was referenced as a planning assumption (based on the information currently available) until the Government confirms the actual changes.

·         Budget provision for future pay and pensions increases – Members asked if pension increases were due to an increase in staff or a general pension increase. It was confirmed that figures in the Plan were the pension element of any agreed pay rises. The Local Government Pension Scheme managed by Surrey County Council was fully funded overall. Once the outcome of the pay negotiations was known, this would be included in the budget.

·         Financial difficulties of neighbouring local authorities – Members asked about the potential impact on the Council and on Surrey local authorities of the reported financial  ...  view the full minutes text for item 35

To consider the Medium Term Financial Plan (2021/22 to 2025/26).

RESOLVED that the Medium-Term Financial Plan be adopted as the framework for the budget elements of service and financial planning for 2021/22 onwards.

Councillor Schofield, Executive Member for Finance and Deputy Leader of the Council, introduced the report and explained that local government continued to face a challenging financial situation. Government funding was set to reduce further, and the Council was continually challenged to find new ways to make more efficient use of existing resources whilst at the same time seeking new sustainable income streams.

The Government had not provided clarity of the timing for many of the proposed funding changes, and there was a further delay due to the COVID-19 pandemic. The Council would, however, continue to plan for the future, and had started budget preparations for next year despite the competing demands of responding to the COVID-19 crisis and the additional uncertainty it represented.

The Medium-Term Financial Plan provided a detailed initial assessment of the information that would be used for budget setting for 2021/22 onwards. It included a five-year forecast for the budget gap that would emerge if action was not taken to reduce costs or increase income. Work was underway with Officers to develop the detailed budget proposals for consideration by the Executive in November.

Councillor Schofield explained that Members of Overview & Scrutiny Committee would be invited to provide feedback on how to address the forecast revenue budget challenge for 2020/21 onward, which would be then be considered in the preparation of budget proposals.

In response to questions and observations from Visiting Members, Executive Members explained that:

·       Each project or initiative to deliver the Environmental Sustainability Strategy, including any capital funding, would be considered as part of the service and financial planning process for 2020/21

·       The Plan confirms when borrowing will be necessary to fund the approved capital programme, and that the Council would continue to seek new forms of income generation to mitigate the revenue budget challenges identified in the Plan

·       The budget allocation relating to Preston Regeneration, as shown on page 138, would be clarified by the interim Head of Finance, for those Members present, after the meeting.

RESOLVED that the Medium-Term Financial Plan be adopted as the framework for the budget elements of service and financial planning for 2021/22 onwards.

Reason for decision:

The Council is required to set a budget by 11 March each year. This report and the associated documents will support this obligation for 2021/22.

Alternative options: As set out in the report, and decision notice.