Agenda item

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 difficulties of the neighbouring local authorities such as the London Borough of Croydon. It was noted that a number of London boroughs were facing acute financial challenges which had been exacerbated due to COVID-19 and increased demands and costs, particularly on social care. The Management Team and Members were keeping a close eye on any potential impact on the Council.

·         Fees and charges – The Medium Term Financial Plan outlines the key principles of the Fees and Charges Policy which focuses on charging for Council services in a transparent and consistent manner. Fees and charges had not been reviewed for some time and increasing the potential for income from this source could contribute to becoming financially self-sufficient. Members commented that a balance needed to be struck on the level of charges: raising fees too much (such as for planning pre-application meetings) would reduce the number of people wanting to use these services. Also, residents were facing significant financial challenges due to COVID-19. Businesses who were struggling would also be affected if charges, such as car parking charges, were increased. Members were reassured that a balanced view would be taken so there was not a negative impact on demand for services. Work was ongoing to benchmark the costs of similar services provided in the market to set the right level of fees and charges. The Council was very sensitive to the fact that many residents had faced a considerable drop in income.

·         Budget impact assessment – Members asked if the Finance team was carrying out an equality impact assessment as part of the budget setting process, including looking at the effect COVID-19 was having on residents’ income, particularly those who had moved onto Universal Credit for the first time. This year’s budget round would be particularly challenging. The Council needed to be agile and proactive to meet the needs of residents during this emergency. Councillor T. Schofield confirmed that the Council was very aware of the current financial impact on residents and this was part of the ongoing budget discussions.  A budget impact assessment would be carried out and feed into the budget-setting process. Leader of the Council, Councillor M. Brunt, told Committee Members that it was recognised that residents would need more Council support in the next one to three years. This was part of the work of the recovery teams and is a factor in next year’s budget discussions and the continued push for more government funding.

Committee Members welcomed the comments from Executive Members. Their observations would be fed into the Executive meeting in November.

RESOLVED –that the Medium Term Financial Plan 2021/22 to 2025/26 financial period be noted, and the Committee’s observations and comments be considered by the Executive.