Agenda item

To recommend the Medium Term Financial Strategy to Council for approval.  

That the Medium Term Financial Strategy 2017/18-2021/22 be RECOMMENDED TO COUNCIL for ADOPTION, subject to the following amendments which would add flexibility to the Strategy:

·           Paragraph 1.1 – amend sentence to read ‘…the level of savings and increased income that are likely to be needed. to keep Council Tax affordable….’

·           Paragraph 10.3 – amend sentence to read ‘…given the size of the deficit faced by the Council it is recommended that this strategy is continued for 2017/18 recognising the likely need for further increases in future years’.

·           Table 8 – amend heading to read ‘Impact of proposedcharges per Council tax band’.

·           Paragraph 10.5 – delete last sentence ‘Projections of future increases to council tax will ensure the council remains within the bottom quartile for council tax charges and meet its priority to maintain a low council tax’. 

58.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 15-40, set out the Medium Term Financial Strategy for 2017/18-2021/22. Members were asked to consider the Strategy and recommend it to the Council for adoption.

58.2           The Head of Finance and Asset Management explained that the Strategy was a five year rolling forecast for the Council which was set against a backdrop of uncertainty. The government had, however, recently confirmed a four year funding deal for the authority which would help with its future financial planning and meant the figures contained within the Medium Term Financial Strategy for core government support were correct for the next three years which was helpful. In terms of some of the key points within the Strategy, he explained that the future funding for New Homes Bonus was still unknown at this stage but it was hoped that any reduction in years payable would be offset by an increased growth in house building. In terms of business rates, the Council had experienced losses in the last two years and, unfortunately, this was expected to continue; with this in mind the income target had been removed from the base budget for future years. It may be put back in at some point if the outlook improved. In addition, there had been no further announcements on scheme design or on the timetable in respect of 100% business rates retention. The growth elements of the Scheme were highlighted at Paragraph 7 of the report and included the cost of employees, in particular pension contributions which the actuary had recently confirmed would increase from an ongoing rate of 14.7% to 17.5%. Notwithstanding this, the annual contribution to the deficit would only increase by £50,000 instead of the £200,000 which had initially been forecast. Overall, the Council faced a £3.3 million shortfall in its budget over the next five years.

58.3           In respect of the Council Tax Strategy, confirmation had been received from the government that the current excessive Council Tax limits would remain in place for next year. This meant the Council could, if it so wished, increase its Council Tax by £5 or 2% whichever was higher. The Strategy was currently modelled on the £5 increase on a Band D property for the life of the Strategy which still left the Council in a position of being in the bottom quartile for Council Tax charges. In terms of the Business Transformation Strategy, the Head of Finance and Asset Management advised that it was essential that all elements were delivered to make £1.4 million savings; this meant pushing ahead with the Commercial Strategy, digitalisation, commercial viability etc. In terms of the Medium Term Financial Strategy reserve, it was felt this was vital to help guard the Council against the deficit which was faced; the suggestion was that the reserve would be accumulated from New Homes Bonus, in-year savings etc.

58.4           During the discussion which ensued, a Member expressed some concern about the Council Tax Strategy and suggested some amendments to the wording to change the emphasis bearing in mind the uncertain future. Drawing attention to Paragraph 10.3, he felt it was important not to commit the Council to a £5 increase for every year of the Strategy and he proposed that, in order to ensure flexibility to be creative with financial management in the future, the Paragraph be amended to state that ‘…given the size of the deficit faced by the Council it is recommended that this strategy is continued for 2017/18 recognising the likely need for further increases in future years’. In addition, at Paragraph 10.5, he proposed that it be amended to read ‘…The proposed Council Tax for the next financial year of £109.36 is likely to be approximately £40 below the bottom quartile threshold and £60 below the national average for a District Council. Projections of future increases to council tax will ensure the council remains within the bottom quartile for council tax charges and meet its priority to maintain a low council tax’.He further proposed that Paragraph 1.1 be amended to read ‘…the level of savings and increased income that are likely to be needed. to keep Council Tax affordable…’. The proposals were duly seconded.

58.5           In response, the Head of Finance and Asset Management advised that, whilst the wording in the paragraphs could be changed, he would question whether the Member would also want the tables and forecasts that were contained within the Strategy to be amended. If the Member wanted the information to be recast he would need to indicate what that would be and where he saw the balance coming from. He did feel, however, that it should be borne in mind the document was refreshed annually and, as such, there was always an opportunity to change it should circumstances change. As a matter of course the Medium Term Financial Strategy was a document that changed constantly and the version before the Committee was only a snapshot in time. The Member indicated that there was no need to change the tables or forecasts as they offered a suitable projection for the future he merely wanted to ensure flexibility within the wording of the Strategy, should it be required. Another Member expressed the view that the Strategy showed the Council was thinking ahead and she could see no problem with it as it was.

58.6           Having considered the report, and amendments as discussed, it was