Agenda item

To recommend to Council the adoption of the Medium Term Financial Strategy 2020/21 – 2024/25.

That it be RECOMMENDED TO COUNCIL that the Medium Term Financial Strategy 2020/21-2024/25 be ADOPTED.  

68.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 116-138, attached the Medium Term Financial Strategy which Members were asked to recommend to Council for adoption.   

68.2           Members were advised that the Strategy provided the financial plan for the Council for the period 2020/21-2024/25 and set out the Council’s estimates of its commitment expenditure, identified the spending pressures faced and the budget savings needed to achieve the recommended Council Tax levels for each of the three years of the plan. It was regrettable that the estimates had been completed on limited information from the government about future funding which made it exceptionally difficult for any meaningful financial planning for future years.

68.3           Attention was drawn to the key sections of the strategy. Section four set out the local government finance settlement – this was a one year settlement so the following four years was based on the most likely projection. There was no conclusion as yet to the fair funding review so, again, there was no allowance for that in the figures. Overall, for the next five years a reasonably flat provision was expected. Section five referred to New Homes Bonus funding – this was likely to be withdrawn over the next few years – although there had been no confirmation of this intention as yet – ‘table 3’ showed the most likely way the funding would be withdrawn. Section six set out information about retained business rates – the move to 75% exemption for business rates had been delayed for a further year with a new implementation date of April 2021; whilst many questions remained unanswered it looked likely that a re-set, partial or full, of the current system would take place in 2021 and this assumption had been built into the forecast of potential business rate retention over the Medium Term Financial Strategy period. Section seven related to growth pressures – the internal growth was easier to understand and included items such as a 2% pay award, an allowance for contract growth, e.g. Ubico, and other depot related services e.g. recycling credits. There was also a general acknowledgement that growth would be needed across all service areas as a result of new Council priorities such as tackling climate change; general growth of the Borough resulting in increasing demand on all services such as the Revenues section; and tackling emerging risks such as cyber security. Section 10 set out the Medium Term Financial Projection – which included the impact of all known capital and revenue commitments between 2020/21 and 2024/25 and showed an overall cumulative deficit of £5,059,000 by 2024/25. Section 11 referred to Council Tax – table 9 highlighted the potential Council Tax strategy and what the percentage increases would look like. Section 12 showed the deficit reduction programme – some of the items were already progressing and some needed to be progressed; treasury management generated £230,000 which meant the Council did not have to rely on bank deposits; pension reductions showed £450,000 savings; waste and recycling showed £400,000 savings which was a high level indication of what could happen and this would be brought forward for discussion in due course; business rates retention growth showed £960,000 savings with significant potential growth at Junction 9; and, as the government had indicated it would replace New Homes Bonus funding with an incentive scheme, a figure had been included worth 25% of the current scheme. The direction of travel was for a £5million deficit.

68.4           Referring to the growth pressures, and the fact that the Council was seeing an increased level of contamination within the recycling it collected which could cost around £100,000, a Member asked what was being done to encourage people to put the correct items in the bins. In response, the Lead Member advised that the Council had seen a gradual increase in what the contractor needed and it was felt that a new campaign of re-education was required to ensure people knew what they were doing and what could happen when items were placed in the wrong bins. Crews now opened the lids of bins before they collected them and, if there was something in it which should not be, the bin was not emptied. In response a Member expressed the view that this was not fixing the problem and questioned whether people could be fined. She was advised that this would not be possible so the only thing the Council could do was to refuse to empty the bin. The Chief Executive indicated that contamination cost the Council a lot and could ultimately result in Council Tax increases; that point could be made to the public which may help. Another Member questioned whether information could be put on the bins to explain why they had not been collected and was advised that it was. Members were informed that other areas in the County had not received good press about new recycling schemes whereas Tewkesbury Borough’s collections were seen as a great example; however, this was largely due to a perception that people could put everything that had a recycling mark in the bin and this was actually not the case which was why there had been issues with contamination; it was true that some re-education was required to address this. A Member suggested schools would be a good place to take a campaign as the children would re-educate their parents.

68.5           Referring to Page No. 126, Paragraph 4.7, a Member noted that the Council was penalised within the fair funding model for its low Council Tax and she questioned whether the authority needed to reflect on that in terms of its stance in the Council Plan to keep a low Council Tax. In response, the Head of Finance and Asset Management explained that the needs-based funding allocated by the government followed a very simplistic formula which took the national Council Tax average and applied it in each area; this resulted in an assumption that the Council could generate more Council Tax than it actually did. In reality, the low Council Tax was historic and the authority had no freedom to increase to the levels that the government thought they should be due to the Council Tax increase limits set by the government. The only thing the Council could do was to continue lobbying for a change to the calculations; however, there were other authorities that benefited from the way it was set so they campaigned for the calculation to remain as it was.  In terms of when some clarity on finances generally would be received from the government, there was currently no timescale available - it was hoped it would be late spring/early summer so there was information available for the next budget-setting process but this was by no means certain.

68.6           Accordingly, it was