Agenda item

Medium Term Financial Plan (MTFP) 2021/22 - 2025/26 UPDATE AND EARLY SAVINGS

A report from the Executive Director – Resources is attached. (Key decision – reference number 5215)



Councillor Mary Maguire (Cabinet Member for Finance and Procurement) introduced the report of the Executive Director – Resources updating the assumptions in the Medium-Term Financial Strategy approved by Cabinet in July and bringing forward early savings proposals for 2021/22.




1.            That the cost of the Covid-19 pandemic on the Council to date was approximately £64m; £27m of Government funding had been received so far. Prior to the pandemic the budget gap for 2021/22 had been estimated to be £1.75m; this had now risen to more than £18m.


2.            That the report proposed bringing forward early savings proposals for 2021/22. The Council was continuing to lobby the Government robustly for full funding to meet the costs of the pandemic.


3.            The number of Covid-19 related financial risks as detailed in the report. The challenges and uncertainties continued into the medium term. This included the Collection Fund deficit which were forecast to be £19.207m; local authorities could run a deficit for three years.


4.            The significant number of residents in the Borough who had been furloughed and the increasing unemployment rates. Members noted the impact on the Council Tax Support fund which would continue to help to support the poorest families with their Council Tax payments.


5.            The increasing cost pressures on demand-led services as set out in the report.


6.            The significant level of uncertainties faced; for example, it was anticipated that there was likely to be only a single year announcement for Local Government funding for 2021/22 in December; Government funding reform had been delayed; the Fair Funding Review and Business rates reset would not take place before 2022/23; and, there had been no visible progress on Adult Social Care Funding, as detailed in the report.


7.            The detailed savings proposals outlined in the report. A further report with additional savings would be presented to Cabinet in December.


8.            That the experiences being faced by the Council were mirrored by other local authorities nationwide. A comprehensive Government funding plan for local government was required to meet the funding gaps arising from the impact of Covid-19 and to provide future stability and financial planning. This had followed ten years of austerity. The Cabinet was committed to do everything possible to seek to protect its most vulnerable residents and to maintain crucial services. This was a difficult economic period and residents would continue to seek support from the Council.


9.            The risks and uncertainties being faced, as set out in the report. The pressures detailed in paragraphs 38 to 45 of the report were highlighted.


Alternative Options Considered: None applicable to this report.


DECISION: The Cabinet agreed to


1.            Note the significant impact of Covid-19 on the Council’s financial position:


(a)  Excluding the impact of Covid-19; after the identification of £7.313m savings and income generation being brought to Cabinet for approval in this report, plus a further £2.690m to be considered at December Cabinet the updated budget gap for 2021/22 was £1.715m.

(b)  Including the impact of Covid-19; the updated budget gap for 2021/22 was £18.117m.


2.            Note the updated financial position for the medium term.


3.            Note the early savings of £6.718m and income generation proposals of £0.595m for 2020/21 summarised in paragraphs 49 to 55 of the report and set out in detail in Appendix E of the report.


4.            Note the refreshed prior year savings in the Medium Term Financial Plan in February summarised in paragraphs 46 to 48 of the report and set out in Appendix D of the report.


5.            Note that there were a number of Covid-19 related financial risks that it was difficult to quantify for the 2021/22 budget and beyond. The timing of the financial settlement meant that the Council was faced with needing to make savings to cover unknown or potential risks with unknown funding levels. In this context, Cabinet noted the risks set out in paragraph 40 of the report which had not been quantified in the 2021/22 budget.


6.            Instruct Officers to continue to lobby the Ministry of Housing, Communities and Local Government (MHCLG) for:


(a)  Full recompense for all costs borne in responding to the Covid-19 pandemic.

(b)  For an announcement on the 2021/22 settlement for local government at the earliest possible opportunity.

(c)  Multi-year settlements.

(d)  To bring forward Fair Funding and the Business Rate Reset at the earliest opportunity; and

(e)  Reform adult social care funding.


Reason: The Council had a statutory duty to approve a balanced budget for 2021/22 in February along with consideration of the finances over the medium term and the Council’s reserves and balances. It was essential that there was a clear understanding of the anticipated income and expenditure flows for the Council, despite the uncertainties, and for proposals for savings to come forward early to ensure full delivery from 1 April 2021 or indeed to also contribute to addressing the financial pressures in 2021/22.

(Key decision – reference number 5215)

Supporting documents: