Agenda item

Medium Term Financial Strategy - 2018/19 to 2020/21

Cabinet to approve, for consultation and scrutiny, the proposed detailed budget 2018/19 and the Medium Term Financial Strategy covering the period 2018/19 to 2020/21.

Decision:

Cllr Ray Theodoulou, Cabinet Member for Finance and Change, presented for consultation and scrutiny, the proposed detailed budget 2018/19 and the Medium Term Financial Strategy for the period covering 2018/19 to 2020/21.

 

Having considered all of the information, including known proposals and the reasons for the recommendations, Cabinet noted the report and, 

 

RESOLVED to: -

 

Approve for consultation and scrutiny, the proposed detailed budget for 2018/19 and the Medium Term Financial Strategy, (including Dedicated Schools Grant, which will be considered by the Schools Forum), and the Treasury Management Strategy.

Minutes:

Cllr Ray Theodoulou, Cabinet Member for Finance and Change presented, for consultation and scrutiny, the proposed detailed budget 2018/19 and the Medium Term Financial Strategy, (MTFS), for the period covering 2018/19 to 2020/21.

 

Cllr Theodoulou referred to the detailed analysis sections of the report, (Annexes 1 to 8) , and advised members that the council would need to be ready to respond positively to any amendments required as a result of the financial settlement due the following day and to meet any educational needs arising from the work in response to the Ofsted Inspection earlier in the year.

 

He explained that the Draft MTFS and budget proposal 2018/19 had been prepared using best estimates from available data, pending the provisional financial settlement due in December.  Any amendments required as a result of the financial settlement would be included in the final budget document submitted to County Council in February 2018.  Alongside the settlement, it was anticipated there would be other significant changes that could impact on Local Government that could potentially affect the financial forecasts.  These included the move to 100% Business Rate Retention and proposed Business Rate Pilots, and the Fair Funding Review.

 

Cllr Theodoulou reported a proposed revenue budget for 2018/19 of £407.16 million, a net reduction of £0.54 million from 2017/18. He said the revenue budget was made up of £28.72 million of investment in services, to be offset by £29.26 million of savings and efficiencies.

 

The £407.16 million budget was based on a 1.99% Council Tax increase. In addition, there would be a continuation of the ‘adult social care precept’ allowing upper-tier authorities to increase council tax levels by up to 2%, (an increase to specifically fund Adult Social Care Services). The 2% adult social care precept was anticipated to raise an additional £5.42 million for Adult Social Care. 

 

Cllr Theodoulou explained that the proposed budget contained provision to fund key budget pressures, including unavoidable contractual inflation; nationally agreed pay awards; and increases in demand led services. In addition, the budget included funding for key administration priorities and additional funding for Children & Families, following the recent OFSTED inspection.

 

Cllr Theodoulou stated that the highest areas of risk continued to be the council’s demand led services, in particular; care for older and vulnerable people, and Children in Care, where demand continued to rise. It was agreed  the recent Ofsted Judgment was having a notable impact.  Although additional resources were being invested in these areas under proposed 2018/19 budget options, funding was limited by the core funding and local taxation alternatives available to the Council.

 

Investment in Adult Social Care included funding aimed at addressing the impact of demographic influences; the National Living Wage; duties under the Care Act, (no longer funded by a specific grant); investments in employment and transitions for those with learning disabilities, and in additional approved mental health professionals. 

 

Budget risks had been considered during preparation of the budget, in particular, funding constraints going forward. The level of reserves had been examined and would continue to be closely monitored during the period of preparing the MTFS, in the context of protecting the Council from existing and future liabilities, particularly the financial risks associated with backdating sleep-in allowances following recent case law; backdating Ordinary Residence cases and the higher than anticipated pay awards.

 

Cllr Theodoulou advised that balancing the budget during a period of financial constraint produced a series of major challenges. Whilst robust management plans had been put into place to deliver savings, (evidenced by performance during the past three years), it was inevitable there would be an element of residual risk.

 

Consideration to funding pressures within the Dedicated School Grant (DSG) High Needs Block Funding were noted. Cllr Theodoulou informed members that, whilst the Council had put in place a programme to resolve this issue, if the High Needs Block continued to overspend, initial funding would need to be taken from DSG balances, followed by other measures put in place aimed at reducing expenditure. Ultimately, if such measures were unsuccessful, there could be a risk this particular liability could fall on the Council.

 

Referring to Paragraph K of the report, Cllr Theodoulou highlighted the elements of risk associated with the two largest budgets, (Adult Social Care and Children’s Services), and informed members that reserves were anticipated to fall slightly. In spite of this, at 4.56% of the net budget, (2017/18), this was considered acceptable.

 

Additional one-off investments

 

Cllr Theodoulou reported a number of one-off investments within the 2018/19 budget proposals, funded from the Transformation Reserve.

 

These included:- 

 

£1.59 million - Growing Our Communities Fund 

The proposed £1.590 million reflects a sum of £30,000 available to each Councillor over a three year period, (2018/19 to 2020/21), to fund community based investments

 

£0.53 million – Lengthsman Scheme

Following the success of the Lengthsman Scheme, and additional one off funding in 2017/18, the MTFS proposed an additional one off £0.53 million in 2018/19 to continue the scheme, after which time, the scheme will become incorporated into the new Highways Contract.

 

£2.74 million - A417 Reserve

Given the Cabinet’s commitment to the £4 million support to the A417 Highways Safety Improvement Work, a further £2.74 million was proposed to add to the A417 Reserve, creating a total funding commitment of £4.0 million. It was noted that the Prime Minister had been made aware of this intention and had supported the proposal. 

 

Capital

The Capital Programme provided estimated investment for the county totaling £490.09 million over the life of the programme. This will be made up of £167.59 million of new capital investment in 2018/19, and £322.50 million of existing capital schemes. The main investment related to Communities and Infrastructure (£256.92 million), Schools and facilities for children (£149.86 million), Business Support (£58.84 million), and Adults (£24.47 million).

 

Cllr Theodoulou informed members that the proposed capital programme included a significant amount of local investment, with the vast majority of projects funded from government grants or capital financing budgets. New internal borrowing was only planned for two major investment projects; a new Secondary School for Cheltenham, (the council has a statutory duty to provide sufficient school placements); and Highways investment to fulfil the manifesto promise of investing £150 million in highways over the next 5 year period.

 

Council Strategy 2018/19

 

Cllr Theodoulou advised that, alongside the MTFS, a refreshed Council Strategy would be considered at the cabinet meeting in January 2018. (The existing strategy runs to March 2018). The refreshed strategy will set out how the council intends to address the issues in the short-term, as well as setting out a clear directive for the next generation. The strategy will describe how the council intends to deliver the 5 priorities reflected in Section B of the MTFS, and how it will measure and report progress. 

 

Consultation

 

Following publication of the budget proposals, consultation would be launched between 14 December 2017 and 17 January 2018.  Stakeholders to be asked to submit their views on overall priorities, council tax levels, Adult Social Care Levy and the council's 2018/19 budget proposals. This would take into consideration announcement of the provisional settlement expected in January 2018.

 

A Due Regard Statement would be updated in January 2018, to include the evidence base about service users and workforce, and final budget proposals.

 

Cllr Theodoulou concluded by stating the council would continue to strive to become more self-reliant. It would also continue to dispose of assets to reduce external debts. The proposed budget was tight, but achievable. Along with continued self-discipline, the budget provided an opportunity for much needed investment.

Leader of the Council, Cllr Mark Hawthorne, highlighted the challenges of producing a realistic and manageable budget. The Leader stated how important it was to focus on protecting the vulnerable of Gloucestershire and to continue to invest in those service areas experiencing the most challenges, namely Adult Care and Children’s Services.

 

Noting the £150 million commitment for highways in the Conservative Manifesto, Cllr Hawthorne stated this would bring huge improvements to Gloucestershire’s infrastructure. 

 

Recognising the huge amount of work involved in responding to the requirements of the Ofsted Inspection, the Leader thanked Cllr Richard Boyles for his hard work and commitment, following his appointment as Cabinet Member: Children and Young People.

 

The Leader also recognised the ongoing support for the most vulnerable, which had always been a clear commitment and would continue. 

 

Cabinet members summarised the key investments within their budget portfolios. Speaking positively about the proposals, members confirmed that the financial commitments within their budgets were in response to meeting the budget challenges and priorities for their areas.

 

Having considered all of the information, including known proposals and the reasons for the recommendations, Cabinet noted the report and, 

 

RESOLVED to: -

 

Approve for consultation and scrutiny, the proposed detailed budget for 2018/19 and the Medium Term Financial Strategy, (including Dedicated Schools Grant, which will be considered by the Schools Forum), and the Treasury Management Strategy.

Supporting documents: