Agenda item

To approve the updated ‘Fairer Future Budget Principles’ and note the continuing financial uncertainty as a result of a number of factors.

RESOLVED:

1.  That the progress made on updating the Fairer Future Budget Principles (see draft at Appendix 1 of the report) be noted and that a final version will be brought back to cabinet for approval later this year.

2.  That the continuing financial uncertainty as a result of a number of factors be noted:

·  A one year spending review in 2020 providing no indication of funding for 2022-23 and beyond

·  The postponement of the planned reforms of local government finance (Fair Funding Review, Business Rate Retention arrangements) previously intended to be implemented from April 2021

·  The ongoing deferment of the Business Rates reset

·  A published white paper on Social Care but no clear indication of if, how or when proposals might be implemented

·  The impact of the Covid-19 pandemic on spending, income and savings plans and the pace of recovery

·  The extent of government support to offset the financial cost to the council of the pandemic in 2021-22 and beyond

·  Any local impact arising from the national and global economic environment following the pandemic

·  Economic and financial impacts to the council of exiting the European Union

·  The current absence of any certainty of funding streams to support climate emergency plans.

3.  That it be noted that the accumulated deficit on the Dedicated Schools Grant was £21m at 31 March 2021 with the prospect of achieving any meaningful reduction without additional funding from the Department for Education being remote.

4.  That it be noted that  financial planning is extremely challenging, with a range of potential scenarios suggesting a funding gap in 2022-23 of anywhere between £14m and £26.4m and that, subject to the inherent uncertainties, the central forecast indicates a potential budget gap of £19.4m in 2022-23.

5.  The it be noted that the central budget forecast is based on the assumptions set out at paragraph 21 of the report, with the key assumptions being:

·  Government funding rises in line with inflation, with the exception of:

o  New Homes Bonus – expected reduction of circa £3.5m resulting from ending of current scheme

·  The Fair Funding review and Business Rate Retention reset will be delayed again until 2023-24

·  Additional costs arising from pay and prices (both 2%)

·  Additional debt financing costs arising from additional capital projects (£2.5m)

·  Council tax will increase by the maximum amount allowed (1.99%)

·  No additional precept for adult social care

·  Council Tax and Business Rate losses arising from the pandemic and associated economic circumstances will be neutralised by a combination of government compensation schemes, service efficiencies and savings and, where appropriate, contributions from earmarked reserves

·  Existing budgeted council income streams will be achieved in 2022-23.

6.  That it be noted that the strategic director of finance and governance, with the support of other strategic directors, will look to establish medium term budget plans, reviewing any decisions previously taken.

7.  That it be noted that the strategic director of finance and governance, with the support of other strategic directors, will seek to prepare indicative savings options and commitments, initially for 2022-23.

8.  That it be noted that cabinet will receive further reports in the autumn including modelling and proposals for future years as further information regarding funding is made available.