Agenda item

This report presents the Medium-Term Financial Strategy demonstrates how the Council’s financial resources will used to deliver declared aims and priorities.

It sets out the overall shape of the Council’s budget by determining the level of resources that will be available and how these are currently allocated between services.

This provides a medium-term framework to enable members and officers to develop detailed annual budget allocations.

Overview and Scrutiny Committee is asked to consider and comment on the report.

The Committee received and noted a report that: (i) outlined how Council’s priorities will be achieved by setting out the framework within which resources that are available to the Council over the medium term and the financial challenges facing the Council in terms of future funding gaps; and (ii) through disciplined execution of this strategy, the Council will achieve financial sustainability while continuing to serve the community effectively.

Questions Responses and Discussion

The mains points of the discussion (Including those issues raised by Councillor Cushing, Fletcher and Heinrich) have been summarised as follows:

The Committee:

1. Noted that developing a detailed precise plan to achieve the required savings over the next 3 years has been challenging, as it depends on both internal and external factor. Internal factors include the council's operational efficiency and the ability to innovate, while external factors range from economic conditions and government policy changes to unforeseen global or regional events.
2. Noted whilst higher interest rates have improved returns on investments, the cost of borrowing has increased, therefore meaning that any borrowing either short term to cover potential shortfalls in cash flows, or longer-term borrowing which may be used to cover larger projects becomes more expensive. Therefore, requiring careful consideration in the current interest rate environment as when interest rates are low, the Council earns less on their investments, reducing the income that can support service delivery. When interest rates rise, the cost of servicing debt increases, which can reduce the funds available for other services if borrowing is sought.
3. Noted that given the current uncertainties around issues such as changes to the Local Government funding mechanisms it is essential to identify new opportunities to either increase income, increase efficiency through the redesign of services, explore new partnership models for service delivery etc and this will be one of the main challenges over the medium term.
4. Noted that whilst the Council’s reserves provide some level of comfort over the short term and can be used to address budget deficits this is not a sustainable financial strategy for the medium to long term.
5. Noted that the MTFS had been significantly restructured and redrafted from comments received from this Committee at its meeting of the 13th November, 2024 and approved by Cabinet on 2nd December, 2024 with further work to be undertaken following receipt of the Financial Settlement.
6. Noted the Council generates income through various fees and charges for services provided to residents and businesses. These charges help fund essential services and maintain financial sustainability.
7. Noted there are currently reserves that can be used to fund one-off costs for projects that will deliver a longer-term benefit. e.g. to fund one-off restructuring costs, where a restructuring will deliver a longer term saving for a service and for the implementation and project costs for the Business Transformation programme that will deliver future savings. The use of reserves in this way will be considered as part of the full business case for individual project proposals, taking into account the payback period of the project along with indirect financial implications, for example, reduced balances available for investment and the associated loss of investment income.

In conclusion the Committee:

The Chairman Moved and Overview and Scrutiny committee RESOLVED to

1. To note the Council’s Medium Term Financial Strategy.