Agenda item

To receive the latest Medium Term Financial Strategy (MTFS) position for the Council, setting out the forecast budget gap over the five-year planning period 2025/26 to 2029/30.

The Interim S151 Officer, Maria Christofi, gave a report on the Medium Term Financial Strategy (MTFS) for 2025/26 to 2029/30. The report said that the MTFS continues to be one of increased uncertainty, with inflationary and interest pressures, the national and global economy, lack of progress on social care reform, continued real term reductions in government funding, and lack of clarity around Local Government funding all adding to the uncertainty.

The report stated that the 6 key objectives of the MTFS are to: 

• Provide financial parameters within which budget and service planning should take place.
• Ensure that the Council sets a robust balanced and sustainable budget.
• Focus and re-focus the allocation of resources so that, over time, priority areas receive additional resources. Ensuring services are defined on the basis of clear alignment between priority and affordability.
• Ensure that the Council manages and monitors its financial resources effectively. Ensuring that spending commitments do not exceed resources available in each service area. Where ring-fenced government funding is reduced, the service area takes action to reduce expenditure accordingly.
• Plan the level of fees, charges, and taxation in line with levels that the Council regard as being necessary, acceptable, and affordable to meet the Council’s aims, objectives, policies, and priorities.
• Ensure that the Council’s long term financial health and viability remain sound and that the financial resilience and sustainability is improved and sustained.

The Interim S151 Officer advised that the report had already been presented to the Executive at the beginning of the month and there were a number of areas which needed to be looked at due to the financial emergency, the use of a lot of one-off resources to set the budget, earmarked reserves and the capitalisation directives.

The Committee were taken through the report and appendix with the Interim S151 Officer highlighting:

• The revised budget gap for 2025/26 is now £88.796m in the central scenario.
• Three scenarios have been produced – low, central and high. The central scenario would be the one that will be included in the update 2025/26 MTFP.
• The detail of the assumptions in the central scenario.
• Modelling would be updated regularly and each assumption reviewed twice yearly.
• The Adult Social Care Precept remains in the 2025/26 estimate, but removed for future years.

In the discussion which followed, Members made a number of comments which were responded to as follows:

• Although the reductions in contract inflation assumptions may seem quite ambitious, there is confidence that this can be achieved and will be carefully tracked. Refer to Appendix A of the report for contracts provision.
• Some reserves are earmarked for specific purposes, but some are ringfenced and would need to be paid back if not used. There are also corporate earmarked reserves. These will need to be reviewed at least annually.
• There are many possible scenarios for the MTFP and as such, it is a live document that is being constantly updated. It will be available publicly in February 2025 ready for budget setting.
• After a number of years of low inflation, the rate of inflation will be closely tracked in preparation for the budget setting in February 2025.
• The next report in February 2025 will contain more detail on the breakdown of the earmarked reserves.

At the conclusion of the discussion Members noted the report and the Chair summed up the discussions.