Agenda item

To consider a report being presented to the Executive on the Medium Term Financial Strategy 2024/25 to 2026/27

To note the presentation. It was agreed there were a number of areas to scrutinise, these included engagement on transition, commercial investments and a number of other actions highlighted within the MTFP.

Jason Vaughan gave a presentation on the Financial Strategy which included the national picture, financial outlook, financial strategy and high level timetable, a copy of the Medium Term Financial Strategy report due to go to Executive in July 2023 had been attached to the agenda for this meeting for background information.

The committee received an overview of the national picture which highlighted the increase in Interest Rates, Labour Market and the impacts on Councils who are now feeling the financial strain including some authorities who have issued S114 notices and DLUHC having to send in Commissioners to take control of decision making in these councils. Other Councils have also issued warnings due to financial issues. It was noted by the committee that unless remedial actions were undertaken, Somerset Council would be facing a possible S114 within a couple of years.

It was noted that there were some of the Districts where Statement of Accounts were outstanding from previous years and accounts for 2022/23 were being finalised with an estimated overspend of £20m.Schools especially were forecasting deficits for 2023/24 and for the following 3 years. In respect of High Need Block (HNB) there was a current deficit of £30m which was projected to be £70m by March 2026, currently there had a statutory override until 31 March 2026 but then the deficit must be set against the Council`s other reserves which would have a huge impact in Somerset Council`s case.

In respect of the financial outlook, this year`s budget has been impacted by interest and inflation, delays on delivery of LGR business case staff savings, there was likely to be a higher than 5% pay award and a potential overspend was likely therefore service directors were looking at corrective actions and there was an Establishment Control Process agreed. The budget monitoring reports will reflect any actions undertaken and their effect.

The committee were taken through the challenges relating to the objectives and challenges of the Medium Term Financial Strategy and the budgets including the Revenue, Housing Revenue Account and Dedicated Schools Grants; all these have been risk assessed and RAG rated so actions can be prioritised.

It was noted that the MTFS was being brought forward so an early review can take place and issues and pressures can be highlighted. There were currently 17 key areas targeted for early focus; these included:

Adult and Childrens Services, Schools – High Needs Block, Review of School Transport, School Capital programme and school balances, commercial investments, review of assets, staffing establishment, capital programme and Receipts, Grants and Treasury Management.

The budget needs to be ready for the Executive and Full Council in February 2024.

Members of the committee discussed the presentation and requested clarification on the High Needs Block for Schools, commercial investments and the reality of S114 notice for the authority. It was confirmed that there were lots of actions that need to be undertaken after review of the budgets and they should be targeted to prioritise savings that would make a difference.

Alyn Jones also explained that there were areas of Transition and Transformation project that should also be explored and he would bring a report to the committee for further discussion.

It was suggested that Task and Finish groups should be set up to enable Councillors to focus on specific areas and then actions can be targeted.