Agenda item

[To provide an update to the Draft Budget and Medium Term Financial Strategy 2021-2022 to 2023-2024 and next steps that will be taken in order to address the financial pressures faced by the Council over the medium term]

That Council be recommended to approve:

1.    The updated draft budget strategy linked to the Five Year Financial Strategy, including changes to corporate resource assumptions and growth and inflation, for inclusion in the Draft Budget and Medium Term Financial Strategy 2021-2022 to 2023-2024.

2.    That work continues to further develop budget reduction and income generation proposals, in order to ensure that a balanced budget can be set for 2021-2022.

3.    That authority be jointly delegated to the responsible Cabinet Member and the Cabinet Member for Resources, in consultation with the responsible Director and the Director of Finance to vary fees and charges in line with key priorities.

4.    That authority be jointly delegated to the Cabinet Member for Resources, in consultation with the Director of Finance to establish supplementary revenue budgets funded by grant and approve any virements required to support the costs associated the second national lockdown.  As detailed in paragraph 3.8, the Government have announced a number of grants for local authorities in response to the second national lockdown.  At the time of writing this report, the full details of these grants were not known.

That Cabinet notes:

1.    That the Council needs the Government to provide confirmation of future years funding as soon as possible and by early December at the latest, in order to ensure that the Council has a clear direction of funding available over the medium term.

2.    That, despite austerity since 2010, the Council has a strong track-record of managing money well, planning ahead and delivering excellent services. The financial implications of the pandemic have significantly distorted the budget and Medium Term Financial Strategy.

3.    The impact Covid-19 has had and will continue to have a significant financial impact on the 2020-2021 budget and Medium Term Financial Strategy.  However, following announcements made by Government it is assumed that sufficient grant funding will be provided to cover the cost pressures arising as a result of the Covid-19 pandemic. Taking this into account, the 2021-2022 projected budget deficit stands at £4.5 million.

4.    That, in the event that the Government do not provide sufficient grant funding to meet the cost pressures arising as a result of the Covid-19 pandemic, the 2021-2022 projected budget deficit would be in the region of £23.2 million. This would have a significant impact on the Council and result in the Council undertaking a fundamental review of all services in order to identify budget reductions sufficient enough to set a balanced budget.

5.    That, a number of assumptions have been made with regards to the level of resources that will be available to the Council as detailed in this report.  It is important to note that there continues to be a considerable amount of uncertainty with regards to future income streams for local authorities over the forthcoming Comprehensive Spending Review period.  At the point that further information is known it will be incorporated into future reports to Councillors.  Any reduction in the Government’s allocation of funding to the Council would have a significant detrimental impact and further increase the budget deficit forecast over the medium term.

6.    That, due to external factors, budget assumptions remain subject to significant change, which could, therefore, result in alterations to the financial position facing the Council.

7.    That the 2021-2022 budget timetable will, as in previous years, include an update on all budget assumptions and the outcome of the Provisional Local Government Settlement will be presented to Cabinet by January 2021, with the final budget report due to be approved by Full Council in March 2021.

8.     That the overall level of risk associated with the 2020-2021 Budget and Medium Term Financial Strategy 2021-2022 to 2023-2024 is assessed as Red. 

Councillor Louise Miles presented the key points from the Draft Budget and Medium Term Financial Strategy 2021-2022 to 2023-2024 report.  Cabinet’s approval was sought to continue work on setting a balanced budget for 2021-2022.  She reported that were it not for the Covid-19 pandemic, the Council would be faced with a budget deficit by 2021-2022 of £4.5 million, which was not an unusual position to be in at this stage in the budget making cycle.  However, Covid-19 had had a huge impact on the Council’s finances and would continue to do so.  Current forecasts were for a challenging time with cuts of more than £23 million to local services that the City’s residents depend on unless additional Government funding was received. She called upon the Government to keep the pledges it had made and do whatever it takes to help local councils with regard to the financial impact of Covid-19; and to put forward a joined up strategy with regard to the future financial aid and grants for councils in the Covid-19 emergency but also generally with regard to resources that they give to councils.

Resolved:

That Council be recommended to approve:

1.    The updated draft budget strategy linked to the Five Year Financial Strategy, including changes to corporate resource assumptions and growth and inflation, for inclusion in the Draft Budget and Medium Term Financial Strategy 2021-2022 to 2023-2024.

2.    That work continues to further develop budget reduction and income generation proposals, in order to ensure that a balanced budget can be set for 2021-2022.

3.    That authority be jointly delegated to the responsible Cabinet Member and the Cabinet Member for Resources, in consultation with the responsible Director and the Director of Finance to vary fees and charges in line with key priorities.

4.    That authority be jointly delegated to the Cabinet Member for Resources, in consultation with the Director of Finance to establish supplementary revenue budgets funded by grant and approve any virements required to support the costs associated the second national lockdown.  As detailed in paragraph 3.8 to the report, the Government have announced a number of grants for local authorities in response to the second national lockdown.  At the time of writing this report, the full details of these grants were not known.

That Cabinet notes:

1.    That the Council needs the Government to provide confirmation of future years funding as soon as possible and by early December at the latest, in order to ensure that the Council has a clear direction of funding available over the medium term.

2.    That, despite austerity since 2010, the Council has a strong track-record of managing money well, planning ahead and delivering excellent services. The financial implications of the pandemic have significantly distorted the budget and Medium Term Financial Strategy.

3.    The impact Covid-19 has had and would continue to have a significant financial impact on the 2020-2021 budget and Medium Term Financial Strategy.  However, following announcements made by Government it is assumed that sufficient grant funding would be provided to cover the cost pressures arising as a result of the Covid-19 pandemic. Taking this into account, the 2021-2022 projected budget deficit stands at £4.5 million.

4.    That, in the event that the Government do not provide sufficient grant funding to meet the cost pressures arising as a result of the Covid-19 pandemic, the 2021-2022 projected budget deficit would be in the region of £23.2 million. This would have a significant impact on the Council and result in the Council undertaking a fundamental review of all services in order to identify budget reductions sufficient enough to set a balanced budget.

5.    That, a number of assumptions have been made with regards to the level of resources that would be available to the Council as detailed in the report.  It is important to note that there continues to be a considerable amount of uncertainty with regards to future income streams for local authorities over the forthcoming Comprehensive Spending Review period.  At the point that further information is known it would be incorporated into future reports to Councillors.  Any reduction in the Government’s allocation of funding to the Council would have a significant detrimental impact and further increase the budget deficit forecast over the medium term.

6.    That, due to external factors, budget assumptions remain subject to significant change, which could, therefore, result in alterations to the financial position facing the Council.

7.    That the 2021-2022 budget timetable would, as in previous years, include an update on all budget assumptions and the outcome of the Provisional Local Government Settlement would be presented to Cabinet by January 2021, with the final budget report due to be approved by Full Council in March 2021.

8.    That the overall level of risk associated with the 2020-2021 Budget and Medium Term Financial Strategy 2021-2022 to 2023-2024 is assessed as Red.