Agenda item

[To provide an update on progress towards identifying additional budget reduction and income generation targets in order to address the projected £22.2 million budget deficit for 2017/18]

Cllr Andrew Johnson presented the report which provided an update on progress towards identifying additional budget reduction and income generation targets in order to address the projected £22.2 million budget deficit for 2017/18.

The report was the first of the financial year on the budget and Medium Term Financial Strategy (MTFS) and provided an update on some key factors, the timetable for the budget process and the risks in relation to them.

Resolved:

1.     That the budget reduction and income generation targets amounting to £21.9 million in 2017/18, be further developed, including the necessary equalities analyses, for inclusion in the Draft Budget and Medium Term Financial Strategy 2017/18 – 2019/20, to be reported to Cabinet in October 2016 for approval to proceed to the formal consultation and scrutiny stages of the budget process.

2.     That the commencement of initial consultation and/or stakeholder engagement relating to individual budget reduction and income generation opportunities, where this is necessary in order that they can be fully developed ahead of the Draft Budget and Medium Term Financial Strategy 2017/18 – 2019/20 being reported to Cabinet in October 2016 be approved.

3.     That a high level strategy to address the projected budget deficit over the medium term; namely identifying £32.4 million of budget reduction and income generation proposals in 2018/19 and 2019/20; allocating the People Directorate with a target of identifying a further £18.0 million of budget reduction and income generation proposals by 2019/20, with the remaining £14.4 million to be identified by the rest of the Council. The outcome being that the People Directorate and the rest of the Council share the £54.6 million projected deficit in equal proportions overall be approved.

4.     That work starts immediately to identify additional budget reduction and income generation targets to address the projected budget deficit in 2018/19, in order to ensure that a balanced budget can be set.

5.     That the prudent postponement of the previously approved ‘Reduce the Number of Councillors’ budget reduction totalling £90,000 from the Medium Term Financial Strategy in 2018/19, until the outcome of the Boundary Commission work is known be approved. Current indications are that this work would not be complete by 2018/19.

6.     That it be noted that the updated projected deficit assumes the achievement of budget reduction proposals amounting to £37.4 million over the four year period to 2019/20. Having identified budget reductions in excess of £175.0 million over the last six financial years, the extent of the financial challenge over the medium term continues to represent the most significant that the Council has ever faced.

7.     That it be noted that the due to external factors, budget assumptions remain subject to change. This could therefore result in alterations to the financial position faced by the Council.

8.     That it be noted that the while significant progress is being made towards identifying the projected budget deficit for 2017/18; work continues to identify possibilities to deliver the remaining £0.3 million of budget reduction and income generation targets for 2017/18.

9.     That it be noted that the over the forthcoming months, Service Directors, Heads of Service and relevant Budget Managers would be participating in ‘Review, Challenge and Progress’ meetings. The aims of the meetings are to review and challenge the current budget provision for each service, to consider commercialisation opportunities and to consider how the service can achieve even better value for money and efficiencies. As a result of conducting the ‘Review, Challenge and Progress’ meetings, it is anticipated that ideas for generating budget reduction and income generation targets in the short and medium term would be discussed and further developed with support from Strategic Finance. In addition to this, the Council seeks to maximise benefits available from income generation, digital transformation, demand management and outcome based service planning workstreams that are currently on-going, however it is important to note that it is likely that there would still have to be further cuts to services. An update on progress would be presented to Cabinet in October 2016.

10.That it be noted that the General Fund revenue outturn position for 2015/16 was a net underspend of £9.4 million (-4.20%) against the net budget requirement of £224.9 million, as reported to Cabinet at this meeting in the Revenue Budget Outturn 2015/16 report.

11.That it be noted that the positive General Fund outturn position for 2015/16 would help to support the Council’s short term financial position, enabling one-off investment to support transformation of the Council, however, it is important to note that it does not address the challenging financial position that the Council finds itself in over the medium term; as detailed in this report.

12.That it be noted that the an element of the underspend arising within the 2015/16 General Fund outturn is already factored into the Council’s Medium Term Financial Strategy (MTFS), including the early achievement of approved budget reductions.

13.That it be noted that the Council’s General Fund Balance remains at £10.0 million; the minimum balance as determined in the Council’s approved Reserves and Balances Policy. Emphasis therefore continues to be placed on identifying budget reductions and income generation proposals to meet the projected budget deficit over the medium term.

14.That it be noted that there is an element of uncertainty surrounding the potential impact that the European Union referendum result will have on Local Government. In the event that the challenge increases in 2017/18, it would be necessary to identify more budget reduction and income generation proposals to ensure that the minimum of £10.0 million in the General Fund Balance is maintained for 2017/18.

15.That it be noted that the Draft Budget and Medium Term Financial Strategy 2017/18 – 2019/20, including the risk register, would be updated during the 2017/18 budget setting process to incorporate an update to assumptions and projections arising as a result of emerging information. At the time of writing, there continued to be an element of uncertainty regarding Public Health and Better Care Funding information for future years and the potential transfer of responsibilities that the Government have alluded to. Updates would be reported to Cabinet in the forthcoming months.

16.That it be noted that the Local Government Association recently conducted a Finance Peer Review at the Council. The initial feedback that was received from the team was very positive, and recognised that there has been significant progress, developments and improvements at the Council, which has resulted in a good grasp of the current budgetary position and future financial challenge. They recommended that it may be timely to revisit and review some of the assumptions built into the Medium Term Financial Strategy, and to also review the assessment of budget risks. An action plan is currently being developed, and would be reported to Cabinet and Confident Capable Council Scrutiny Panel over the forthcoming months.

17.That it be noted that the 2017/18 budget timetable would, as in previous years, include an updated report presented to Cabinet in October 2016 detailing budget reduction and income generation proposals that will be subject to formal budget consultation and scrutiny during October 2016 - January 2017. Further to this, an update on all budget assumptions and the Provisional Local Government Settlement would be presented to Cabinet by January 2017, with the final budget report due to be approved by Full Council in March 2017.