Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: Yes
The Finance and Resources Portfolio Holder provided a highly detailed presentation on the draft Medium Term Financial Plan (MTFP). The Plan was a key element of the Council’s corporate planning framework to ensure that the Council had sufficient financial resources in the short to medium-term to deliver its statutory responsibilities and its Council Plan priorities.
Due to the impact of Covid-19, the report included high-level projections based on the information available as at early July 2020. The situation was changing significantly and quickly. The projections would be regularly reviewed and reported during the 2021/22 budget preparation process. The Council was required by statute to set a balanced budget in February 2021.
Based on current projections within the report, the impact of Covid-19, combined with budget deficits reported in February 2020, meant that the Council would need to find revenue savings (including potential additional income) of between £1m and £1.5m to set a balanced budget for 2021/22. Further recurring savings of £1m would need to be identified by February 2022.
Due to reasonable General Fund balances and reserves at the start of the pandemic, robust financial management practices and a good track record in achieving efficiency savings, the Council was in a positive financial position overall compared to many local authorities, but now had a substantial challenge to correctly predict and then offset the budget deficit.
The MTFP, once approved, would form the basis of the budgets to be prepared during the remainder of 2020/21 for approval in February 2021. However, the MTFP and the Budget Strategy provided only the broad framework; individual decisions, particularly the level of Council Tax, would be approved during the budget process based on the latest projections available.
Options to balance the budget in both the short and medium term will be prepared for the 2021/22 Budget to be approved in February 2021 and for the 2022/23 Budget to be approved in February 2022. The size of the projected deficits might require solutions that would take some time to identify and implement. It would be important to ensure adequate consultation on proposals was carried out. The Commissioning Strategy would be used to identify how the resources of the Council could be used to improve outcomes for South Lakeland residents in the most efficient, effective, equitable and sustainable way.
Overall, the Council’s financial position had been weakened significantly by Covid-19, despite robust financial management processes and a good track record in achieving efficiency savings. There were challenging times ahead to identify and decide upon options that would provide the solution to remaining revenue deficits.
The Overview and Scrutiny Committee had given consideration to the MTFP at its meeting on 17 July 2020 when a number of comments had been raised, details of which the Finance and Resources Portfolio Holder provided, including a suggestion for a workshop for all Members to ideas on how to address deficits.
The Finance and Resources Portfolio Holder closed, stressing that the report highlighted the prudential management of the Council’s finances over the past decade and drawing attention to and thanking the Finance Team for its exceptionally hard work.
Members expressed thanks to the Finance and Resources Portfolio Holder for his clear presentation, acknowledging the challenging times ahead and the tough decisions that would have to be made moving forward.
The Leader, again thanking the Finance and Resources Portfolio Holder and officers for their work, asked the meeting if the motion was agreed. There was no dissent.
RESOLVED – That
(1) the comments from the Overview and Scrutiny Committee be noted;
(2) the proposed Medium Term Financial Plan at Appendix 1 to the report be noted; and
(3) the draft Medium Term Financial Plan 2020/21 – 2025/26 be recommended to Council for approval.
Reasons for Decision
The MTFP indicates the resources available to fund the Council Plan and how these resources will be allocated.
Alternative Options Considered and Rejected
The assumptions forming the MTFP could be amended. This is not recommended, as the proposals are regarded as the most appropriate option when considered against the need to secure financial resilience and deliver the Council Plan priorities.
Publication date: 24/07/2020
Date of decision: 22/07/2020
Decided at meeting: 22/07/2020 - Cabinet
Effective from: 03/08/2020