The Board considered a report of the Operational Director, Finance, on the Medium Term Financial Strategy (MTFS) for the period 2019/20 to 2021/22.
The Board was advised that the MTFS set out a three year projection of resources and spending based on information currently available.
The projections in the MTFS showed that there was a continued need to make a significant level of savings over the next three years. This was the effect of the projections of public spending through to 2020 resulting from the 2015 Comprehensive Spending Review and uncertainty from 2020 on Government plans for public spending and continuity of the austerity programme. The MTFS took into account the:
· Budget 2018 announced by the Chancellor of the Exchequer on 13 March 2018;
· Comprehensive Spending Review 2015 announced by the Chancellor of the Exchequer on 25 November 2015; and
· The Local Government Finance Settlement 2018/19 dated 6 February 2018.
The MTFS provided initial guidance to the Council on its financial position into the medium term. Revenue savings of approximately £9.8m, £8.2m, and £3.3m would be required over the next three years. It was noted that as a result, a total of £21.3m would need to be removed from the Council’s budget, by reducing spending or increasing income. This represented 19.5% of the net budget and continued to be a significant challenge to find sufficient savings over the medium term in order to balance the budget.
The Board was advised that the MTFS had a number of objectives, as listed in the report. The report set out the Council’s budget strategy, with budget savings proposals and areas identified for further savings. The report contained details of the Council’s Capital Strategy for the management of assets such as land and buildings in Council ownership.
Reason(s) for Decision
To seek approval for the Council’s Medium Term Financial Strategy for 2019/20 to 2021/22.
Alternative Options Considered and Rejected
The alternative option of not maintaining a MTFS had been considered. However, this would not follow good financial management practice, as the MTFS was a key element in informing the Council’s financial planning and budget setting processes.
The MTFS 2019/22 would be implemented from 1st April 2019.
1) the Medium Term Financial Strategy be approved;
2) the 2019/20 base budget be prepared on the basis of the underlying assumptions set out in the Strategy;
3) the Budget Strategy and Capital Strategy be approved;
4) the Reserves and Balances Strategy be approved; and
5) the award of Council Tax Support for 2019/20 remains at the 2018/19 level of 21.55%.