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Agenda item
Medium Term Financial Strategy
- Meeting of Cabinet, Monday, 5th September, 2022 6.00 pm (Item 453.)
- View the background to item 453.
(Kit Wheeler, Chief Finance Officer)
Decision:
That Cabinet agree:
1) Officers continue with detailed work to bring forward business case options to the Executive designed to address the deficit by curbing unplanned cost increases, reduce core costs and/or increase income.
2) Officers report monthly to the Executive on progress with developing and implementing the business cases, savings achieved/identified to date and the latest financial position.
3) Officers provide regular updates to the Executive on all the other management action points listed in this report.
4) An urgent review of all fees and charges be undertaken with the aim of implementing them as soon as legally possible (allowing for any statutory consultation periods).
5) The council request that the LGA (Local Government Association) organise a finance peer challenge in early Spring 2023.
6) A review of the capital programme is completed to ensure it is affordable and commencement of new capital schemes which require borrowing is restricted until the strategy to address the financial deficit has been determined.
(*Exceptions to include schemes that demonstrate reduction in revenue costs, orwhere schemes are fully externally funded).
7) A further, more detailed Medium Term Financial Strategy be bought to the October Cabinet meeting setting out more detail of the strategy to address the budget deficit, including scenario planning, as well as in-year and other budget savings where these have been identified.
Minutes:
The report explains where the Council will be in a short space of time if issues are not addressed quickly. One of the areas that is causing us the greatest concern is the housing and homelessness issue and we've set up a task force to identify any potential savings and any efficiencies that that can be made. Unfortunately for us as fast as we're working to find those savings, there are costs that are still increasing.
Cllr. Patmore’s question regarding the reserves was answered by the Chief Finance Officer. The accounts have not been signed off from 2019-2020 yet and that has given some time for movement. Some spending that was planned was not completed due to covid. A lot of previous forecasts have become actual.
The Finance portfolio holder explained that the threat of recession and inflation means that we may meet even bigger challenges than we've already factored into this report.
It was requested for some training for Councillors to help them review finance reports and make decisions. It was discussed that by maximising income the Council should not conflict with its anti-poverty commitments. The Chief Finance Officer explained that there are separate discussions around fees and charges and there'll be a separate paper on it. Councillors asked when there will be an update from the Housing Task Force. The Managing Director answered that this will be discussed at the next Housing Task Force meeting and will update when this can be brought forward.
Cllr Patmore asked a question regarding the position the Council is in regarding energy costs. The Chief Finance Officer explained the council is on a fixed energy contract for a year.
The Chair explained that the Council has to respond to the cost of living crisis but also deliver a service to residents. There are now weekly financial planning meetings and also budget planning over a longer span than one financial year.
Cllr Willis proposed approval of the recommendation and Cllr Rogers seconded the recommendation.
RESOLVED (unanimously):
That Cabinet agree:
1) Officers continue with detailed work to bring forward business case options to the Executive designed to address the deficit by curbing unplanned cost increases, reduce core costs and/or increase income.
2) Officers report monthly to the Executive on progress with developing and implementing the business cases, savings achieved/identified to date and the latest financial position.
3) Officers provide regular updates to the Executive on all the other management action points listed in this report.
4) An urgent review of all fees and charges be undertaken with the aim of implementing them as soon as legally possible (allowing for any statutory consultation periods).
5) The Council request that the LGA (Local Government Association) organise a finance peer challenge in early Spring 2023.
6) A review of the capital programme is completed to ensure it is affordable and commencement of new capital schemes which require borrowing is restricted until the strategy to address the financial deficit has been determined.
(*exceptions to include schemes that demonstrate reduction in revenue costs, or where schemes are fully externally funded).
7) A further, more detailed Medium Term Financial Strategy be bought to the October Cabinet meeting setting out more detail of the strategy to address the budget deficit, including scenario planning, as well as in-year and other budget savings where these have been identified.
Reasons for Recommendations
Hastings Borough Council, like many other councils, is currently facing some of the biggest financial challenges and pressures in recent years, possibly ever.
The ability to deliver key services to the most vulnerable is becoming increasingly hard to do. Static funding from Central Government, coupled with high cost of inflation on all services, rising homelessness and temporary accommodation costs, and tighter restrictions on how Councils can fund capital expenditure is providing a perfect storm.
Under the Local Government Finance Act 1992, as amended by the Localism Act 2011, it is a statutory requirement that Councils set a balanced revenue budget.
A major overhaul of the funding mechanism for local authorities has continuously been postponed and when combined with a regular one-year spending reviews, continues to provide considerable uncertainty on funding in future years.
The previous Secretary of State for Levelling Up, Housing and Communities committed to providing a two-year financial settlement for 2023/24 onwards, however until the new Prime Minister and Cabinet is in place, uncertainty remains as to whether this commitment will be realised.
Whilst a two-year financial settlement would be better for planning purposes than previous one year settlement figures, it does little to provide long term assurance and planning opportunities for Local Government finance teams across the country and Hastings is no different.
The Council needs to be able to match its available resources to its priorities across the medium term and to maintain sufficient reserves and capacity to deal with potentially large and unexpected events, in addition to fluctuations in income and expenditure levels.
We have seen in recent years what impact Covid-19 had on our ability to deliver services and the wider economy, so we must be prudent to guard against similar unexpected and impactful local and even global events outside of our control.
It is therefore imperative that attention is drawn to the current and future financial position of Hastings Borough Council and that Members act immediately on the recommendations as outlined in this report.
Failure to do so will result in a worsening financial position and likely issuing of a Section 114 notice in the forthcoming months.
Supporting documents:
- MTFP Summary Update Report for Cabinet 05 September 2022 Revised, item 453. PDF 203 KB
- 2023-24 MTFP Update Report Appendix 1 Revised, item 453. PDF 608 KB
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