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Agenda item
Medium Term Financial Strategy (MTFS)
(Kit Wheeler, Chief Finance Officer & Section 151 Officer)
(Cabinet Decision)
Decision:
1) Approve the Medium Term Financial Strategy.
2) The Council continues to take a proactive and robust approach to delaying or ceasing all Capital programme expenditure not deemed to be of a legal or statutory responsibility or can demonstrate a clear reduction of revenue expenditure.
3) The Council continues to evaluate the current asset portfolio and identify any suitable potential disposal options to generate additional Capital receipts to alleviate financial burdens around borrowing costs for the current Capital programme.
4) The Council reviews its new Council wide financial restrictions, (brought in from October 2023) for its effectiveness, financial results, and organisational impact.
5) Service cost areas are reduced in the current and future financial years, to provide the necessary savings to balance the budget, with a pre-Section 114 approach.
6) The Council continues to focus on reducing the temporary housing expenditure, with the requirement of producing a Housing and Homelessness strategy outlining how those costs are to be reduced before 2025/26.
7) The Council commits to implementing and co-ordinating its individual strategies to align with one single long term overall Corporate Plan. This includes Green Initiatives, Housing and Homelessness, Cultural Regeneration, IT, HR (including Equalities), Capital Financing and Asset Management.
8) Full Council to note the actions to address the Budget deficit and if no conclusive savings identified, that the issue of a Section 114 notice will take place in 2024/25.
Minutes:
The Chief Finance Officer presented a report outlining the Medium Term Financial Strategy (MTFS).
Section 151 Officers across the country have asked government for a multi-year settlement. That hasn’t been forthcoming so officers have to make a forecast as best they can. The current forecast is not positive, the Council has a large deficit to address which is forecast to continue.
Officers will be bringing forward savings, and management controls on spending have already been implemented. These will be in place until the end of the financial year and then reviewed.
Councillor Barnett proposed approval of the recommendations, seconded by Councillor Roark.
RESOLVED (unanimously):
1) Approve the Medium Term Financial Strategy.
2) The Council continues to take a proactive and robust approach to delaying or ceasing all Capital programme expenditure not deemed to be of a legal or statutory responsibility or can demonstrate a clear reduction of revenue expenditure.
3) The Council continues to evaluate the current asset portfolio and identify any suitable potential disposal options to generate additional Capital receipts to alleviate financial burdens around borrowing costs for the current Capital programme.
4) The Council reviews its new Council wide financial restrictions, (brought in from October 2023) for its effectiveness, financial results, and organisational impact.
5) Service cost areas are reduced in the current and future financial years, to provide the necessary savings to balance the budget, with a pre-Section 114 approach.
6) The Council continues to focus on reducing the temporary housing expenditure, with the requirement of producing a Housing and Homelessness strategy outlining how those costs are to be reduced before 2025/26.
7) The Council commits to implementing and co-ordinating its individual strategies to align with one single long term overall Corporate Plan. This includes Green Initiatives, Housing and Homelessness, Cultural Regeneration, IT, HR (including Equalities), Capital Financing and Asset Management.
8) Full Council to note the actions to address the Budget deficit and if no conclusive savings identified, that the issue of a Section 114 notice will take place in 2024/25.
Reasons:
Hastings Borough Council, like many other councils, is continuing to face 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 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.
In a previous Medium Term Financial Strategy update report to Cabinet back in September 2022, and then reinforced as part of the Budget report agreed by Council in February 2023, it highlighted the need for the council to reduce its direct service expenditure, in particular, the escalating temporary accommodation costs for homelessness.
As outlined as part of the regular financial monitoring reports which include a MTFS update appendix, those same temporary housing costs, (as well as some unavoidable additional costs elsewhere) have worsened the financial position rather than improve it.
This has resulted in further additional savings needing to be identified in order to balance the budget in the current and future financial years and the Council has brought in additional financial restrictions across the organisation from October 2023.
Supporting documents:
- MTFS 2024-25 - 2026-27 v1.1, item 15. PDF 142 KB
- Appendix 1 - MTFS 2024-25 - 2026-27 v1.1, item 15. PDF 2 MB
- Appendix 2 - S114 Notice Information, item 15. PDF 56 KB
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