Agenda item

    Medium Term Financial Strategy (Revenue and Capital) 2018-23 (MTFS)


    The Committee received a report on the Medium Term Financial Strategy (MTFS) for the period 2018-23.  It was reported that there was a statutory duty to set a balanced budget and to calculate the level of Council Tax for the district.  It was also reported that the Chief Finance Officer (Head of Finance & Procurement) had a duty to ensure all figures provided for estimating and financial planning were robust and stand up to Audit scrutiny.


    The Committee received a presentation from the Head of Finance & Procurement and he began by reporting to Members that the provisional Local Government Finance Settlement for 2019/20 had been received and with the elements of the removal of the negative revenue support grant, additional New Homes Bonus, the successful application for a Business Rates pilot and additional grants, the budget would be balanced for 19/20 with a small transfer to General Reserves.  It was reported that in terms of risk and uncertainty, both 18/19 and 19/20 were assessed as low but 2020/21 to 2022/23 were assessed as high because the Government was undertaking in 2020/21 major reviews of income streams related to Business Rates, Fair Funding and New Homes Bonus.


    The Budget consultation was discussed and it was reported that there had been 340 responses received which was over double the amount from the 2017 consultation.  It was reported that there was a legal duty to consult annually on the Council’s Medium Term Financial Strategy and Officers were still considering the most appropriate means to engage with Council Taxpayers.  The Committee felt that it was a high level of response for a consultation and it was asked what value had been put on the responses received.  It was reported that the percentage response rate for the district was 0.75% of the number of Council taxpayers and although taken into account, the consultation findings were not the only strand of evidence used when formulating the MTFS.  The Committee felt that although the response rate was deemed low, it was high for a local level consultation and showed consistent themes when considered against other consultations


    Post 2020 scenarios were given regarding Business Rates and New Homes Bonus and it was noted that NHB had been gradually removed from the base budget to be prepared for the risk of its reform or it ceasing.  It was also reported that it had been assumed in financial modelling projections that Council Tax would be increased by the maximum amount allowable without a referendum each year.


    The Capital Strategy was reported and it was noted that capital expenditure had slipped due because more time was needed to launch the Property Investment Strategy and, in particular to ensure there was sufficient capacity, appropriate expertise and firm governance arrangements being established.  It was then reported that there could be an opportunity to borrow some of the required funds internally.  It was reported that this would be a lower cost option, reduce investment risk because there would be lower investment levels and would allow in the event of ‘windfall’ income early repayment without penalties.  It was noted that a second opinion for this option would be sought from the Treasury Management Advisors Arlingclose.  The Committee were in agreement with this idea and wished to limit the exposure to external borrowing and the associated risks.  There was some concern regarding proceeding with strategy in the current climate and it was reported that there had been and continued research undertaken to monitor property prices and due diligence would be carried out.  It was also reported that different sectors would be considered and this diversity in the portfolio would be used to manage risk.


    Continuing the discussion regarding the Capital Strategy, it was raised that there was still an inequity across the district.  It was reported that a meeting with Burntwood members and the Leader and Deputy Leader of the Council had taken place however there did not seem to be no evidence of extra investment in Burntwood from the Council.  Some frustration was expressed that there would still be funding for the Garrick Theatre and for enabling works at the Birmingham Road Site (BRS).  It was reported that projects for the Burntwood area would be forthcoming in the future.


    BRS was considered further and it was reported that funding for the enabling works would be funded from the earmarked reserve that were still in place following the decision not to fund the Friarsgate Scheme.  These reserves had been put in place to cover any short term revenue implications during construction such as loss of car parking and therefore because this risk no longer existed they were available to fund these works.  When asked, it was confirmed that no long term budgets had been allocated to the project as it was unknown what the scheme could look like or how it would be delivered until the masterplanning stage had been completed however this would be updated as soon as practicable. 


    The Committee thanked the Finance and Procurement Team for all their hard work and believed that it was a difficult environment for Officers to plan in with all the uncertainties.


    RESOLVED:   1)       That the 2019/20 Revenue Budget, including the Amount to be met from Government Grants and Local Taxpayers of £11,371,400 and proposed level of Council Tax (the District element) for 2019/20 of £175.07 (an increase of £5.08 or 2.99%) for Band D equivalent property be noted;


                            2)         That the MTFS 2018-23 Revenue Budgets be noted;


    3)         That the MTFS 2018-23 Capital Strategy and Capital Programme be noted;


    4)         That the requirements and duties that the Local Government Act 2003 places on the Authority on how it sets and monitors its Budgets, including the Chief Finance Officer’s report on the robustness of the Budget and adequacy of Reserves be noted.


    Supporting documents:


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