Agenda item

Medium Term Financial Plan


Claire Hazeldene - Interim Executive Director (Finance & Customer Services), presented a report which provided an updated summary version of the Medium-Term Financial Plan 2020/21 – 2023/24, with a forecast of the longer term impact the Coronavirus pandemic has had on the financial position of the Authority.


The budget setting and medium term financial planning process provided the Council with the opportunity to plan its delivery of public services in accordance with local priorities.


The Medium Term Financial Plan (MTFP) which set out the Council’s finances over a four-year period, namely 2020/21 to 2023/24 had been formally approved in February 2020.


This resulted in a small surplus position of £17,840 on the General Fund by the end of 2023/24, with an overall contribution of £35,950 into reserves over the 4 year life of the plan.  


However, since the MTFP was approved, the Coronavirus pandemic has had, and is likely to continue to have an adverse impact on the Council’s financial position.  The financial impact was arising from additional expenditure in dealing with the crisis both externally and organisationally, lost income and savings targets that may not be met within the same timeframe due to resources being diverted elsewhere.


The 2020/21 projected outturn (as per the Quarter 1 financial report) currently forecast a £0.35 million deficit.  At the end of 2019/20, the Council established a Covid-19 earmarked reserve specifically to support with the financial impact of Covid-19 totalling £500,000 – which utilised part of the 2019/20 underspend generated.  Therefore part of this earmarked reserve could be drawn to cover the projected 2020/21 deficit


The current four year MTFP had been updated to reflect Covid-19 related pressures and updated economic forecasts in order to begin to understand the medium term financial impact. 


It was extremely difficult to forecast how long the recovery period would be and also what impact the economic recession would have.  The report detailed the assumptions that had been made at this point (as well as the risks), which would be continually under review as new information became available and the 2020/21 position developed


At this stage, the updated MTFP highlighted a required use of reserves over the 4 year period of £1.8million in order to balance.  Utilising the Covid-19 recovery earmarked reserve and re-designating the pensions earmarked reserve, would result in a required drawdown from contingency reserves of £883,220.


Consequently, at the end of year 4 of the plan (2023/24) there would be an estimated balance of £1.535million in General Fund Contingency reserves – £0.435 million above the required £1.1 million minimum required balance as set out by the Chief Finance Officer in the MTFP approved in February 2020.


The updated MTFP illustrated a requirement to draw from reserves in year 4 of the plan 4 (2023/24) whereas the position at February 2020 was a small surplus position at that stage.  At the next iteration of the MTFP, an additional year would be added to the plan to understand if the Council was back to a balanced budget position at that point.


If reserves were utilised as forecast to fund the deficit position, a plan would need to be put into place in to rebuild reserves over the longer term.


The next iteration of the MTFP was due towards the end of the calendar year and then again alongside the presentation and setting of the Budget 2021/22 in February 2021.


Members and the Chair thanked the officers involved for the comprehensive report.


Due to the current financial position of the Council, some members were of the opinion that the Council’s assets would start to deteriorate. The importance of benches and bus shelters being maintained to a high standard by the Council and not community groups was stressed. In particular, there was concern around value for money for the cleaning of the public conveniences and the cost of this service was requested. These figures would be provided after the meeting.  It was confirmed that the current facilities management arrangement was under review and options being considered included; a Council owned company arrangement, collaborative working with other authorities and the use of local businesses. The Panel would receive a report on this in the near future.


Discussion also took place around irrecoverable income loss of car parking fees. The Panel was advised that the loss of only certain income streams could be claimed for, and as the free car parking in August was a local decision, it would not be covered by this scheme.


DECIDED: That the Resources Overview & Scrutiny Panel NOTE the forecast updated MTFP position.

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