Decision details

Purpose of Report

To consider recommending the Medium-Term Financial Strategy for the period 2022-2027 and the budget for 2022/23 to the Council for approval.

To consider recommending the Capital Strategy 2022-2027 to the Council for approval.

Decision

That the Council be recommended to approve the Medium Term Financial Strategy 2022-2027, and the Capital Strategy 2022-2027, which included the following specific elements:

• a proposed council tax Increase of 1.89% for 2022/23;
• a proposed housing rent increase of 3.6% for 2022/23;
• the Council being a member of the Lincolnshire Business Rates Pool in 2022/23;
• the General Fund Revenue Forecast 2022/23-2026/27, as shown in Appendix 1 and the main basis on which this budget had been calculated (as set out in paragraph 4);
• the General Investment Programme 2022/23-2026/27, as shown in Appendix 2, and the main basis on which the programme had been calculated (as set out in paragraph 6).
• the Housing Revenue Account Forecast 2022/23-2026/27, as shown in Appendix 3 and the main basis on which this budget had been calculated (as set out in paragraph 5); and
• the Housing Investment Programme 2022/23-2026/27, as shown in Appendix 4, and the main basis on which the programme has been calculated (as set out in paragraph 7).

Alternative Options Considered and Rejected

None.

Reasons for the Decision

The financial landscape for local government had continued to pose an unprecedented challenge to the Council and was set in the context of significant, inherent, uncertainty with the ongoing impact of the Covid-19 pandemic on income and expenditure assumptions, and a lack of any form of clarity on future funding settlements from Government.  It was a long time since the Council had any medium-term certainty during budget setting, which had made financial planning in this climate extremely challenging.

The Covid-19 pandemic continued to provide budget pressures arising from demand for services, the availability of goods and services, escalating costs and ongoing and permanent reductions in income.  With rising inflation; labour shortages; and supply chains issues the level of uncertainty had never been so high.

There was no certainty whether and when each of the planned local government finance reforms would be implemented, which could alter the course of the Medium Term Financial Strategy.  Certainty would make a significant difference to the Council’s financial planning and the services it delivered.  The Council’s overriding financial strategy was, and would continue to be, to drive down its net cost base through the Towards Financial Sustainability Programme.

There still remained a current savings target of £1.5 million on the General Fund, which was significant, particularly in light of the revenue reductions of nearly £10 million over the last decade.  Considerable progress had already been made with over 50% of the savings target achieved.  In the longer term the Council was seeking to use its influence to create the conditions for the City’s economy to recover and grow, thus increasing tax bases and ensuring its financial sustainability.

However, due to the short term need to close the budget gap the Council would have to revert to more traditional cost cutting measures to deliver the reductions required, which would continue through 2022/23.

The Council would continue to protect the core services, whilst at the same time allowing for significant investment in the City, and its economy, and driving forward Vision 2025. Adopting this approach would ensure that it carefully balances the allocation of resources to its vision and strategic priorities, whilst ensuring it maintained a sustainable financial position.

Prior to compilation of the Medium Term Financial Strategy for 2022-2027, there had been public consultation and scrutiny.