Issue - meetings

Purpose of Report

To inform the Executive of the likely challenges ahead in preparing for the 2020/21 and future years budget, to set out parameters within which the Council would prepare these budgets and to confirm the Council’s approach to development of the budget and Medium Term Financial Strategy.

Decision

That the Executive:

(1)       Notes the significant financial challenges that the Council faces.

(2)       Notes the projected budget parameters for 2020/21 and future years and notes the planning assumptions as set out in Appendix A.

(3)       Notes the budget, strategic and service planning preparation programme, as set out in Appendix B.

Alternation Options Considered and Rejected

None.

Reason for Decision

The financial landscape for local government over the medium term period posed significant challenge to the Council due to the volatility, complexity and uncertainty about future funding. Significant national reforms about future departmental spending through the spending review, the allocation of this funding to local government through the Fair Funding Review and the implementation of the 75% business rates scheme, all of which would affect the Council’s Medium Term Financial Strategy, had been delayed beyond 2020/21. In addition, the impact of Brexit and the consequent impact on the economic and political landscapes posed significant uncertainty for central and local government.

The Council continued to face budget pressures due to changes in use and demand for services as well as escalating costs. It was these escalating pressures which, if they could not be mitigated against or contained within existing budgets, may require an increase in the level of savings in the medium term to be delivered through the Towards Financial Sustainability Programme.

In the short term, and as a direct result of the delay in national reforms, the Council was likely to have a one off gain in budgeted resources as it had previously assumed that the full negative impact of the changes in funding levels and mechanisms would impact in 2020/21. These had now been deferred until 2021/22.

Although the potential of further increases in the level of the Council’s funding gap would require further reductions in expenditure and/or an increase in income, this was not unprecedented and the Council should have some confidence that it had a track record of delivering strong financial discipline and that it could continue to rise to the challenge.

The successful financial planning to date had enabled the protection of core services for the people of Lincoln, whilst at the same time allowing for significant investment in the city, and its economy, and delivery of the Council’s Vision 2020. The Council would continue to adopt this approach, carefully balancing the allocation of resources to its strategic priorities, through its emerging Vision 2025, whilst ensuring it maintains a sustainable financial position.