Setting the 2021/22 Budget and the Medium Term Financial Strategy 2021/22 – 2025/26
Purpose of Report
To update the Executive on the latest Medium Term Financial Strategy position for the Council, including the challenges in preparing for the 2021/22 and future years budget, setting out the parameters within which the Council would prepare these budgets and confirm the Council’s approach to development of the budget and Medium Term Financial Strategy.
That the Executive:
(1) Notes the significant financial challenges and risks that the Council faces, primarily as a result of the Covid 19 pandemic.
(2) Notes the projected budget parameters for 2021/22 and future years and the planning assumptions set out at Appendix A of the report.
(3) Notes the level of projected budget shortfalls forecasted for the General Fund from 2021/22.
(4) Notes the budget, strategic and service planning preparation programme, as set out in Appendix B of the report.
Alternative Options Considered and Rejected
Reason for Decision
The Council’s Vision 2025 and five strategic priorities drove the medium-term financial planning process, with changes in resource allocation determined in accordance with policies and priorities. The Medium Term Financial Strategy provided the framework for the development of annual budgets in line with the aims of the Council’s strategy and priorities.
In March 2020, Council agreed the budget for 2020/21 and Medium Term Financial Strategy 2020-2025, which recognised that there was a funding gap forecast in 2020/21 and across the remaining years of the Strategy. This was refreshed annually and rolled forward one year.
The refreshed Medium Term Financial Strategy would include financial projections for the five-year financial planning period through to 2025/26. It would set out the financial parameters within which the Council was required to work and the recommended approach to addressing the financial challenges the Council faced to develop a balanced, sustainable budget and set at Council Tax for 2021/22.
The refresh of the Medium Term Financial Strategy needed to be seen in the context of significant inherent uncertainty for the Council against the backdrop of the long term, and in many cases unknown, impact of the Covid 19 pandemic on income and expenditure assumptions, together with a lack of any form of clarity on the funding settlement from Government.
The Covid 19 pandemic was having immediate effects on the Council’s budgets as a result of increases in spending on local services and plummeting income from sales, fees and charges and commercial activities. However, there would be longer term implications for the Council to consider such as reductions in council tax and business rates revenues collected this year, which would feed through to budgets over the next three years. Additionally, some Covid 19 related spending pressures and reductions in revenues were likely to persist and could potentially grow in some cases.
It had also been confirmed that the UK had fallen into recession, the impact of which was likely to be exacerbated as the furlough scheme and eviction protections were unwound by Government. This inevitably created an ongoing uncertainty over the future levels of Government funding for local authorities ... view the full minutes text for item 43