Agenda item

Purpose of Report

To consider recommending the Medium-Term Financial Strategy for the period 2023-2028 and the budget for 2023/24 to the Council for approval.

To consider recommending the Capital Strategy 2023-2028 to the Council for approval.

Decision

That the Council be recommended to approve the Medium Term Financial Strategy 2023-2028, and the Capital Strategy 2023-2028, which included the following specific elements:

• a proposed council tax Increase of 2.91% for 2023/24;
• a proposed housing rent increase of 6.5% for 2023/24;
• the Council being a member of the Lincolnshire Business Rates Pool in 2023/24;
• the General Fund Revenue Forecast 2023/24-2027/28, 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 2023/24-2027/28, 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 2023/24-2027/28, 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 2023/24-2027/28, as shown in Appendix 4, and the main basis on which the programme had been calculated (as set out in paragraph 7).

Alternative Options Considered and Rejected

None.

Reasons for the Decision

Much had changed since the Council approved the previous MTFS in March 2022, with spiralling inflation, soaring energy prices and national pay agreements all adding significant cost pressures to budgets. These were in the main caused by national issues, which were beyond the Council’s control and were impacting all Councils.

In addition, the Council was facing growing demands for some of its key services as those more vulnerable in the city, a client group that was impacted the hardest during Covid19, looked to the council for support as the cost-of-living crisis hit household incomes.

Alongside these cost and demand pressures, there still remained uncertainty around the level of funding for local government beyond the current Spending Review period and the implementation of the planned national funding reforms. These reforms had the ability to fundamentally alter the course of the MTFS. Although it had now been confirmed that these fundamental reforms would not be implemented until 2025/26 at the earliest, and the Autumn Statement announced some much-needed additional funding for local authorities for the next two years (providing some limited and short-term stability), there could be no certainty beyond 2024/25. This was further compounded by the risk of a new round of public expenditure austerity measures. The funding outlook for local authorities therefore remained volatile and uncertain.

As a result of these factors, the financial landscape for local government continued to pose an unprecedented challenge to the Council and this MTFS was set in the context of significant and inherent uncertainty. It was a long time since the Council had any medium-term certainty during budget setting which made financial planning in this climate extremely challenging.

The Council would continue to build on its successful financial planning to date, driving down the net cost of services (by changing the way in which it delivered services, but inevitably through reductions in the range and scale of services it could continue to deliver), whilst continuing to prioritise investment in the City and its economy. Adopting this approach would ensure that the Council carefully balanced the allocation of resources to its Vision and Strategic Priorities, whilst ensuring it maintained a sustainable financial position and delivered the required reductions in its net cost base.

Prior to submission of the MTFS 2023-2028 and budget to the Executive and Full Council, public consultation and member scrutiny had been undertaken.