Agenda item

Purpose of Report

To consider the draft Medium-Term Financial Strategy for the period 2024?2029; the draft budget and council tax proposal for 2024-25; and the draft Capital Strategy 2024-2029.

Decision

(1)         That the Draft Medium Term Financial Strategy 2024?2029, and the Draft Capital Strategy 2024-2029 be approved for consultation and scrutiny.

(2)         That it be noted that the Draft Medium Term Financial Strategy 2024?2029, and the Draft Capital Strategy 2024-2029 included the following specific elements:

(a)         a proposed council tax Increase of 2.9% for 2024/25;

(b)         a proposed housing rent increase of 7.7% for 2024/25;

(c)          the Council’s membership of the Lincolnshire Business Rates Pool in 2024/25;

(d)         the draft General Fund Revenue Forecast 2024/25 - 2028/29, detailed in Appendix 1 of the report, and the main basis on which this budget had been calculated, as set out in section 4 of the report;

(e)         the draft Housing Revenue Account Forecast 2024/25 -2028/29, detailed in Appendix 2 of the report, and the main basis on which this budget had been calculated, as set out in section 5 of the report;

(f)           the draft General Investment Programme 2024/25 - 2028/29, detailed in Appendix 3 of the report, and the main basis on which the programme had been calculated, as set out in section 6 of the report;

(g)         the Draft Housing Investment Programme 2024/25- 2028/29, as detailed in Appendix 4 of the report, and the main basis on which the programme has been calculated, as set out in section 7 of the report; and

(3)         That the Chief Finance Officer be delegated authority to approve the final Business Rates Base for the financial year commencing on 1 April 2024 and ending 31 March 2025 and submission of the base (via the NNDR1 return) to the Department of Levelling Up, Communities and Housing by 31 January 2024, with changes to the base estimated in the Draft Medium Term Financial Strategy 2024/29 being reported to the Executive as part of the Final MTFS 2024-29 on 19 February 2024.

Alternative Options Considered and Rejected

As detailed throughout the report.

Reasons for the Decision

The refresh of the MTFS needed to be seen in the context of significant financial uncertainty for the Council. Exceptional economic factors such as; the impact of inflation on the Council’s pay bill and the cost of goods and services it purchased; rising interest rates which increased the cost of borrowing; increased costs of construction impacting on capital schemes; and reductions in service income and collection rates, continued to add considerable cost pressures to the Council’s budgets.

In addition, the Council faced growing demands for some of its key services as those more vulnerable in the city looked to the council for support as the cost-of-living crisis continued to impact on household incomes. The imbalance between housing supply and demand and the reliance on temporary accommodation to provide the necessary support, were of particular challenge to the Council.

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 been confirmed that these fundamental reforms would not be implemented in 2024/25, and there was a high likelihood that this would be the case in 2025/26 as well, all this did was shift the financial challenges to later in the MTFS period. This was further compounded by the risk of a new round of public expenditure austerity measures. The funding outlook for local authorities therefore remained uncertain.

As a result of these factors, the financial landscape for local government continued to pose a challenge to the Council and was set in the context of this significant, 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.

Set against this backdrop and in line with the Council’s overall financial objectives, the key elements of the 2024/25 budget, Medium-Term Financial Strategy 2024-29 and Capital Strategy were detailed at paragraphs 2.5-2.6 of the officer’s report.

The Council would continue to build on its successful financial planning to date, driving down the net cost of services by implementing a range of transformational changes in the way in which it operated and delivered services, while continuing to prioritise investment in the City and its economy to grow future tax bases. 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 2024-2029 and budget and council tax proposal for 2024/25 to Full Council, on 27 February 2024, this initial draft would be subject to public consultation and member scrutiny.