Issue - meetings

To consider a report from the Strategic Director of Finance and Customer Services which sets out a review and update of the Council’s Medium Term Financial Strategy to 2025/26.

Recommendations

1.    That the MTFS update be noted.

2.    That Cabinet note the potential requirement to use reserves in order to balance the Council’s outturn position for 2023/24.

The Chair invited the Cabinet Member for Finance, Customer Services and Community Safety to introduce a report and provide an update of the Council’s Budget and Medium-Term Financial Strategy (MTFS) to 2025/26. The MTFS would be revised further in advance of the Council Budget setting meeting in February 2024, to take account of the Local Government Finance Settlement for 2024/25, when issued, along with budget policy proposals on levels of Council Tax and fees and charges and any budget savings or investments.

This position may be subject to variation should Government announce changes to the funding of local authorities or if inflation assumptions change significantly.

The MTFS review, alongside the latest Financial Monitoring 2023/24 report to Cabinet in November, envisaged a financial overspend of £4.2m for 2023/24 that would require the use of the Council’s reserves to achieve a balanced financial outturn position for 2023/24.

The current MTFS forecasts identified that the Council was able to provide a balanced budget for 2024/25 but faced a significant financial challenge in setting a balanced budget for 2025/26. Therefore, it was expected that additional use of reserves will be required for 2023/24 and likely for 2025/26. This position was subject to review when the Finance Settlement for 2024/25 was received.

Nationally, the financial environment presented a very challenging position with a number of local authorities declaring S114 notices, stating that a balanced budget may not be achieved for those Councils issuing the notice. It was noted that in comparison Rotherham’s budget position was more robust.

The Chair invited the Strategic Director for Finance and Customer Services and the Assistant Director for Finance to give a brief presentation.

It was outlined that the report provided a technical update and was based on the MTFS as approved by Council in March 2023. It had been updated to reflect changing assumptions around inflation, pay and other pressures. It was noted that a similar update was provided to the Board at this stage last year which Members had found helpful.

It was noted that announcements made by Government on the 22 November 2023 or within the subsequent Finance Settlement for 2024/25 may add further financial pressures to the Council’s MTFS position, either through Government not inflating public sector resources as assumed or through other cuts to public sector funding.

The presentation outlined saving proposals agreed for 2023-2024 and 2024-2025. It was noted that progress was being made on the delivery on the identified savings proposals for the current financial year.

Directorates were working on recovery plans to mitigate the financial overspend for 2023/24 to minimise the use of reserves. Within the current forecast overspend, the Directorates had a forecast overspend of £9.2m but reduced to £4.2 million because of budget contingencies. This was largely due to the following overall issues:

·       Placement pressures within Children and Young People’s Services and Adult Social Care.

·       Home to School Transport pressures within Regeneration and Environment and Children and Young People’s Services.

·       Pressures relating to the longer-term recovery from Covid-19 on income  ...  view the full minutes text for item 66