Decision details

Money Matters 2019/20 Position - Quarter 3

Decision Maker: Cabinet

Decision status: Recommendations Approved

Is Key decision?: No

Purpose:

This report provides an update to Cabinet on the county council's 2019/20 revenue and capital financial position, proposed 3 year capital delivery plan as at the end of December 2019, an updated medium term financial strategy (MTFS) covering the period 2020/21 to 2023/24, and a proposed capital strategy. 

 

There is currently an unprecedented amount of uncertainty relating to future funding across local government. Accordingly significant assumptions are required to underpin our forecasts. While these can be made with reasonable confidence in the current year, over the medium term, with limited information, we rely heavily on advice from national bodies and discussion with peers. A number of funding scenarios were assessed in Quarter 2 and the most likely scenario selected remains appropriate and is the basis for this forecast.

 

The provisional local government finance settlement for 2020/21, announced on the 20 December 2019, was largely in line with the technical consultation that was published in October. It announced the continuation of the revenue support grant and significant additional funding for social care. Based on this position there is not expected to be any requirement for reserves in setting the 2020/21 revenue budget along with £4.045m being available to support the ongoing Improvement Journey work that is currently underway.

 

The settlement is for one year only and the figures are expected to be confirmed in late January/early February 2020 within the final settlement announcement. The 2020/21 announcement is the first and only year of the Spending Round 2019, with future years’ announcements dependent on a number of factors, including: spending review 2020, the outcome of the fair funding review, the business rates retention reset, the move to 75% business rates retention and any reform of the new homes bonus scheme. 

 

Whilst we expect to deliver a budget in 2020/21 without recourse to reserves, forecasting based on the most likely funding scenario indicates a future funding gap of £33.312m by 2023/24. This is due primarily to increased pay costs and service demand pressures. Work continues to build on last years' service challenge work to deliver further efficiencies and close the funding gap. Further reports will follow as firm costed proposals become available.

 

In summary:

 

(i)  The 2019/20 revenue forecast outturn is £788.767m, representing a projected underspend of £13.508m (1.68%) of the agreed budget.

 

(ii)  The MTFS has been updated for our current expectations of increased demand and volume. The revised forecast position has deteriorated slightly in the light of our expectations of future funding levels, the impact of a higher than expected National Living Wage increase on the cost of our commissioned adult social care and an updated forecast on pay and pensions following the completion of the latest triennial pension scheme valuation.

 

(iii)At Quarter 2 the MTFS showed a deficit £28.438m to 2023/24 and our most likely scenario now indicates a financial deficit of £33.312m in 2023/24.

 

(iv)The council is forecast to hold a General Reserve against unforeseen issues of £23.437m representing circa 3% of net budget, which is unchanged from the previously reported position. 

 

(v)  The council is forecast to hold £147.989m of uncommitted transitional reserve at the end of the financial year. This is sufficient to meet the forecast gap beyond the end of the current MTFS period.

 

 

Decision:

The Cabinet approved the recommendation(s) as set out in the report.

 

Date of decision: 06/02/2020

Effective from: 12/02/2020