Decision details

Money Matters 2020/21 Position - Quarter 2

Decision Maker: Cabinet

Decision status: Recommendations Approved

Is Key decision?: No

Purpose:

This report provides an update to Cabinet on the county council's 2020/21 revenue and capital financial position, as at the end of September 2020, and an updated medium term financial strategy (MTFS) covering the period 2021/22 to 2023/24.

 

There is ongoing and unprecedented uncertainty in relation to future local government funding and the financial impact of the Covid-19 emergency has exacerbated the problem.

 

Accordingly, significant assumptions are required to underpin our forecasts. While these can be made with a level of confidence in the current year, over the medium term, with limited information, we rely heavily on advice from national bodies, benchmarking and discussion with peers.

 

Whilst a multi-year Spending Review was originally expected, the Chancellor and the Prime Minister have now decided to conduct a one-year Spending Review, setting department’s resource and capital budgets for 2021/22 only, in order to prioritise the response to Covid-19 and focus on supporting jobs. The exact date of the Spending Review has not been confirmed yet but will conclude in late November and this and the subsequent settlement may have a significant impact on the forecast gap in 2021/22 given the clear recognition now that financial pressures relating to Covid-19 will continue into 2021/22 and beyond.

 

Whilst the quarter 2 forecast presents a small underspend of £2.017m for the current financial year, there remains a level of uncertainty about the longer term impacts of the ongoing pandemic. There will certainly be ongoing impacts relating to the collection fund that force a pressure, currently estimated at £6.9m per annum, into the next three years.

 

The wider impacts on economic activity remain uncertain at present and as a result we have assumed no growth in our tax base and share of non-domestic rates for 2021/22 the effects of which impact significantly upon our MTFS.

 

Any latent impact on price or demand for our services also remains unclear.

 

The current MTFS indicates an aggregated funding gap of £78.791m by 2023/24, a small decrease of £0.515m from the previously reported position.

 

In summary:

 

(i)  The 2020/21 revenue forecast outturn is £842.834m, representing a projected underspend of £2.017m (0.24%) of the agreed budget.

 

(ii)  The MTFS has been updated for our current expectations of levels of funding, savings delivery, demand and inflation.

 

(iii)At Cabinet in September 2020 the MTFS showed a deficit of £79.306m in 2023/24. The forecast now indicates a financial deficit of £78.791m by 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 £151.241m of uncommitted transitional reserve at the end of the financial year. This is sufficient to meet the forecast gap for financial years 2021/22 and 2022/23 only.

Decision:

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

Date of decision: 05/11/2020

Effective from: 11/11/2020