Decision details

Money Matters 2019/20 Position – Quarter 2

Decision Maker: Cabinet

Decision status: Recommendations Approved

Is Key decision?: No


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


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 and the most likely scenario selected as the basis for this forecast.


The provisional local government finance settlement for 2020/21 announced on the 20th December, 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 adult social care. As a result a balanced financial position without recourse to reserves is expected in 2020/21.


The settlement is for one year only and the figures are expected to be confirmed in late January 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. 


Given the uncertainty regarding the future funding for local government, we have modelled a number of scenarios to reflect a range of possible funding measures. Whilst we expect to deliver a balanced budget in 2020/21 without recourse to reserves and after a contribution of £800,000 from revenue to organisational development work, commencing in January 2020. Forecasting based on the most likely funding scenario indicates a significantly reduced future funding gap of £28.438m by 2023/24. This compares favourably with the funding gap reported at Q1 of £64.755m. 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 £790.140m, representing a projected underspend of £12.135m (1.51%) of the agreed budget.


(ii)  The MTFS has been updated and revised and the forecast position has improved significantly in the light of our expectations of future funding levels. At Q1 the MTFS showed a deficit £64.755m to 2022/23 and our most likely scenario now indicates a financial deficit of £28.438m in 2023/24.


(iii)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. 


(iv)The Council is forecast to hold £150.358m of uncommitted transitional reserve which is sufficient to meet the forecast gap beyond the end of the current MTFS period.



The Cabinet approved the recommendation(s) as set out in the report and included the following additional recommendation:


vi.  Thanked the Chief Executive and Director of Resources; the Director of Finance and his staff; and all staff for their hard work in achieving the improvement in the county council's financial position and the forecast reduced future funding gap.



Date of decision: 16/01/2020

Effective from: 22/01/2020