To consider a report by County Councillor Aled Davies, Portfolio Holder for Finance, Countryside and Transport.
Minutes:
Cabinet considered the draft Medium Term Financial Strategy 2020-2025, draft Budget 2020-21 and draft Capital Programme 2020-2030. (Copy filed with signed minutes).
The Portfolio Holder for Finance set out the Cabinet’s approach to developing the budget. The Council continues to face significant challenges arising from increasing demands, and rising costs, meeting these pressures has to be balanced by prioritising resources and reducing the cost of delivery, whilst considering the impact on residents and affordability for Council Tax payers.
He explained that over the last 12 months the Cabinet and Executive Management Team (EMT) had placed a greater focus on longer term financial, service and workforce planning to help provide sustainable solutions to these challenges. The Medium Term Financial Strategy (MTFS) had been aligned with the Council’s corporate priorities identifying the resources required to deliver them.
The MTFS provided a set of clear principles which would drive the Council’s budget and spending decisions over 2020-25 which Members and others could judge the Council’s financial performance against. The MTFS incorporated
• principles that will govern the strategy and a five-year Financial Resource Model (FRM), comprising detailed proposals for 2020-21 and outline proposals for 2021-22 to 2024-25.
• The Capital Financing Strategy and the Treasury Management Strategy; and
• The Capital Programme for 2020-21 to 2029-30 which totalled £532 million.
The budget setting process had been informed by the consultation exercise, with almost 600 people completing the budget simulator. The Portfolio Holder noted that services continued to perform well with Powys ranking 5th in Wales in terms of overall performance using Public Accountability Measures.
The Portfolio Holder for Finance acknowledged the additional funding received from Welsh Government. The 2020-21 provisional settlement gave Powys a cash increase of £9.5 million (5.4%) on 2019-20 which when adjusted for transfers into the formula of specific grants (schools’ pay and pensions £2.06 million, and Funded Nursing Care £99,000) becomes 4.2% for Powys against the Welsh average of 4.3%. Overall Powys was ranked 14th of 22 councils in terms of its increase which represented a significant improvement compared to previous years, considerable lobbying has taken place to raise the issues facing rural authorities and this has been supported with the evidence provided through the Rural Cost Analysis.
The Council has also secured £900,000 additional funding from Welsh Government to support digital transformation.
The Portfolio Holder set out the details of the draft budget for 2020-21, which includes £6.6 million for the Education Service and Schools; £5.68 million to realign the Children’s Service base budget; and £500,000 new growth in roads’ maintenance. Cost reductions of £10.79 million are also proposed and Impact Assessments are provided for these.
The Council’s proposed budget will be financed in part through the generation of income and the updated fees and charges register forms part of the budget documentation. The remaining net budget is financed through the Welsh Government settlement and Council Tax income which is proposed to be increased by 5%. In proposing this increase, the Portfolio Holder stressed that Cabinet have had to balance affordability for Powys residents with the ongoing need to meet increasing demand and inescapable cost pressures on vital local services.
The council’s forward financial projections identify a further budget gap between 2021 and 2025 of £49 million, this is based on the worst case scenario. Officers are developing cost reduction proposals to bridge this gap and so far have identified a potential £16 million of proposals that are still in development, leaving a further £32.8 million still to identify.
The draft Capital and Treasury Management Strategy which includes the Minimum Revenue Provision Policy Statement and Annual Investment Statement is also proposed. This provides a high-level, long-term overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services, whilst considering the risks how these will be managed and the implications for future financial sustainability. The strategy is supported by the draft Capital Programme for 2020-30 totalling £532 million. The document also includes a draft Treasury Management Strategy which sets out how the Council will ensure that it has enough funding available to fund its revenue and capital requirements and an appropriate strategy for borrowing and investing for the financial year 2020-21.
RECOMMENDED to Council to approve the: |
Reason for recommendation:
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1. MTFS for 2020-2025 as set out in Appendix A to the report be agreed in principle.
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To aid business planning and development of the budget over a three-year period |
2. Draft Revenue Budget for 2020-2021 with the inclusion of a 5% increase in Council Tax shown in the Financial Resource Model in Appendix B and Table 2 of this report. |
Statutory Requirement |
3. Fees and Charges Register in Appendices D and E. |
To comply with Powys County Council Income Policy |
4. Capital Strategy and Capital Programme for 2020-30 shown in Appendix F. |
Statutory Requirement |
5. Minimum Revenue Provision Statement as set out on Appendix F. |
Statutory Requirement |
6. Treasury Management Strategy and the Annual Investment Strategy in Appendix F. |
Statutory Requirement |
7. Authorised borrowing limit for 2020-21 as required under section 3(1) of the Local Government Act 2003 at £429 million as set out in section 3.58 of this report. |
Statutory Requirement |
8. Prudential Indicators for 2020-21 as set out in section 3.54 to 3.61 of the report and Appendix F. |
Statutory Requirement |
Supporting documents: