Agenda Item No. 6
THE VALE OF GLAMORGAN COUNCIL
CORPORATE PERFORMANCE AND RESOURCES SCRUTINY COMMITTEE: 20TH SEPTEMBER, 2018
REFERENCE FROM CABINET: 17TH SEPTEMBER, 2018
“C411 MEDIUM TERM FINANCIAL PLAN 2018/19 TO 2021/22 (L) (SCRUTINY - CORPORATE PERFORMANCE AND RESOURCES) -
The draft Medium Term Financial Plan 2018/19 to 2021/22 was attached at Appendix 1 to the Leader’s report for Cabinet’s consideration and approval.
The Leader advised that the purpose of the Medium Term Financial Plan was to:
- link the Council’s strategic planning process with the budget process and to ensure consistency between them;
- Identify the main financial implications resulting from the increased pressure falling upon Council services, including pay and price inflation, legislative and demographic changes;
- Estimate the reduced financial resources that will be available to the Council to meet these demands; and
- Match the predicted expenditure and resources and provide a framework to develop a financial strategy towards achieving a balanced budget for the next 3 financial years.
The financial climate continued to be a difficult one for Local Authorities and the Council needed to plan for a range of challenging settlements over the coming years. In developing a three year plan, it had been necessary to make assumptions with regard to a number of key elements within the Council’s budget:
- As part of the final revenue settlement for 2018/19, Welsh Government provided an indicative figure of a 1% reduction for the potential change in funding for 2019/20. No further indications were provided after that year. Due to the considerable uncertainty and the continuation of austerity measures, it was considered prudent that a reduction of 1% was applied year on year for the period of the Plan.
- With regards to pay budget, a two year pay deal had now been agreed for 2018/19 and 2019/20 for staff on NJC terms and conditions. As part of the final budget proposals for 2018/19, an increase of 2% had been included, with a higher % being assumed for staff on scale point 19 and below. However, the new pay deal would result in more scale points receiving a higher than 2% pay award and this had increased the funding required. Increases at this level had also been included for 2020/21 and 2021/22.
- With regards to price inflation, it was proposed that in line with the budget setting process for 2018/19, a review of the Council’s contracts was undertaken and that inflation was only provided where it was a contractual commitment for large contracts.
- Some funding had been assumed for major cost pressures. These calculated at £5.7m over the life of the plan. These would be reviewed when the estimates were reviewed over the coming months.
- It had been assumed that the savings previously agreed would all be met.
- A possible increase in the Council Tax over this period of 2.5% which was in line with CPI, had been assumed.
All of the above assumptions would be reviewed through the annual budget setting process.
The Leader added that the Plan estimated that between 2018/2019 and 2020/2021 the Council would need to reduce its revenue budget by £15.7m, £3.6m of which had already been identified. The achievement of these savings would be extremely challenging, particularly as the Council had already identified savings in excess of £50m in the period 2010/2011 and 2018/2019.
In view of the shortfall identified across the 3 years, actions needed to be taken to prepare for future reductions in funding. It was proposed that once the 2019/20 indicative allocations were received from Welsh Government and as part of the budget setting process for 2019/20, the Budget Working Group would consider the options for funding the shortfall as outlined in the Plan and identify further savings targets for future years, while ensuring that the limited resources focus on priorities as outlined in the Corporate Plan. At that stage the assumptions made in the Plan would also need to be reviewed.
Finally, the Leader added that with regards to the capital position, the Medium Term Financial Plan had assumed a decrease in the capital grants from WG of 5% on year on year basis.
This was a matter for Executive decision.
(1) T H A T the contents of the draft Medium Term Financial Plan for 2018/19 to 2021/22 be endorsed.
(2) T H A T the Plan be referred to the Corporate Performance and Resources Scrutiny Committee for its consideration with any comments being referred to Cabinet for its consideration of the final budget proposals for 2019/20.
Reasons for decisions
(1) To facilitate the integration of medium term financial planning into the corporate planning and budget process.
(2) To consider comments of Scrutiny Committee.”
Attached as Appendix – Report to Cabinet: 17th September, 2018