Agenda item

As detailed in the recommendations.

The Leader of the Council and Cabinet Member for Finance introduced the updated Medium Term Financial Plan (MTFP) 2014/15 to 2018/19 and sought endorsement on the proposed approach for future development and reporting.

The Chief Executive explained that the Medium Term Financial Strategy (MTFS) and the MTFP were critical aspects of the Council’s overall governance arrangements.

Updates to the MTFP had been presented to Members with the budget reports for 2012/13 and 2013/14 with the most recent update provided in the 2013/14 budget report to County Council on 1 March 2013.

The publication of the new Improvement Plan with refreshed Improvement Priorities provided an important opportunity to ensure that the financial strategy was focused on enabling resources to be aligned in order to achieve them.

This was the first of two revisions of the published MTFP within 2013/14.  The aims of the first revision were:

·        To present an updated forecast of the impacts of the changing and worsening national fiscal position, and inflationary trends, on the core resources available to the Council to meet its priorities and maintain its services

·        To present a first forecast of the investment needed to support the priorities of the Council

·        To present, by combining the above, the updated revenue ‘gap’ to be bridged by organisational change, efficiencies and choices between services

The second revision of the MTFP would be published by October 2013.

The Welsh Local Government Association (WLGA) had set out three potential scenarios for the immediate future of local government funding in Wales.  However, recent communications from Welsh Government (WG) had confirmed that the indicative allocations set for 2014/15 could no longer be relied upon for financial planning.  Therefore, a fourth scenario with a greater reduction was being worked on.  The position on funding for 2014/15 and beyond would become clearer following the Chancellors Spending Round announcement due on 26 June 2013 and as the WG’s response emerged in budget planning discussions. 

The Head of Finance explained that, whilst the scale of probable reductions for 2014/15 was not yet known, as an illustration, a 1% reduction in the funding received in 2013/14 would add £1m to the projected gap for 2014/15.

On the newly published Improvement Plan, resources were in place to deliver the priorities for 2013/14.  Some of the resources were met from within the base budget but there had been specific and positive investment in the 2013/14 budget as reported to County Council on 1 March 2013.

The MTFP was an ever evolving forecast of the Council’s financial position, which was continually updated to take in and / or refine latest forecasts of funding, investment needs and the opportunities to be gained from efficiency of saving measures.

At this stage, there was an estimated shortfall in funding of £8.5m for 2014/15 rising to £28.5m over the 5 year period 2014/15 to 2018/19.  This forecast was based on the most recent information available and the key assumptions which were detailed in the appendix to the report. 

The Head of Finance explained that the following could change the headline overview:

·        Ongoing revision to the forecasts and key assumptions

·        Clarity about the level of WG funding

·        Clarity from WG on future expectations around the protection of Schools, Social Care or other budget areas

·        Local policy decisions, the two most significant being Single Status and School Funding Formula Review

Whilst there were a number of variables, using broad assumptions, there was potential for the gap to increase to over £10m for 2014/15 and £40m over the five year period.

As the programme of legislation of the National Assembly for Wales developed, local government would continue to be given new responsibilities and those responsibilities would need to be planned for.

In conclusion, the Chief Executive said that the development and broadening of the Council’s programme for organisational modernisation and change would be central to the Council’s protection of key services, the achievement of its priorities and its very survival as a competent unit of local government.

RESOLVED:

(a)       That the Medium Term Financial Plan 2014/15 to 2018/19 be noted;

(b)       That the approach to be adopted for ongoing development and reporting be supported; and

(c)        That the Medium Term Financial Plan 2014/15 to 2018/19 be referred to Corporate Resources Overview and  Scrutiny Committee on 11 July 2013 for consideration and to receive verbal feedback at the Cabinet meeting on 16 July 2013 so that feedback can be received prior to the summer recess.