Issue - meetings

Following on from the Contingency Revised Budget agreed at Full Council in August, a commitment was made to undertake an update to the Medium Term Financial Plan (MTFP) including a review of the longer-term effect of the pandemic on the Council’s future financial resilience, taking account of the wider economic conditions. It was agreed that this should be reported to Council no later than its December meeting.

Recommendation

It is recommended that the Executive, after considering comments from the Value for Money Overview & Scrutiny Committee, make the following recommendations to Council, to:

1.    Approve the updated forecast and assumptions in the latest Medium Term Financial Plan and request that a full review of the Plan is brought to Council in February 2021 alongside the draft 2021/21 Budget report; and

2.    Agree that capital receipts are applied to fund business transformation and efficiency projects as allowed under the statutory provisions.

The Executive RESOLVED to RECOMMEN that Council:

1.    Approve the updated forecast and assumptions in the latest Medium Term Financial Plan and request that a full review of the Plan is brought to Council in February 2021 alongside the draft 2021/21 Budget report; and

2.    Agree that capital receipts are applied to fund business transformation and efficiency projects as allowed under the statutory provisions.

Reason: The budget is a major decision for the Council and setting a balanced budget is a statutory requirement. As a result of the sudden and unexpected COVID-19 impact, the Council had to act quickly to take steps to address the significant projected net budget shortfall so that the Council can continue to function. A revised budget for 2020/21 was set in August and Council asked that the medium term financial projections are updated in December, ahead of the budget setting process in February 2021. The Medium Term Financial Plan projects future financial pressures and opportunities to enable the Council to take action to ensure sufficient funding is in place to deliver services.

This matter is recommended to Full Council for decision and is not subject to call-in.

59.1    Cllr Mark Merryweather, Portfolio Holder for Finance, Assets and Commercial Services, introduced the report updating the Medium Term Financial Plan(MTFP) to take account the review of the longer-term effect of the pandemic on the Council’s future financial resilience, taking account of wider economic conditions. The outcome of the review was an increase to £7.9m in the projected net budget shortfall for the four year medium term. While Covid was one key direct driver for this, other consequential factors left an unresolved recurring annual deficit for 2024/25 and beyond projected at £1.2m pa. The principal aim of the revised MTFP was to protect core services so a one off repurpose of earmarked reserves in 2021/22 was likely to be necessary if government funding continued to fall short of meeting the full impact of COVID-19 on the Council’s finances.

59.2    Cllr Stephen Mulliner spoke to provide some context to the statement that “Waverley has very limited General Fund reserves”. Between 2007 and 2019, the Conservative administration had a strategy of ensuring reserves were equal to12 weeks of council tax income, or £3.2m, which had been agreed with the auditors. So, the fact that the General Fund reserves were limited was only true in the context that no one was expecting the scale of financial strain imposed by a pandemic costing £7m so far.

59.3    Cllr Jerry Hyman expressed concern that in February 2021, councils would be blind to the economic hardship faced by residents and impose the highest possible rise in council tax on the basis that they have no option. That would only be true if councillors and officers were doing everything to minimise the council tax precept, and whilst a lot of hard work was being done to reduce costs and waste in many areas of the council’s business, he continued to assert that the council could avoid unnecessary waste by preventing planning appeal cost awards if Waverley announced they would now apply environmental law correctly as required by the ECJ in the People over Wind ruling and the High Court Crondall judgement.

59.4    Cllr Follows reminded Cllr Hyman that Waverley had taken Counsel advice on a number of occasions regarding the ECJ ruling, and all had confirmed that Waverley was compliant in its approach. He went on to thank officers and Cllr Merryweather for their work in preparing the revised MTFP, despite the huge uncertainty about the government’s future funding intentions, both in relation to Covid support and structural funding. It was clear from the Chancellor’s statement that the expectation was for councils to raise local taxes to the maximum allowed in the absence of a fair funding settlement from the government.

59.5    The Executive RESOLVED to RECOMMEND that Council:

1.  Approve the updated forecast and assumptions in the latest Medium Term Financial Plan and request that a full review of the Plan is brought to Council in February 2021 alongside the draft 2021/22 Budget report; and

2.  Agree that capital receipts are applied to fund business transformation  ...  view the full minutes text for item 59