Agenda item

Review the progress of the Medium-Term Financial Plan 2022/23 – 2025/26.

The Financial Services Manager, Rosie Plaistowe, presented the mid-year review of the Medium Term Financial Plan (MTFP), which had been carried out in view of the high level of economic volatility and uncertainty. In short:

·         The General Fund had shown a £452k net positive variance at the end of the 2021/22 financial year.

·         Key variances against budgets in the 2021/22 out-turn had been identified to assess the potential impact on 2022/23.

·         There were a number of key pressures on the current and longer-term financial plans including inflationary pressures, the impact of the cost of living crisis on Waverley’s businesses and residents, the re-tender of the leisure centre operator contract, and recruitment and retention of staff.

·         There was a forecast £3.4m budget shortfall over the period of the MTFP, including a shortfall of £806k for 2023/24 which still needed to be closed through the budget-setting process.

·         The impact on the capital programme of inflationary pressures had been assessed and savings identified on approved projects within the 2022/23 budget. Future capital projects would be assessed carefully against corporate priorities and funding opportunities.

·         The report identified risks to delivery of the 2022/23 budget and the MTFP, including the adequacy of reserves, the impact of inflation and interest rates, and continued uncertainty relating to the timing of the Fair Funding Review.

In response to questions from Committee members, officers advised:

·         An application had been submitted to the Museum Estate and Development Fund (MEND) for funding to undertake vital maintenance to Wilmer House, which housed the Farnham Museum. The outcome of the application was expected in March 2023.

·         Annexe 1 showed the forecast year-end position based on year-to-date actuals and forecasts as at 30 September 2022. This showed a £41k positive variance against budget overall. The impact of inflation had been off-set by increased treasury investment income.

·         The M&Co property at 69 High Street, Godalming was being developed in line with the planning permission. The timing of letting the retail unit would depend on the development timetable and separation of the retail unit from the residential construction.

·         The announcement of the local government finance settlement for 2023/24 was not expected until closer to Christmas. The ‘negative government grant’ was still on the agenda, but the Fair Funding Review had been delayed again.

·         Income from green waste and Careline subscriptions had declined as the number of subscribers had reduced. This was the first year that green waste subscriptions had declined and these had previously not been shown to be particularly price sensitive.

·         It was noted that Freedom Leisure had recently announced the closure of two swimming pools due to increases in energy prices. Places Leisure had resumed paying the management fee, but all leisure centre operators were facing challenging conditions and it would be important to keep up open communications between the council and contractor.

·         The Hardship Fund had been increased by £50k in February but it was not expected that this would need to be increased further in the short-term. The third tranche of the Household Support Grant was expected shortly.

·         There had been previous exercises undertaken to identify the geographical distribution of discretionary council spending and income generation to address the issue of ‘fairness’ across the borough. The outcomes had not revealed any bias in spending decisions but did not dispel perceptions of unfairness and were potentially misleading.

·         A new Homelessness Reduction Strategy was being developed, to come forward in 2023, which would respond to an anticipated reduction in the Homelessness Prevention Grant from 2023/24.

Having considered the report and responses to questions, the Committee RESOLVED to note the report on the MTFP mid-year review, including the 2022/23 forecast General Fund position, the emerging pressures and risks identified, and the impact on the General Fund capital programme.