Issue - meetings

The Medium-Term Financial Strategy (MTFS) sets out the strategic direction and priorities for the Council as well as outlining the financial context and challenges the Council faces over the next five years and the strategy that will be used to inform its annual budget process.

Cllr Mark Elliott, Cabinet Member for Resources, introduced the report, moved the officer recommendation and made the following points:

·  There are many challenges over the next five years, in particular the unprecedented level of uncertainty due to the government’s ongoing “fair funding” review.

·  Due to this uncertainty, we must base our entire Medium Term Financial Strategy (MTFS) on assumptions and modelling rather than on confirmed figures.

·  The MTFS models the following:

o  A projected budget gap of £8.9 million for 2026/27 - and further gaps of over £10 million in each of the following two years.

o  A cumulative funding gap of £38.6 million over the next five years (2026/27 to 2030/31), even after accounting for planned savings and income generation.

o  Estimated reductions in central government funding of £13 million over the next three years - broken down as £4 million in 2026/27, £4 million in 2027/28, and £5 million in 2028/29 - and that is purely because of the anticipated impact of the “fair funding” review.

·  The modelling suggests that Bath and North East Somerset will be a net loser from the new system.

·  This uncertainty comes on top of sustained inflation, rising demand for social care and continued pressure in Children’s Services.

·  We are taking a prudent and proactive approach by maintaining unearmarked reserves of £12.6 million to manage in-year pressures and unforeseen risks.

·  We are also reviewing all capital spending to ensure affordability and alignment with our strategic priorities.

·  We are also investing in transformation and prevention – including digital transformation, new ways of working and early intervention in social care.

Cllr Lucy Hodge seconded the motion and made the following points:

·  The Council is operating in an environment across the board of increasing pressures, leading to difficult decisions.

·  Local funding per resident remains, on average, 19% below 2010 levels.

·  We are aiming for a balanced budget but there is a gap which needs to be addressed by trying to find new sources of income, growth and difficult decisions about savings to the extras we want to deliver.

·  The administration will continue to demonstrate sound financial leadership and to steer our way carefully through these challenges.

RESOLVED (unanimously):

To approve the Medium Term Financial Strategy attached as Appendix 1 to the report.