Agenda item

The Medium Term Financial Strategy (MTFS) sets out the strategic direction and priorities for the Council as well 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.

Councillor Richard Samuel introduced the report by reading out the following statement:

‘The Medium Term Financial Strategy (MTFS) is not the council budget – that will come later when more detail about government funding appears in the autumn and leads to the budget and council tax setting in February. The MTFS is however an important health check on the pressures and opportunities facing the council in the medium term and describes actions the council may need to take to balance our finances.

I made it clear on taking office that it was my intention that the council live within its means throughout the whole of this administration’s term. That means balancing the books and not spending more than we receive in income, grants and tax. So far, we are on track to achieve that objective for the third year in a row having done so in 19/20 and 20/21. This is an outcome that was never achieved by the previous administration whose waste and inefficiency made me determined to try to do better.

This latest MTFS highlights the severe challenges ahead. These have just been added to by the government in their Health and Social Care taxes. Whilst the detail of how this will affect local government remains opaque what we know already is that the employers NI changes will add 750k to our wage bill at a stroke roughly equivalent to 1% on council tax. At this stage we are also unclear how the changes which, are broadly beneficial for most residents requiring care, will be funded. I have to give this stark message. There is no money to top up any shortfalls in government funding. Our finances are already at their limit following government underfunding of covid pressures – another hollow Tory promise. To use a hackneyed phrase – there is no magic money tree.

Turning back to the MTFS Cabinet will recall that to deal with the extreme conditions caused by the pandemic it was necessary to draw from reserves to in effect cash flow our funding. That draw down must be repaid and is a key component of the MTFS. At the same time, we are currently experiencing a big increase in social care service requests which were fewer during the 2020 lockdowns. Predicting future demand is a fraught process as is what the government’s intentions for local government finance in the medium term. The MTFS identifies that potentially £28m will need to be saved over the next five years. It seems at times that the council like others is in perpetual Kafkaesque cycle of continuous cuts where no exit ever arrives.

Within the plan great uncertainties exist about the government’s funding plans for local government. We do not know at this point what will be said about social care precepts and council tax capping limits. What we do know is that by avoiding progressive tax rises to pay for health and social care the burden has been placed on working age adults with the imposition of regressive national insurance increases. Everyone should pay for care not just those who are working that is fair but then Tories have never cared about fairness in society.

At a high level what we are trying to do is to match the council’s corporate priorities with the finance available. As things stand today there is highly limited scope for service growth and investments are going to be necessarily confined to those that essential or externally funded or where additional income or savings can be made. Sadly, our residents are going to have accept that a period of government-imposed austerity is already here and is likely to continue.’

Councillor Richard Samuel moved the recommendations.

Councillor Kevin Guy seconded the motion by thanking Councillor Samuel and team of officers for bringing this report before the Cabinet, and for the hard work since the start of the pandemic.

Councillor Tim Ball also thanked Councillor Samuel and officers for the role they continued to play in ensuring strong financial position during these challenging times.

Councillor Alison Born added that that the Social Care funding (about £1.8bn), which was announced this week, would go to adult social care for each of the next three years. The NHS would get five times that amount, yet no immediate support has been announced for social care. After years of cuts to local authority budgets, social care funding was at a very low base and services were reaching crisis point.  Councillor Born added that services did not have sufficient staff to assess people in a timely manner, nor to provide care when people needed.  Increasing numbers of people were in the community without support and there were problems with staff shortages. Councillor Born also said that staff working in social care would also have to pay additional national insurance, which would reduce rather than increase their pay, and would not help with social care staffing situation.

RESOLVED (unanimously) that the Cabinet agreed to approve the Medium-Term Financial Strategy.