Agenda item

Report of the Executive Director of Resources.

The Board considered the Medium Term Financial Strategy (MTFS) for 2016-2019 for adoption by the City Council.The previous strategy was approved in November 2014.The Strategy set out the financial planning foundations that supported the Council’s vision and priorities and leads to the setting of the Council’s revenue and capital budgets. The Strategy would be considered at the same meeting of Cabinet as the Council’s Pre-Budget Report set out the work undertaken in preparation for 2016/17 and future years’ revenue budgets and capital programme.

The Government’s July 2015 Summer Budget announced a further period of public sector spending reductions over the course of the new Parliament and this provided a key backdrop to the Council’s medium term financial position. However, further detail on the local future years funding position would not be clarified until after the results of the forthcoming Spending Review, due to be published on 25 November and the Local Government Finance Settlement expected in late December. The high likelihood was that these would confirm continued cuts in Revenue Support Grant for local government on a trajectory which was broadly consistent with cuts made since 2010. Therefore, the fundamental factor shaping the City Council’s MTFS continued to be one of unprecedented financial pressure leading to further significant reductions in spending levels that are likely to continue in the period up to 2020 and possibly beyond. If the current pattern of local government funding continued, this indicates that, in real terms, for every £10 of net budget the Council had available in 2010/11 it has just over £7 now and will have nearer £5 in 2024/25.

The national and local contexts that frame this Strategy were detailed in the report.  In addition, on 13^th October 2015 the Council took an in-principle decision to join with other councils across the region to form a West Midlands Combined Authority (WMCA) - a statutory body to facilitate collaboration and joint working between local authorities to improve economic development, regeneration and transport in the area. The precise structure, functions and financial arrangements of the authority continued to be developed at this time. In particular, it was possible that a Devolution Deal will be struck between WMCA and Government, seeing additional delegations and devolution of power and resources to the West Midlands.  It was too early to predict the financial implications of this for the City, and the impact on the MTFS.

These factors represented a combination of reducing resources, challenging underlying economic and demographic conditions, increased demand, a heightened need to improve the quality of services and new challenges represented by government reform and local structural and governance relationships. In these circumstances it was crucial that the Council’s financial strategy was both robust and flexible. This would provide the financial foundations required to ensure that Council services were fit for purpose to protect the most vulnerable as well as providing decent core services for every citizen in the city.  In support of these aims, the City Councils strategic financial approach to the demands were fully detailed in the report.

The Board discussed aspects of the report, in particular costs relating to agency staff/consultants and in this regard, further detail was requested by the Board.

The Board also discussed the work of the Reserves and Underspends Working Group and agreed that their findings be taken into account by the Cabinet when considering the report.

RESOLVED that the Board recommend that Cabinet consider incorporating the findings and recommendations of the Reserves and Underspends Working Group into the Medium Term Financial Strategy to address part of the budget shortfall for 2016/17.