Agenda item

Further to Minute 62/15 of the Cabinet, the City Council considered a report of the Executive Director of Resources, which set out the Medium Term Financial Strategy for 2016-19 for adoption and included the financial planning foundations that support the Council’s vision and priorities, leading to the setting of the Council’s revenue and capital budgets.

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 was due to be published on 25^th November and the Local Government Finance Settlement was expected in late December 2015.  The high likelihood was that these would confirm continued cuts in Revenue Support Grant for local government on a trajectory broadly consistent with cuts made since 2010.  Therefore, the fundamental factor shaping the Council’s Medium Term Financial Strategy continued to be one of unprecedented financial pressure leading to further significant reductions in spending levels that would be likely to continue in the period up to 2020 and possibly beyond. 

The report submitted summarised the national and local contexts that frame the Strategy and acknowledged the Council’s in principle decision to join with other councils across the region to form a West Midlands Combined Authority.  Taken together these factors represented a combination of reduced 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 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 report also set out the Council’s strategic financial approach to the demands that it faced. 

Based on initial estimates of future funding settlements, the City Council’s indicative financial position moving into 2016/17 budget setting process showed a major funding gap increasing to £28m in 2018/19.  This gave a clear picture of the massive financial challenges faced by the Council.  This financial position was developed further in the Pre-Budget report also being considered and detailed in Minute 63 below, and could be expected to become yet more acute in the period beyond the Medium Term Financial Strategy based on ministerial announcements about continued spending cuts.

The Finance and Corporate Services Scrutiny Board (1) had also considered the report at their meeting on 11^th November 2015, and a briefing note detailing their recommendations was appended to the report.  In particular, the Board recommended that the 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.  The Cabinet noted the comments from the Board but decided not to accept their recommendation as the key element of the findings had been incorporated into the Pre-Budget Report.

RESOLVED that the City Council approve the Medium Term Financial Strategy 2016-19.