Agenda item

Report of the Executive Director of Resources

The Cabinet considered a report of the Executive Director of Resources, which would also be considered by Council on 11^th October 2016, that presented a Medium Term Financial Strategy (MTFS), incorporating an Efficiency Plan for 2017-2020 for adoption by the City Council.The previous strategy was approved in December 2015.The Strategy set out the financial planning foundations that supported the Council’s vision and priorities and lead to the setting of the Council’s revenue and capital budgets.

The government was to commit to 4 year funding settlements to local authorities in order to encourage efficiency savings. To qualify, each local authority needed to produce an Efficiency Plan setting out how the authority intended to increase efficiency over the planning period.

Looking forward, the Council’s pre-budget report would be brought to members on 29th November 2016, followed by the budget setting report in February 2017.

Local authorities would continue to face severe financial pressures for the foreseeable future in what were very uncertain times. Although the previous government policy of targeting a budget surplus by 2020 had been dropped, following the EU referendum, the downgrading of growth forecasts indicated that the severe financial pressures on public finances would continue.  The fundamental factor shaping the City Council’s MTFS remained that of unprecedented financial pressure leading to further significant reductions in spending levels that were likely to continue in the period up to at least 2020.

In summary, the national and local contexts that framed this Strategy included:

·  A paramount need to protect the most vulnerable people in the city including children at risk, children and young people in care, victims of domestic abuse and vulnerable adults and older people;

·  Significant reductions in government resources with a fall of c£95m in the 5 years to 2016/17 and a further fall of c£25m in the next 3 years;

·  Fast population growth causing greater demand or expenditure pressures in areas such as housing, social care and waste disposal;

·  A move towards greater localisation of income, including business rates by 2020, and uncertainty arising from the review of the business rates system and other funding programmes;

·  The increasing importance of promoting growth in the local economy;

·  Upward pressure on Pension Fund contributions, in particular to fund pension past service deficits;

·  The transfer of schools to Academy status putting increasing pressure on the Council’s core education functions and other services that trade with the city’s schools;

·  More complex service delivery models across the Council driven by the need to modernise and rationalise services and work in tandem with partners and neighbouring authorities;

·  Continued expectations on the Council to maintain service levels and standards across the full range of core services despite the financial challenges;

·  The development of the West Midlands Combined Authority providing a source of financial support for key transformation programmes.

Taken together, 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 that it faced included:

·  A Council Plan focusing on economic growth, quality of life and a commitment to protecting the vulnerable, whilst delivering services with fewer resources;

·  A Local Plan setting the blueprint for taking the City forward, identifying land to satisfy housing, infrastructure and developmental demand;

·  Strong corporate financial planning, monitoring and project management arrangements;

·  Growing the city’s local income base, within the environment of increasing localisation of funding sources, including business rates;

·  Managing the demand for services, through digital working and community engagement;

·  A transformation programme, including the delivery of major capital investment schemes, to change the way the Council worked and engaged with its customers, as well as to drive economic growth and the delivery of unprecedented savings;

·  Partnership working, including as part of the West Midlands Combined Authority, together with voluntary organisations and other partners;

·  A fundamental commitment to protecting the city’s vulnerable children, adults and older people;

·  Changing the relationship between the Council and its citizens reflecting the reality that the Council would provide a smaller range and lower level of services in new ways and out of far fewer locations;

·  Doing things differently by considering alternative service delivery models and options for delivering service outcomes in different ways with less reliance on Council delivered services;

·  A continued Workforce Strategy requiring a significantly smaller workforce working in flexible ways consistent with a modern organisation, ensuring that the Council had the talent in place necessary to deliver the challenging agenda that it faced;

·  Seeking to optimise the use of pooled or new funding available to support social care and health;

·  Investing in the environmental elements that supported the regeneration of the city including its public realm, the city’s highways network and its cultural and leisure offer to make Coventry an attractive place to live and work.

Based on the 2016/17 approved budget, the financial gap for the following 3 years was:-

The financial position would be developed further in the Pre-Budget and Budget Setting reports.

RESOLVED that the Cabinet approves the report and recommend that Council approve the Medium Term Financial Strategy.