Councillors given update on savings shortfall

Cabinet are to be given an update on our Medium Term Financial Plan (MTFP), following the government's November Autumn Statement and the Local Government Provisional Finance Settlement published just before Christmas.

Significant pressures

In October, Cabinet was presented with an MTFP report which identified a requirement to find additional savings of more than £52 million over the next four years, with £37 million of this needing to be achieved in 2023/24.

The significant shortfall reflects the current unprecedented strain our budgets due to increases in inflation and interest rates, which is impacting on the cost of all goods and services. It is also due to increased demand for social services, particularly looked after children, and inflationary pressures in adult social care.

Autumn statement

The position has been updated taking on board the government's Autumn Statement and the Local Government Provisional Finance Settlement, where some additional funding to meet rising cost pressures in social care, including specific grant funding to facilitate early discharge of patients from hospital, was announced.

The government has also increased the current council tax referendum limit from 1.99 per cent to 2.99 per cent from next year and has enabled local authorities to increase council tax by a further two per cent for an adult social care precept for the next two years.

Additional funding

Cllr Richard Bell, deputy leader and Cabinet member for finance, said: "In overall terms, the provisional settlement has provided some much-needed additional funding which will reduce, but not fully address, the significant savings requirements over the next two years, particularly in 2023/24.

"The government has reset the referendum limit for council tax increases from next year and provided additional powers in terms of the adult social care precept next year - with the expectation that all authorities implement increases to help meet the inflationary pressures we are facing and provide the funding to protect essential services.

"The additional grant funding and council tax raising powers and expectations will result in an improved financial outlook for us in the short term. However, like many local authorities, significant savings still need to be implemented for us to be able to set a sustainable balanced budget for 2023/24 and beyond."

Public consultation

To ensure budgets can be balanced, a thorough review of all earmarked reserves was carried out to ensure that corporate reserves are in place to meet the budget shortfalls next year and to provide the capacity to deliver more sustainable solutions in the longer term.

During October and November 2022, we carried out a public consultation on its approach to the MTFP which included seeking feedback on a wide range of savings options in the October Cabinet report, with the updated report setting out details of options for further savings that could be delivered next year.

Revised savings

Taking on board available government funding, tax base growth, updated base budget pressures, and an assumption that we raise council tax by the maximum sums available, the saving required over the next four years has reduced to £41.041 million, with £25.759 million of this falling into 2023/24.

If the savings plans that have been developed are ultimately agreed and implemented, we will still have a £12.881 million budget deficit in 2023/24, which will require the use of reserves to bridge the gap next year whilst more sustainable budget solutions are found.

Planning for our 2023/24 budget will continue, with the final report to be presented to Cabinet and the council in February.