Agenda item

The Scrutiny and Overview Committee reviewed a report on the Council’s Medium-Term Financial Strategy (MTFS) and financial forecasts. The report covered the MTFS up to the financial year 2026-27 and set out the updated medium term financial plan following the outcome of a mid-year review of financial forecasts.

Committee members noted that an early draft of the MTFS had already been considered by Full Council as part of the new process for developing the Budget. This review by the Scrutiny and Overview Committee was another part of that process.

Councillor John Williams (Lead Cabinet Member  for Finance) briefly introduced the report, and then Committee members engaged in debate about the following.

The potential impact of inflation – especially wage inflation

In response to a question from Councillor Dr. Claire Daunton, the Head of Finance highlighted inflation as being one of the uncertainties in developing a Strategy taking the Council through to the year 2026-27. He summarised several other challenges and said that, at a time of such financial uncertainty, various assumptions had had to be made. Inflation was just one of those assumptions likely to vary over time.

Nature of the savings outlined in the report

The Head of Finance confirmed that predicted savings were on-going savings at this stage. He said that the extent of such savings might be reduced in the event of enhanced levels of service provision. Members cautioned against an over-reliance on efficiency savings to make the budget balance, and attempting to claim all the savings from transformation but overlook service provision.  Underlying that there was the assumption that once one round of efficiency savings had been made, subsequent ones would be harder to achieve.

Business Rates

·       The Head of Finance said that South Cambridgeshire District Council is in the top ten for business rates growth above the baseline. This had resulted in the Council benefitting from a substantial increase in income from business rates in recent years. He therefore acknowledged and highlighted the potential implications for the Council of the impending review of that source of local authority revenue. In response to a request to clarify a statement in his report that “…The financial forecast assumes neither a surplus or deficit in the period to 2026-27…”, the Head of Finance said that there was a significant gap between revenue and expenditure but that the Council’s Transformation Project might reduce that gap by up to 50%. In response to a query about a deficit in the Collection Fund, he said that this had been identified as a one-off occurrence. The Council’s exposure to the possible abolition of Business Rates needed to be recognised and guarded against.

The impact of Brexit

The Head of Finance acknowledged the possible increase in costs.

Covid-19 costs

In response to a request to quantify reduced income aligned to business confidence (commercial rents, planning applications), the Head of Finance said there would be additional costs in 2022-23 and that the extent of the reduced income should become clearer in the next two to three months. In terms of income from planning applications, the Joint Director of Planning and Economic Development said that the Greater Cambridge Planning Service was constantly monitoring anticipated planning applications and revising its forecast of fees income. He said the current position was better than anticipated, but officers were continuing to assess matters and engage with developers, especially those whose applications were likely to generate higher levels of income.

Comparison between South Cambridgeshire District Council and other local authorities

Councillor Gavin Clayton wondered whether there were local authorities elsewhere with more certain forecasts. In reply, the Head of Finance said that South Cambridgeshire District Council was not alone in facing an uncertain financial future: while Councils had control over Council Tax revenue, the impending review of Business Rates was a major concern.

Council Tax

·       The Head of Finance said the figure for Council Tax was assessed on three elements: an increase of 1.99% or £5 whichever is the higher, an increased charging base, and Increased income from the Council Tax Counter-Fraud project.

Information

Councillor Peter Fane satd that South Cambridgeshire District Council should endeavour to acquire first-hand information from Central Government rather than relying on information provided by third-parties, no matter how trusted those third-parties were.

Conclusion by the Scrutiny and Overview Committee

The Committee applauded the work being undertaken by the Head of Finance and his team. The Chair observed that the only certainty seemed to be uncertainty. He thanked the Head of Finance for giving the Scrutiny and Overview Committee the opportunity to understand the financial challenges that lie ahead.