Agenda item

Provisional Medium Term Financial Strategy 2020/21 - 2023/24.

Mr. N. J. Rushton CC, the Leader of the Council, and Mr. J. B. Rhodes CC, the Deputy Leader and Cabinet Lead Member for Finance and Resources, have been invited to attend for the Medium Term Financial Strategy (MTFS) items.


The Commission considered a report of the Director of Corporate Resources which provided information on the proposed 2020/21 to 2023/24 Medium Term Financial Strategy (MTFS) as it related to Corporate and Central items, provided an update on changes to funding and other issues arising since the publication of the draft MTFS and provided details of a number of strategies and policies related to the MTFS.  A copy of the report marked ‘Agenda Item 8’ is filed with these minutes.


The Chairman welcomed the Leader of the Council, Mr N J Rushton CC, the Deputy Leader and Cabinet Lead Member for Resources, Mr J B Rhodes CC, and the Cabinet Lead Member for Communities, Mrs L Richardson CC, to the meeting for this item


In his introduction to the report, the Director of Corporate Resources reminded members that the Council’s financial position had been challenging since 2010.  The key driver had been the reduction in funding.  This was the first budget since 2010 where the Council had had a meaningful increase in funding from central Government.  Despite this, the MTFS contained a number of challenges and risks, notably the SEND (Special Educational Needs and Disabilities) budget.


The Leader of the Council advised the Commission that increases in the National Living Wage would have a knock-on effect on pay differentials, particularly towards the bottom of the pay scale.  The impact would need to be reviewed in future iterations of the MTFS.  With regard to the forthcoming Devolution White Paper, the Leader felt that the Council’s previous work on the business case for a unitary model of local government in Leicestershire had put it in a good position but that the business case might need amending in the light of the White Paper.  However, he expected that any local government reorganisation would take a number of years and therefore the Comprehensive Spending Review and the Fair Funding Review were both needed to address the Council’s short-term financial challenges.  It was expected that an announcement regarding the Comprehensive Spending Review would be made at budget time.


The Deputy Leader and Cabinet Lead Member for Resources advised that the Ministry for Housing, Communities and Local Government was intending to provide more detail relating to the Fair Funding Review in the Spring.  This was expected to include examples of what the review would mean for individual councils and some detail of the methodology that had been used.


The Deputy Leader confirmed that the following changes to the MTFS would be included in the report to the Cabinet in February 2020:


·         SEND figures would need adjusting to reflect the most recent information that was available;

·         £100,000 extra would be made available for Shire Grants;

·         The scams intervention project, provided by Trading Standards, would receive £75,000 to enable it to continue;

·         The £130,000 saving from the Recycling and Household Waste Sites, intended to be achieved through a reduction in opening hours, would be removed.


Arising from discussion and questions, the following points were raised:


Revenue Budget


(i)        The Commission welcomed the report, which demonstrated the Council’s good financial management.  Members were also pleased to note that the opening hours of Recycling and Household Waste Sites would remain unchanged and that the £130,000 saving was no longer required.


(ii)       The additional funding for the scams intervention project and Shire Grants was welcomed.  Members requested a written briefing on Shire Grants which could be shared with residents.  The Cabinet Lead Member for Communities, Mrs L Richardson CC, confirmed that this would be made available and also advised members to look at the communities website.


(iii)      The growth set out in the MTFS would, in some areas, require additional staff to be employed.  Children’s Social Care was one such area.


(iv)      In response to a query regarding health and social care integration, it was confirmed that Leicestershire had a successful programme.  However, the NHS also required integration to take place at system level, defined as Leicester, Leicestershire and Rutland, which was more difficult.  To facilitate greater joint working, the local NHS was now engaging with Executive members as well as the Health Overview and Scrutiny Committee and some meetings which also involved the City Mayor and his Cabinet would take place.  The Leader commented that he welcomed the introduction of these meetings and that the initial meeting had been positive.


(v)       Some concern was expressed that the Clinical Commissioning Groups (CCGs) were struggling to produce a balanced budget and that this could have an impact on the health and care integration programme.  It was noted that the local response to the NHS Long Term Plan should be published in the Spring.  This would give an indication of the extent of the financial difficulty faced by the CCGs.


(vi)      The New Homes Bonus was being phased out by the Government.  It was not yet known whether it would be replaced by a new system or abolished and the funding returned to form part of the total amount of money that the Government made available for local government.


(vii)    It was not known when the review of business rates would be undertaken by the Government.  It was noted that, through the 75% retention of business rates policy, the Government was already moving away from a system based purely on business rates to one based on the level of activity in an area.


(viii)   With regard to the plan to address overspends in the SEND budget, it was confirmed that the key part of the plan related to managing demand, including how applications for support were assessed, and part required the provision of additional places.  200 additional places had been created so far.  However, increases in demand had meant that it had not been possible to move some children from expensive, independent sector provision.  The number of children and young people with Education, Health and Care Plans increased by approximately eight percent each year.  It was also noted that the system was designed to support parents and that the majority of appeals at tribunal went against the County Council, which further increased costs.


Capital Programme


(ix)      The Deputy Leader advised that the size of the Capital Programme reflected the proposed level of housing and economic growth in Leicestershire and associated requirements for infrastructure.  Section 106 contributions would be essential, but the agreements were determined by the district councils as Local Planning Authorities and their decisions could reduce the level of funding available to the County Council in order to meet other local needs, in some cases significantly.  This in turn would increase the pressure on the County Council’s budget.


(x)       With regard to the proposal to share the risks relating to the forward funding of infrastructure for major developments with district councils, the Commission was advised that the scale of development proposed for Leicestershire would otherwise expose the County Council to too much risk.  Risk sharing agreements would need to be developed on an individual basis, reflecting the degree of risk for each scheme.


(xi)      It was confirmed that the County Council submitted robust, evidence-based requests for Section 106 funding, not least for education provision in new housing developments, but that it was a matter for the Local Planning Authority to agree the requests.


In closing the debate, the Deputy Leader advised the Commission that, to date, the County Council had made sufficient savings to enable it to set a balanced budget.  However, the opportunities to make savings in the future were limited.  An outcome of the Fair Funding Review which ensured that the Council was funded adequately in the future was needed.




That the comments now made be submitted to the Cabinet for consideration at its meeting on 7 February.


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