Cabinet received a report as part of the Council’s agreed process within the Annual Budget Framework which required it to consider the Council’s Budget and Financial Strategy and to set provisional cash limits for the forthcoming year. The purpose of the report was to provide Cabinet with an update on the likely financial situation of the Council both within the current and future financial years, to outline national issues which would need consideration within the medium term financial strategy for 2015/16 onwards, including funding consultations and to outline the approach to the budget process and budget consultation.
Councillor Seaton introduced the item and advised that the current financial position faced by the Council was a difficult one. The budget put in place at the start of the financial year had highlighted significant levels of savings to be made as well as achieving additional income.
Further key points highlighted by Councillor Seaton relating to the current financial position included the emerging financial pressures which had been identified as part of the current financial year such as the ever increasing demand on services such as Children’s; the numbers of vulnerable children requiring support being higher than was anticipated; the overspend predicted if no further action was taken, this being £1.3m, and the work being undertaken by officers to review all areas of spend to ensure the budget be brought back into balance.
There had previously been a good track record of managing pressures in recent years and it was anticipated that the financial situation could be managed by the end of the year end if action was taken promptly. Cabinet would be kept informed of progress.
In terms of future financial plans and the emerging financial picture for forthcoming year Councillor Seaton highlighted key points which included the Council’s commitment to maintaining the future of the city and its people therefore retaining focus on education, jobs creation, economic prosperity and quality of life for residents; the loss of grant funding, equating to £40m; the combination of the loss in grant funding and added financial pressures, such as Looked After Children, meaning a gap of £22m in the following years budget.
Councillor Seaton summarised that a balanced budget would need to be produced by April 2015 and Councillors had been working alongside officers, with the involvement of all Political Parties, through the cross party Budget Working Group.
Members commended the Resources team for the work undertaken and acknowledged the work involved.
Cabinet considered the report and RESOLVED:
1. To note the financial pressures in the current financial year, the continuing work by CMT to deliver a balanced budget and that the financial pressures widened the budget gap in 2015/16;
2. To note that the current local government funding consultation and continued uncertainty on future years’ government funding for local authorities increased the uncertainty of the council’s medium term financial strategy; and
3. Council approved the approach proposed for the budget process, including provision resource cash limits, and that Cabinet agreed the approach to consultation with the cross party Budget Working Group, exploring the options to commence consultation at the earliest opportunity.
REASONS FOR THE DECISION
The Constitution required Cabinet to outline its approach to developing the medium term financial strategy. This process helped to ensure that the Council achieved a balanced budget, aligned to corporate priorities.
ALTERNATIVE OPTIONS CONSIDERED
An alternative option would be to do nothing. This was rejected because the constitution required the Council to outline the approach to the following year’s budget setting by the end of the preceding month of September. The current medium term financial strategy for 2015/16 estimated a budget gap of £17.6m, and the council must set a balanced budget.