Agenda item

Cabinet Member: Finance

Forward Plan Ref: 2020/064

Contact: Hannah Doney, Head of Corporate Finance Tel: 07584 174654

Report by Director of Finance (CA6).

This report is the first in the series on the Budget and Business Planning processfor the forthcoming year and forms context and background information ahead of and part of the process which will culminate in Council setting a budget for 2021/22; a medium term financial strategy to 2025/26 and capital programme to 2029/30 and a Corporate Plan in February 2021. 

The Cabinet is RECOMMENDED to:

(a)        Note the report;

(b)        Approve the Budget and Business Planning Process for 2021/22; and

(c)        Approve a five-year period for the Medium Term Financial Strategy to 2025/26 and ten-year period for the Capital Programme to 2030/31.

Cabinet considered a report, the first in the series on the Budget and Business Planning processfor the forthcoming year that formed the context and background information ahead of and as part of the process which will culminate in Council setting a budget for 2021/22; a medium term financial strategy to 2025/26 and capital programme to 2030/31 and a Corporate Plan in February 2021. 

Councillor Glynis Phillips, Shadow Cabinet Member for Finance, highlighted that the budget setting process was taking place in the context of extreme uncertainty due to the cancellation of the autumn budget, waiting for the outcome of the Spending Review, the unknown financial implications of Covid 19 and a further delay in the new needs-based funding formula and changes in the way business rates are allocated. At the same time the  report contained a number of assumptions which would need to be reviewed as the process developed through the autumn and winter.

Councillor Phillips welcomed the recent government announcement of additional funding relating to wider Covid-19 cost pressures and queried what conditions were attached to the funding and whether the allocation to the County Council was known. eried why the underestimation on earmarked reserves was not known when the Council budget was set

Referring to Paragraph 3 in Annex 1b Councillor Phillips drew attention to the position on earmarked reserves where in the agreed budget in Feb 2020 earmarked reserves were estimated to be £66.6m at March 2020. The actual figure was £102.9m at March 2020 and she queried why this figure was not known at the time the budget was set in February.

Councillor Phillips commented that the existing gap was £24.4m and the biggest risk was the assumption that the grant allocations for 2020/2021 would be  rolled forward into 2021/2022.

Referring to the Council’s five-year Medium-Term Financial Strategy she felt it was ironic that as a result of government policy we are unable to confidently predict the financial strategy for next year let alone the following 4 years. She was concerned about this short term approach to local government funding.

On the Capital Programme Planning analysed over specific time lines Councillor Phillips commented that this looked very sensible. She welcomed the review of the funding gap of £18.2m in 2020/202.

On the Corporate Plan’ Councillor Phillips highlighted the role of councillors in informing the council’s priorities and noted that she could not see where councillors were involved in the review process.

Councillor Bartholomew responded to the comments made. He wished like Councillor Phillips that there could be more certainty but that this year was particularly difficult for obvious reasons. On the additional funding there was £1b across all councils but the allocation for Oxfordshire was not known yet.

On the earmarked reserves this was always an estimated figure and always changed a year end.

Councillor Bartholomew introduced the contents of the report that set out information on the context and starting point for the 2021/22 budget process. He noted the extreme uncertainty over government funding due to the cancelled Autumn Budget, the awaited outcome of the spending review and the ongoing financial impact of the covid pandemic. He noted that the report made mention of the potential savings of £25m however this was an initial assumption and would be reviewed as more information became available through the Autumn and Winter. The figure included  £10m of savings already agreed as part of the agreed budget as an outcome of the transformation of services and service redesign and these savings were still intended to be made. Councillor Bartholomew noted that it was proposed to extend the Capital Programme by one year to 2030/31. Councillor Bartholomew moved the recommendations.

Councillor Heathcoat, Deputy Leader of the Council, noted the importance and seriousness of the report concerning business and budget processes. She thanked officers and Councillor Bartholomew for the ongoing work to brief councillors and noted the report was an indication of the early planning and consideration going into planning the budget for 2021/22. Councillor Heathcoat highlighted that by law councillors in February must set a balanced budget. Referring to the Corporate Plan, this would be updated and would reflect the years challenges. It would also refresh the six overarching priorities with consideration also being given to corporate level issues.

RESOLVED:            to:

(a)        Note the report;

(b)        Approve the Budget and Business Planning Process for 2021/22; and

(c)         Approve a five-year period for the Medium Term Financial Strategy to 2025/26 and ten-year period for the Capital Programme to 2030/31.