Decision details

The Executive Director, Resources and Support Services introduced the Medium Term Financial Strategy (MTFS) 2014/15 to 2018/19. Local authorities still faced challenging financial situations and where previous budget strategies had focussed on areas such as additional income and procurement savings more radical methods would be required in the future. The Council’s external auditors had conducted a Financial Resilience Review and the Council had scored well with good systems, procedures and processes to face the challenges ahead.

A Member questioned whether the Committee could receive the MTFS prior to Cabinet in future. The Leader would pass the query to the Portfolio Holder for Finance and Resources to review the timetable, ascertain if the request was possible and provide a formal explanation as to why the MTFS was received by Cabinet first. The MTFS was a living document and the Leader was happy to receive the Committee’s comments and minor amendments could be made.

Members were concerned that the Strategy did not emphasise the severity of the financial situation. Risk assessments would be conducted by the Business Improvements team for any service changes. All Council departments had been asked to model what their service would look like with a 20%, 40% and 60% budget reduction which would create a picture of what the Council could afford to do.  Savings from the Heads of Service posts that had recently been vacated would be included in the Draft Savings Plans that would be received at the December meeting.  

There was discussion of the growth agenda and the need to look for external funding which the MTFS did contain some modelling for. Members felt it was essential to look beyond being more efficient and considered that there were several strands that needed to be pursued including more work with the voluntary sector for the benefit of residents, health authorities focussing more on prevention rather than treatment and sharing services such as was being investigated with the Legal department. The model being looked at for the Legal department was not the one that had been anticipated. Keeping the Council’s legal service was now being looked at with the possibility of buying in services from the County Council as required, which could potentially be a model for other areas. It was necessary to look at alternative models of delivery and look at what other authorities were doing well.

With decreasing funding from central government the tax payer would be the biggest funding source for the Council and there was a changing relationship between local authorities and the public. Services would need to be more focussed to a local need rather than government targets. The third sector would be able to deliver some services better than the Council, and through the Co-operative Strategy they could be commissioned with the emphasis on social values. It might also be necessary to rationalise the Council plan.

Members questioned whether there was an indication of when central government funding would cease. If the funding reductions continued on the current trajectory then the estimate would be 2021-2022. Members were of the opinion that when the funding did stop there would be an opportunity to develop the Borough with partners without the need to borrow money. There was a model with a neighbouring authority whereby they had entered into a joint venture with a company who they lent money to at a greater rate than they had borrowed. 

There was also discussion around issues that could influence the MTFS such as HS2 and JCB leasing the Blue Planet building in Chatterley Valley, Newcastle.

RECOMMENDATIONS:       The Portfolio Holder for Finance and Resources to ascertain whether the Medium Term Financial Strategy can be received by the Committee prior to Cabinet in future and provide a formal explanation as to why the strategy was received by Cabinet before the scrutiny committee.