Agenda item

The Deputy Leader and Portfolio Holder for Finance, Town Centres and Growth presented the update on the Medium-Term Financial Strategy for the upcoming five years. The Strategy had been agreed in February 2024 as part of the budget setting process and was designed to provide an overarching framework for the allocation of resources to the Council’s key priorities in light of financial pressures forecasts.

Members submitted questions and responses were provided by the Service Director for Finance (S151 Officer).

Cllr Stubbs enquired about the £127k gas and electricity inflationary increase assumption for the year 2025-26. – It was advised that higher energy prices were still being experienced and, in addition to that there was additional usage with issues at J2.  Councillor Stubbs referred to last year’s MTFS where there had been a huge increase and this was a second one.  Was there any thoughts that at some point these could be reduced in the budgets.   It was advised that, while it was hoped that some of these energy costs would come down eventually there were currently no sign of reduction in energy prices.

Cllr Stubbs also asked if it was correct to say that an additional £476k borrowing costs were built into the Strategy. – Indeed these related to regeneration projects and would be partly covered by Capital and Centric as part of the business model.

Councillor Stubbs stated that the previous MTFS did have all of the projects in it and asked if any new projects been added to the current MTFS as, if that were the case, there were additional borrowing costs that members were not aware of last year.  He was advised that the borrowing costs shown in the previous MTFS related to the new car park on the Ryecroft site  but not the other projects because borrowing costs were not put into the Capital Programme until financial information was received on them.

Cllr Jones asked about the 3.5% pay award budgeted which fell under what had been actually awarded for the third year in a row. – This was discussed every year with the Staffordshire Chief Finance Officer Group with insights of what was happening at national level.

The Service Director for Finance (S151 Officer) advised that last year a higher increase had been expected.  Officers sat on the Staffordshire Chief Finance Officer Group where all Staffordshire Councils came together to discuss their budget assumptions.  There were lots of discussions over pay awards, including with West Midlands Employers.  All of the information gained was then used as a guide.

Cllr Jones asked – going forward how could we avoid making the shortfall four years in a row.  He was advised that assumptions could only be based on the information that was received.

The Chair commented that inflation was lower than in previous years.

Cllr Fox-Hewitt enquired about the risk assessment on capital reserves. – when could members expect to receive it?  He was advised that, as part of the budget setting process, this report was the starting point.  Meetings had been built in over the next four weeks -  after which time the Service Director for Finance (S151 Officer) would work through the risk assessment and it should be available in December.

Councillor Stubbs referred to £100,000 that had been built in for restructuring costs and asked which department it was for.  This information would be made available to members.

Cllr Stubbs asked about the Council’s journey to become self sufficient and asked how the pressure of another £100,000 on income be justified when it was almost forecasting a drop of almost £400,000 each year.  He was advised that there were income areas where it was known that readjustments were required.  Commercialisation was also being investigated.

 Cllr Fox Hewitt referred to the £1.5m shortfall over the next twelve months and after that, £5.25m and asked the Portfolio Holder for Finance, Town Centres and Growth about the funding gap.   The Portfolio Holder asked the Service Director-Finance (S151 Officer) to respond who advised that the £5.25m was over 5 years and included the £1.5m previously referred to.  Regarding what was making those pressures up, the majority was pay awards.   There was also business rate retention reset as it needed to be assumed that, if current business rates protection changed, there would be a gap of over £1.5m.

Cllr Fox-Hewitt asked if it was a mixture of anticipated savings through the Efficiency Board and reserves that would fill the gap.  This was confirmed that efficiency savings would fill the gap.

The Chair advised that at the December meeting, the forecasts should be clearer and the document would be updated. 

Resolved:    1. That the funding pressures of £1.429m in 2025/26 and £5.251m over the 5-year period covered by the Medium-Term Financial Strategy (MTFS) be noted.

2. That the approach regarding the development of savings and income generation proposals in the medium-term be noted.

3. That the continued uncertainty regarding the medium-term impact on local government funding be noted.

Watch the debate here