Agenda item

2022-2026 Financial and Planning and Budget Process incorporating the Associated Engagement Strategy

To consider a report outlining the process to be adopted for the Authority’s Financial Planning and Budget process for 2022/23 as part of the proposed framework for the four years 2022/23 to 2025/26


Cabinet considered a report seeking approval to the proposed 2022-2026 Financial Planning and Budget process including information on the key decision milestones; and as part of the process, the proposed approach to Budget Engagement.


Whilst this report formed an important part of the Authority’s budget-setting process for the 2022/23 Budget, it also provided Cabinet with an overview of the potential financial implications of COVID-19, for both the current year and for the period of the Authority’s Medium-Term Financial Strategy (MTFS). An initial review of the MTFS had been carried out in light of future Government announcements and, as the scale of the financial impact of COVID-19 became clear, it would need to be updated.


In addition, the report acknowledged the continuing exceptional circumstances in which the 2022/23 Budget would need to be prepared as the Authority started to emerge from the pandemic.  This would have an impact on the organisation’s ability to achieve planned Budget savings and income for 2022/23, its capacity to develop and deliver new Budget proposals for 2022/23, and on the wider Budget position, which was the subject of extremely high levels of uncertainty.  The report set out details of a proposed Budget planning process for 2022/23 but recognised that there would be a need for flexibility.  In this context, the report also provided a summary of key areas of wider risk and uncertainty for Cabinet’s consideration.


The last few years had been uncertain and challenging for local government but financial planning for 2022/23 was particularly difficult.  Since March 2020, the COVID-19 pandemic had repeatedly highlighted the vital role that the Authority continued to play in supporting vulnerable people and communities across the Borough.  This once again demonstrated the critical need to set a balanced and sustainable budget to enable the Authority to continue to deliver the services which were so important for all North Tyneside’s residents, businesses and visitors.  The report therefore set out the process by which the Authority would build on the 2021/22 budget in order to develop the detailed financial plans for future years, which would secure the Authority’s financial position and safeguard the provision of essential services into 2022/23 and beyond.


The Chancellor of the Exchequer had delivered the Spring 2021 Budget on 3 March 2021.  As part of the Government’s response to COVID-19 there had been 13 major fiscal announcements since the previous Budget on 11 March 2020.  This was also the first budget since the UK had entered the various lockdowns imposed in response to COVID-19, and the UK’s departure from the European Union. 


The Chancellor had confirmed that economic support would be maintained until the country had exited lockdown.  This included extensions to furlough, support for the self-employed, support for businesses in the form of business rate relief and targeted grants, and education catch-up funding.


The Government continued to explore the long-term reform of adult social care, the Fair Funding and Business Rates Retention reviews had been pushed back to April 2023 at the earliest, and the future of Government grants such as the Better Care Fund and Troubled Families were also uncertain.  The outcome of these had the potential for a significant impact on local government and, in the absence of any announcements, this only added to the challenge.


As in in recent years, the Authority would not receive detailed information about funding allocations for 2022/23 until autumn 2021 at the earliest.  In the absence of a Comprehensive Spending Review, any long-term funding allocation was unlikely.  There was very little time for Government to undertake a full multi-year spending review and in this context a one-year roll over of the local government settlement was increasingly likely for 2022/23. 


Beyond the immediate impact of COVID, the overall level of uncertainty meant that the financial environment for local government was set to remain highly challenging.  There continued to be a growing gap between funding and service pressures.  This was driven by demographic changes, unfunded burdens such as the National Living Wage, and the needs of vulnerable social care users becoming increasingly complex.  Children’s services, in both social care and education (particularly the High Needs Block), were also under very significant pressure. 


Any consideration of the Authority’s Medium-Term Financial Strategy and Medium-Term Financial Plan (MTFP) must be undertaken in the context of the funding outlook for local government and what that meant for the Authority.  Full details of the funding outlook for local government were included in section 3 of the Medium-Term Financial Strategy.


The current MTFP covered the period to the end of 2024/25.  Whilst there continued to be a great deal of financial uncertainty, recommended practice suggested that due consideration was given not only to the short-term but to how the Authority would continue to finance its activities in the medium-term.  It was therefore recommended at this stage that the MTFP covered the four-year period 2022/23 to 2025/26.


The report referred to the Authority’s responsibilities under the Equality Act 2010 and Public Sector Equality Duty, part of which was to ensure that the potential effects of decisions on those protected by the Equalities legislation were considered prior to any decision being made. The effect of the Authority’s budget setting process and decision-making would continually be monitored by using Equality Impact Assessments.


The revised Medium-Term Financial Strategy and the proposed principles for Budget planning for 2022/23, were set out in Appendix A and section 1.5.8 of the report.


Key aspects of the 2021/22 Financial Planning and Budget process timetable were set out at Appendix B to the report. This highlighted key decision milestones in the process.


The Elected Mayor and Cabinet were responsible for formulating the Council Plan and the Authority’s Budget. The Cabinet Member for Finance and Resources, in close consultation with the Elected Mayor, had been nominated as the lead Cabinet Member for the overarching 2022-2026 Financial Planning and Budget Process. The Director of Resources would be the project sponsor.


Details of the Budget Engagement Strategy for 2022/2023 were set out at Appendix C to the report. The aim of the Strategy was to reach different sectors of the population through an approach that encompassed engagement with residents as a whole and customers/users of services as well as particular groups of people, including those with protected characteristics. The approach also ensured reach with particular interest groups and also ensured targeted activity with specific external and internal stakeholder groups.


Cabinet considered the following decision option: to agree the recommendations as set out in paragraph 1.2 of the report. The Authority‘s Constitution and Budget and Policy Framework Procedure Rules set out the stages to be completed in relation to agreeing the Budget of the Authority. There were no other options available in relation to this. The Budget Engagement Strategy formed part of the 2022-2026 Financial Planning and Budget Process.


Resolved that (1) the revised Medium-Term Financial Strategy and the proposed principles for Budget planning for 2022/23, as set out in Appendix A and section 1.5.8 of the report, be noted;

(2)  the proposed outline 2022-2026 Financial Planning and Budget

process, which incorporates the key decision milestones and dates, as set out at Appendix B to the report, beapproved;

(3)  Cabinet recognise that there may be a requirement for flexibility within

both theBudget-setting process and the assumptions used, as a result of future Government announcements and other developments relating toCOVID-19;

(4)  the Budget Engagement Strategy as part of the 2022-2026

Financial Planning and Budget Process, set out at Appendix C to the report, be approved;and

(5) the key Budget risks and uncertainties as set out in the Medium-Term FinancialStrategy, including the implications of announcements made at the Spring Budget 2021 and subsequently as part of the COVID-19 response benoted.


(Reason for decision: The recommendations are mainly legal in nature, as stated in paragraphs 2.1 and 2.2 of the report.)


Supporting documents: