Agenda item

2023- 2027 Financial 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 2023/24 as part of the proposed framework for the four years 2023/24 to 2026/27.

 

Minutes:

Cabinet considered a report seeking approval to the proposed 2022-2027 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 the report formed an important part of the Authority’s budget-setting process for the 2023/24 Budget, it also provided Cabinet with an overview of the potential financial implications for both the current year and for the period of the Authority’s Medium-Term Financial Strategy (MTFS).

 

In addition, the report acknowledged the continuing exceptional circumstances in which the 2023/24 Budget would need to be prepared.  The Authority was continuing to operate in a period of significant financial uncertainty brought about by a combination of the ongoing impact of the pandemic, significantly higher levels of inflation which was impacting energy and fuel costs and the outcome of the pay award for 2022/23 and future years.  The Authority was currently assessing the impact of the financial implications of the reforms in relation to Adult Social Care, which would undoubtably add to the financial pressure the Authority would face in 2023/34 and future years.  These factors would have an impact on the organisation’s ability to achieve planned Budget savings and income for 2023/24, its capacity to develop and deliver new Budget proposals for 2023/24, 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 2023/24 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.

 

It was highlighted that at the time the Authority’s Budget and Medium-Term Financial Plan was set in February 2022, it would have been impossible to anticipate or make provision for either the economic impact of the Russian invasion of the Ukraine or the wider cost of living crisis that had emerged in recent months.  As the Budget process progressed the impact of this and other factors would need to be accounted for, and therefore it remained essential for the Authority to have a robust plan in place to enable the preparation of a balanced and sustainable Budget.  The report therefore set out the process by which the Authority would build on the 2022/23 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 2023/24 and beyond.

 

The former Chancellor of the Exchequer, Rishi Sunak, had delivered the Spring 2022 Budget on 23 March 2022.  There were limited announcements which would impact on the Authority’s budget position directly, although there were some measures which would require administration by local authorities including an extension of the Household Support Fund from April 2022 and various business rate changes.  Full details of the key economic forecasts and key policy announcements made in the Spring Budget were included within the Medium-Term Financial Strategy which was appended to the report.

 

As in in recent years, the Authority would not receive detailed information about funding allocations for 2023/24 until autumn 2022 at the earliest.  Spending review announcements in 2021 covered one year only and as a result there remained high uncertainty about the levels of funding for 2023/24 and beyond. 

 

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 2025/26.  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 2023/24 to 2026/27.

 

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 2023/24, were set out in Appendix A and section 1.5.8 of the report.

 

Key aspects of the 2023/24 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 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 2023-2027 Financial Planning and Budget Process. The Director of Resources would be the project sponsor.

 

Details of the Budget Engagement Strategy for 2023/2024 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 such as council housing tenants.

 

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 2023-2027 Financial Planning and Budget Process.

 

Resolved that (1) the revised Medium-Term Financial Strategy and the proposed principles for Budget planning for 2023/24, as set out in Appendix A and section 1.5.8 of the report, be noted;

(2)  the proposed outline 2023-2027 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 to current and forecast inflation levels, the pay award and the ongoing financial impact of the pandemic;

(4)   the Budget Engagement Strategy as part of the 2023-2027

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 2022 and subsequently as part of the COVID-19 response beconsidered.

 

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

 

Supporting documents: