8
Report to Scrutiny Panel
Name of Scrutiny Panel
USE OF RESOURCES
Meeting Date
21 AUGUST 2013
Subject
THE COUNCIL’S MEDIUM TERM FINANCIAL STRATEGY
Wards Affected
ALL
Report of
HEAD OF FINANCE
Type of Item
(please tick )
Review existing policy
Development of new policy
Performance management (inc. financial)
Briefing (inc. potential areas for scrutiny)
Statutory consultation
Council request
Cabinet request
Member request for scrutiny (CCFA)

Why is it coming here?
Use of Resources Scrutiny Panel has included the Medium Term Financial Strategy (MTFS) on its work
plan for 2013. This item will give the Panel an opportunity to make recommendations to Cabinet on the
assumptions within the MTFS when it is considered.
What are the key points?
The MTFS is a key element of the Council’s strategic planning framework. The MTFS will include
an analysis of the most significant national and local policy initiatives which will have service and
financial implications for the Council. It will also include the main assumptions which need to be
considered in preparing the financial forecasts.
Possible courses of action
Use of Resources Scrutiny Panel can make recommendations to Cabinet when it considers the
MTFS at its meeting in September.
Contact officer
Nigel Broadbent
Assistant Head of Finance (Accountancy)
Chief Executive’s Office
01422 393505
Should this report be exempt?
No
1.
Background
1.1
The Medium Term Financial Strategy (MTFS) is a key element within the
Council’s overall strategic planning framework. The Strategy takes a threeyear perspective and sets a framework for how budget pressures will be
prioritised within the best estimates of available capital and revenue
resources. The MTFS is reviewed each year to cover a new third year
(2016/17 in this case) and updated to reflect current issues.
1.2
It is usual for the MTFS to be framed in the context of some uncertainty but
there is more uncertainty than ever this year given the lack of a 3 year
settlement, revisions to public spending targets and major policy changes
occurring at a national level.
2.
Main issues for Scrutiny
2.1
The MTFS includes financial forecasts of the amount of funding, likely levels
of spending and therefore the savings required over the next three years. In
order to produce these forecasts a number of assumptions have to be made.
The key assumptions are listed below.
2.2
Funding assumptions
The MTFS will include assumptions around Government funding in line with
the most recent announcements covering Revenue Support Grant, Education
Services Grant and New Homes Bonus. Actual allocations of these grants will
not be known until the Local Government Finance Settlement is announced in
December/January. The MTFS will also need to make assumptions around
the local share of retained business rates and council tax increases. Clearly
the Council has some discretion over the council tax increases subject to a
limit above which it must hold a local referendum on the proposed increase
(2% for 2014/15 and 2015/16). Every 1% reduction in the council tax increase
would result in additional savings needing to be identified of around £700k per
annum.
The MTFS also uses assumptions about fees and charges for Council
services e.g. parking and sports charges etc. The draft MTFS will assume that
these charges should increase by 2% per annum. Reducing the assumed
increase in charges by 1% would add around £200k per annum to the savings
required by the Council.
2.3
Expenditure assumptions
Some of the key expenditure assumptions currently being considered within
the MTFS are:
Pay awards
Contract price increases
Other price increases
2014/15
1%
2.5%
0%
2015/16
1%
2.5%
0%
2016/17
2%
2.5%
2%
The MTFS will also make provision for:
 Energy price increases in 2015 (potentially up to 40%) as a result of
switching the UK from fossil fuel to low carbon generation
 Landfill tax increases by £8 per tonne per annum
 Increased contributions to the West Yorkshire Plus Transport Fund
 Fall out of the employers National Insurance contracted out rate as the
Government creates a single tier pension
 Demographic growth in adult health and social care clients in 2016
 Not achieving planned savings where necessary and other budget
pressures.
3.
Consultation
3.1
Extensive consultation was last undertaken in 2010 on spending priorities
although the draft budget is issued for public consultation each year. The
extent of consultation undertaken this year will depend upon the degree of
change to spending plans required for 2014/15 but will be undertaken in four
phases:

Presentation
(September)

Confirmation of resource prioritisation and necessary consultation
(October-December)

Presentation of Draft Budget proposals for consultation (January 2014)

Presentation of the Final Budget to Budget Council (February 2014)
of
Medium
Term
Forecast,
Strategy
and
Priorities
The MTFS therefore represents the first of four main stages in setting the
Council’s final budget.
4.
Further action and timescales
4.1
Cabinet is due to consider the Medium Term Financial Strategy at its meeting
on 9 September 2013 and make recommendations to Council on 26
September 2013.
5.
Options appraisal
5.1
The Council is required to produce a Medium Term Financial Strategy.
6.
Conclusions
6.1
The Council has developed the MTFS as the cornerstone of the budget
process and it has been instrumental in guiding this process. The scale of the
reductions in spending required over the period of the plan is likely to be
substantial. The budget process will therefore have to reflect the fact that the
Council will need to challenge its existing priorities and make some tough
decisions in order to meet the financial challenge particularly in 2015/16 and
2016/17 when further significant reductions in Government funding are due to
take effect.
7.
Appendices
None.
8.
Background documents
None
9.
Documents available for inspection at
Calderdale MBC Finance Service, Princess Building, Halifax HX1 1TP.