Agenda item

To consider a report from the Cabinet Member for Finance (copy enclosed)

Members considered a report from the Cabinet Member for Finance which set out the proposed financial disaggregation and aggregation process from a funding, revenue cost and balance sheet perspective to give initial potential funding envelopes for the Unitary Councils and Cumbria Fire and Rescue Service. 

The report also provided clarity on the decisions required by each Unitary Council and Cumbria Fire and Rescue Service to deliver the strategic planning process to enable the development of their 2023/24 revenue and capital budgets and Medium Term Financial Plans, and included the timeline for the strategic planning approach required to support the establishment of two financial sustainable Unitary authorities and a financially sustainable Cumbria Fire and Rescue service (CFRS).

As part of the LGR Implementation Plan a strategic planning process had been proposed that enabled the two new Unitary Councils and CFRS to determine how they would deliver services to achieve their Council Plan priorities and deliver them within a balanced budget.

For 2023/24 the strategic planning process requiref decisions and information to be provided as part of the overall financial disaggregation work.  It would also require individual organisations to make decisions on their own assumptions around financing and risk in order that a balanced budget for 2023/24 and Medium-Term Financial Plan could be finalised for approval by the Executive and Full Council in February 2023.

In respect of the Financial Disaggregation work there were a number of decisions which would need to be taken jointly by both unitary authorities and CFRS to approve the principles and approach taken to allocate the existing resources.

These decisions included capital and revenue funding and expenditure and all balance sheet items (which included reserves, liabilities, and assets).

The Cabinet Member then took members through the detail of the report.

Each sovereign authority had a MTFP for at least a 3-year period and many for a 5-year period.  Each MTFP had been prepared on the basis of assumptions around costs and revenues and around each authority’s balance of risks and opportunities and risk appetites.  The published MTFP budget gap was around £32m for 2023/24 and £35m for 2024/25:

On conclusion of his presentation the Cabinet Member ended by detailing the conclusion and next steps.

Cllr Hughes asked the Cabinet Member for Finance to expand on why Westmorland and Furness would be more reliant on Council Tax that Cumberland would be.

The Cabinet Member responded to say the main reason was that the need was higher in Cumberland than it was in Westmorland and Furness, which had far less areas of deprivation.  Cumberland would also be getting a greater share of the public health grant.

Cllr Battye asked when Scrutiny members would get the chance to consider the draft budget and medium term financial plan.

The Interim Chief Finance Officer said the draft budgets would not be available by the next meeting on 21 September, however, they would be available by October.  The draft budgets would be out for public consultation and the Overview and Scrutiny Committee would have the opportunity to scrutinise the draft budgets during this period.     

The Cabinet Member for Finance felt the increases in inflation and the cost of living crisis could affect the rate of council tax needed, and the figures to be set by Government, and this may not be known until December.  This could also have an effect on business rates.

Cllr Dew thanked the Cabinet Member for the report and asked if the Medium Term Financial Plan was proposed to be a 5 year plan, and whether Cabinet yet had any idea what the budget gap was likely to be for Westmorland and Furness Council.  He also asked about the way in which ‘transformation’ had been built into the budget planning.

The Cabinet Member responded to say a separate had been agreed between Day 1 budgets and supplementary budgets as this was the only way to build in transformation.

He was unable to confirm the budget gap split as this had not yet been worked out, however, he did not envisage that the split would be heavily weighted one way or the other. He confirmed that the MTFP would cover a five year period.

Cllr Hodgson asked the Cabinet Member when the setting of council rates would be considered. The Cabinet Member said Council Tax would be reviewed each year, but all the sovereign council rates would be harmonised over a 5 year period.    

The Chair reminded members that at the last Scrutiny meeting members it was agreed that the committee wanted the chance to scrutinise the draft budget and medium term  financial plan, and based on the conversation today this may require the date of the November meeting to be brought forward.  She asked officers to look at this and amend the date if necessary.

RESOLVED, that the Overview and Scrutiny Committee notes the progress to date and the next steps in preparing budgets for 2023/24.