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Medium Term Financial Strategy and Budget 2021/22

Published: 15/10/2020

At their meeting on 20 October, Cabinet members will be asked to review the overall forecast for the period 2021/22 – 2023/24 and to refer the list of cost pressures for 2021/22 to Overview and Scrutiny meetings in November.

Members will also be asked to discuss the solutions available to meet these cost pressures and re-set the funding strategy for 2021/22.

This report provides an update from the forecast position last reported in February 2020 for 2021/22 and the following two financial years.  The cost pressures identified for 2021/22 at that time were £9.829m.

A full review, taking into full account the ongoing impacts of the emergency situation,  has been undertaken to build an accurate and robust baseline of cost pressures that will need to be funded. 

The latest forecast position is below.  This is the funding we will need to find to bridge our budget gap:

2021/22 - £14.423m - £27.336m

2022/23 - £9.447m - £13.036m

2023/24 - £8.982m - £11.996m

Forecasts for 2022/23 and 2023/24 will continue to be refined alongside the work to agree the 2021/22 budget as decisions made throughout the process will impact on the projections for later years. 

Flintshire County Council’s Cabinet Member for Finance, Councillor Glyn Banks, said:

“The emergency situation continues to have a significant impact on the Council’s cost base and its ability to generate income.  The Welsh Government has made a number of funding announcements which have given some certainty as to how these additional costs and income losses can be recouped in the current financial year.

“The UK Government has announced that the autumn budget has been postponed which, in turn, impacts the Welsh Government budget.  However, we do expect that there will still be some form of a UK Spending Review on a date to be announced.

“We are facing unprecedented challenges this year and the Council has really limited efficiency options left after years of financial austerity.”

The cost pressures have been categorised as:

• Prior year decisions/ approvals including:

o Marleyfield residential care home extension;

o Single Person Discount is a one-off benefit for this year only.

• Loss of Income – reductions in demand are impacting on budgeted income levels across a wide range of service areas, including:

o Reduced energy sales (dependent on the availability of gas produced by two closed landfill sites);

o Markets – activity has reduced over time as well as footfall going down as a result of the COVID-19 situation.

• Legislative/Unavoidable Indexation – over which we have no direct control, including:

o The need to meet statutory obligations for risk assessments for all water supplies in Flintshire;

o North Wales Fire and Rescue Authority levy to which the Council will need to contribute an inflationary uplift.

• Issues requiring national resolution, including:

o Council Tax income is currently well below average and there has been a significant increase in demand for the Council Tax Reduction Scheme;

• Pay Awards: the impact of the increases for the nationally agreed pay awards for teacher and non-teacher pay which are not yet known.

• Strategic Considerations, including:

o Post 16 transport – a policy change due to changes in regulations means that any potential income anticipated from post 16 transport will now not materialise as it remains free of charge.

Solutions available to the Council to fund the cost pressures can be split into three main areas:

• Government funding

• Local taxation and income

• Service transformation and efficiencies.

Flintshire County Council’s Chief Executive, Colin Everett, said:

“Our funding strategy is highly dependent on enough national funding for local councils.  We receive our largest amount of funding from the Welsh Government.  

“For the Council to be sustainable, future settlements will need to reflect the national financial pressures that are outside of our control, for example, pay awards.

“There are no local budget choices presented at this stage.  There are no efficiencies of scale remaining and the position has not changed since we set the last annual budget.  The need for safe and resilient services has been highlighted by the response to the emergency situation.”