Agenda item

The Council received a report setting out an update on the Medium-Term Financial Plan (MTFP) and progress with the Financial Recovery Plan.

Councillors noted that the Council had agreed the 2023-24 budget in February 2023 with a £3.3m shortfall requiring further work to remove this gap, with the fallback position being the deployment of usable reserves.

An updated MTFP position had been presented to full Council on 25 July 2023 which set out the key issues and the position in which the Council was now left.  In summary, this had been a remaining in-year deficit of £1.7m and a budget gap of £18.3m over the MTFP period to 2026-27.

A Financial Recovery Plan had been presented to full Council at its extraordinary meeting on 30 August and updated at its last meeting on 10 October. This had set out the immediate and medium-term actions being taken to address both the in-year and medium-term budget gaps.

In October, the Interim s151 officer had concluded that sufficient progress had been made to avoid the need for a s114 report to be issued but that significant work was still required to produce a balanced budget for 2024-25 and beyond.

In addition to providing an update on the MTFP position, potential funding changes, and progress on the Recovery Plan workstreams, the report presented to the Council had also set out the outcome of the review of the Capital Programme.  If approved, this would remove £96.6m from the Approved and Provisional Capital programmes which, in turn, would reduce the Council’s projected borrowing needs.

The report had also provided a high-level update on the potential remaining budget gap to be addressed and the actions ongoing to address this. The work to date on the Financial Recovery Plan had reduced the July MTFP gap of £18.3m to £7.3m.  Although excellent progress had been made, significant further work was still required to produce a balanced budget for 2024-25.

Prior to their formal consideration of the report, the Interim Section 151 Officer commented the government had issued a policy statement that afternoon regarding the Local Government Funding Settlement, which had set out some of the high-level expectations around council tax and funding for next year.  The statement had confirmed that the council tax rise would actually be 2.99% maximum. It had also confirmed a 3% funding guarantee for the Council that there would be another single year allocation of New Homes Bonus and also that the revenue support grant would increase by RPI.  All of these were in line with the assumptions in the report.

The Lead Councillor for Finance & Property, Councillor Richard Lucas proposed, and the Leader of the Council, Councillor Julia McShane seconded the adoption of a motion to approve the changes proposed to the Approved and Provisional Capital Programmes described in the report.

The Council noted that the report had also been considered by the Corporate Governance & Standards Committee at its meeting on 16 November 2023.  The Committee supported the proposed changes to the Approved and Provisional Capital Programmes, subject to a number of comments which were set out in the report to Council.  At its meeting on 23 November 2023, the Executive noted the updated MTFP position and the further work ongoing to produce a balanced budget for 2024-25, and also commended the proposed changes to the Council for adoption.

During the debate, councillors made a number of points, which are summarised as follows:

·      There had always been doubts over whether the full capital borrowing programme was ever going to be accomplished, but it was worth noting that the only significant change in the capital programme over the past four years had been the addition of Shaping Guildford’s Future.

·      Welcome the fact that since July, the Medium-Term Financial Plan deficit had been reduced by £11 million to £7.3 million, which represented huge progress, and had avoided a Section 114 notice.

·      It would have been helpful to have provided a calculation of the MRP per project.  Whilst the reduction in the capital programme of £96 million was noted, the actual impact on the General Fund position was relatively small at £2.5 million over three years.

·       In response to concerns over continuing uncertainty in respect of key projects such as the Council’s climate change commitment to be Net Zero by 2030 and the Master Plan, the Leader of the Council reminded councillors that the Lead Councillor for Regeneration had already indicated that there would be a briefing for all councillors in the New Year on Shaping Guildford’s Future and was happy to agree that a climate change briefing for councillors should be arranged.

The Council

RESOLVED: That the proposed changes to the Approved and Provisional Capital Programmes set out in Appendix 1 to the report submitted to the Council, be approved.

Reason:

To enable the Council to protect the current level of reserves and to set a balanced budget and a robust Medium-Term Financial Plan.