Agenda item

Consider report by Chief Financial Officer on the financial strategy and estimated Financial Plan resources for the Council covering the period 2019/20. (Copy attached.)

There had been circulated copies of a report by the Chief Financial Officer on the estimated revenue and capital resources available for financial year 2019/20 following publication of the local government finance settlement on 17 December 2018 and subsequent funding notification from Scottish Government for 2019/20 on 31 January 2019.  The report recommended the financial strategy to be followed by the Council the following year and identified the financial constraints and major risks to be addressed.  The report also outlined the process supporting the construction of the draft revenue and capital Financial Plans for 2019/20 as well as draft plans for future years.  The Corporate Management Team had worked with political groups to support Members set a corporate revenue and capital budget, meeting identified pressures facing the Council. These pressures had arisen from a variety of factors.  The principle pressures identified were due to the anticipated continuing constraints on external revenue and capital funding from central government, the impact of national pay negotiations, the increasing pressures from demographics, particularly the increasing numbers of very elderly people requiring care services, as well as inflation.  The budget development process had been conducted to ensure that the financial plans of the Council were aligned with its business and people planning objectives and the level of resources available.  The report highlighted that total revenue resources of £283.238m were available assuming the Council accepted the 2019/20 settlement offer from Scottish Government along with a 3% increase in the Council Tax rate approved by Council on 20 December 2018 based on the parameters set out in the LGFS.  Subsequently the Cabinet Secretary wrote to Council Leaders on 31 January 2019 explaining he was now willing to allow Councils to vary Council Tax by up to 4.79% in 2019/20.  The impact of other potential variations in the Council Tax was shown in the tables in paragraph 7.2 and 9.1 of the report.  The benefits, in terms of financial stability and effective change management, derived from adopting a longer term corporate approach to the revenue and capital planning process and were widely accepted.  Financial year 2019/20 represented the second year of the revenue 5 year financial plan for the Council agreed in February 2018.  It was anticipated Members would continue to adopt a longer term approach to financial planning and consequently the estimated resources available over the following four financial years were also shown.  These estimates would continue to be updated annually as the detail of the financial settlement from Scottish Government became known.  It was anticipated from 2020/21 that a three year settlement would be provided from Scottish Government assisting long term financial planning.  Regular monitoring reports submitted to the Executive Committee during 2018/19 had identified that there were significant savings which had not yet been delivered on a permanent basis.  The Corporate Management Team had therefore considered a revised approach to organisational change under the banner of ‘Fit for 2024’ which would reshape the transformation programme ensuring individual projects were more cross-cutting and focused on joined up business process review as detailed at paragraph 1 above.  In line with previous Audit Scotland recommendations scenario planning had once again been used to model a range of scenarios with regard to Scottish Government grant, Council Tax increases and estimated future inflation.  This analysis was included at Appendix 2 to the report.  Approval was also sought for the financial strategy for the Council covering the period 2019/20 – 2023/24.  The strategy provided the overall framework for the financial management of the Council and covered the revenue budget, capital investment plan, the Council’s treasury management arrangements and the recommended policy on reserves.  The approach to the development of the 2019/20 budget had been aligned with the financial planning process in the NHS reflecting the increasing maturity of the Integration Joint Board (IJB) and the requirement to deliver shifts in the balance of care across the partnership from acute to community settings.  The financial plan was highly dependent on the delivery of savings and a risk based approach had once again been used to set the level of recommended balances.  These were held both as contingency against unforeseen circumstances, to facilitate the delivery of savings and to smooth the financial plan in the event of non-realisation of the savings envisaged.

DECISION

AGREED to:-

(a)       note the estimated revenue resources for 2019/20 to 2023/24;

(b)       note the estimated capital resources for 2019/20 to 2028/29 and the requirement to adhere to the prudential code for capital borrowing;

(c)       note the flexibility provided by the Cabinet Secretary to allow Council Tax to be increased by up to 4.79% in 2019/20;

(d)       approve the financial strategy set out in section 4.4 (a) to (h) of the report having considered the risk register highlighted in appendix 1 to the report; and

(e)     proceed to consider the Administration’s proposed Financial Plan for 2019/20 including the council taxes to be paid in respect of all chargeable dwellings to fund these plans as part of the budget motion.