Agenda item

Consider report by Executive Director, Finance and Regulatory.  (Copy attached.)

2.1     There had been circulated copies of a report by the Executive Director Finance & Regulatory Services on the estimated revenue and capital resources available for financial year 2020/21 following publication of the local government finance settlement (LGFS) on 6 February 2020.  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 2020/21 as well as draft plans for future years.  The Corporate Management Team had worked with political groups to support Members in setting a corporate revenue and capital budget, meeting identified pressures facing the Council.  These pressures had arisen from a variety of factors and 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 general 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 £295.757m were available to Elected Members assuming the Council accepted the 2020/21 settlement offer from Scottish Government including the ability to vary Council Tax by up to 4.84% in 2020/21.  The impact of other potential variations in the Council Tax was shown in the tables contained in paragraphs 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 2020/21 represented the third 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.  There was a commitment by Scottish Government to provide a three-year settlement from 2020/21; this had not materialised, but it was hoped that from 2021/22 a three year settlement would be provided assisting long term financial planning.

2.2     The Council had approved a revised approach to organisational change under the banner of ‘Fit for 2024’ when the budget was set for 2019/20 in February 2019.  This approach was reshaping the transformation programme ensuring individual projects were more cross-cutting and focused on joined up business process review.  The Fit for 2024 programme had been a strong driver in developing financial plan proposals for the 5-year period of the plan.     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 2020/21 – 2024/25.  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 2020/21 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 to be held in contingency.  In terms of borrowing, the proposed Plan included a total borrowing over the 10-year period of £202m borrowing an increase of £108.4m from the previous plan.  It was estimated based on assumptions around cash flow and interest rates that this was deliverable within the estimated revenue resources, although there was a risk however if interest rates rose above the assumed levels that additional charges may be incurred.  Regular monitoring would be undertaken to ensure that borrowing levels were sustainable and affordable.  The Executive Director Finance & Regulatory Services answered Members’ questions and explained that 80% of Council funding came from Scottish Government which included funding for the core and new initiatives; the pattern over the last few years had been less funding on the core and more on new initiatives which were ring fenced. 

DECISION

AGREED to:-

(a)       note the estimated revenue resources for 2020/21 to 2024/25;

(b)       note the estimated capital resources for 2020/21 to 2029/30 and the requirement to adhere to the prudential code for capital borrowing;

(c)       note the flexibility provided through the LGFS process to allow Council Tax to be increased by up to 4.84% in 2020/21, and this flexibility was factored in to the total resources made available to Councils;

(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;

(e)       proceed to consider the proposed Financial Plans submitted by political groups for 2020/21; and

          (f)      approve the Council Taxes to be paid in 2020/21 in respect of all chargeable dwellings.