Agenda item

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

There had been circulated copies of a report by the Executive Director, Finance and Regulatory providing details of the estimated revenue and capital resources available for financial year 2021/22 following publication of the Local Government Finance Settlement (LGFS) on the 1st February 2021 and the subsequent approval of the Local Government Finance Order approved by Parliament on the 10^th March 2021.  The report recommended the financial strategy to be followed by the Council next financial year, identified the financial constraints and major risks to be addressed and outlined the process supporting the construction of the draft revenue and capital Financial Plans for 2021/22 as well as draft plans for future years.  The Corporate Management Team had supported Members to set a corporate revenue and capital budget, meeting identified pressures facing the Council. These pressures had arisen from a variety of factors but were principally due to the anticipated continuing constraints on external revenue and capital funding from central government, the uncertainty around national pay negotiations, the increasing pressures from demographics, particularly the increasing numbers of older 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 explained that total revenue resources of £314.657m were available to Elected Members assuming the Council accepted the 2021/22 settlement offer from Scottish Government.  The Council agreed on the 25^th February 2021 to freeze Council Tax at the 2020/21 rates  and accept funding of £1.955m provided by Scottish Government for this purpose, this funding being broadly comparable to a 3% increase.  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 were widely accepted.  Financial year 2021/22 represented the fourth year of the revenue 5 year financial plan for the Council first 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. The Council 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 and this analysis is included in Appendix 2 to the report.  The report also sought approval of the financial strategy for the Council covering the period 2021/22 – 2025/26.  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 2021/22 budget had been prepared against a background of significant financial uncertainty caused by the COVID-19 pandemic.  The impact of COVID-19 on wider society had been profound and this in turn had significant implications for the Council’s finances and its service delivery model.  It was anticipated that these impacts would continue to be felt for some time to come, even once lockdown restrictions were raised.  The Council’s financial strategy had been adapted accordingly using the best information available at this time. A risk based approach had once again been used to set the level of recommended balances to be held in contingency recognising the uncertainty caused by the Pandemic.  In response to question on the likely allocation of further funding, the Executive Director advised that Scottish Borders Council normally received around 2.2% but this could vary depending on the type of funding.

DECISION

AGREED to:-

(a)       note the estimated revenue resources for 2021/22 to 2025/26;

(b)       note the estimated capital resources for 2021/22 to 2030/31 and the requirement to adhere to the prudential code for capital borrowing;

(c)       approve the financial strategy set out in in the report, including the recommendation to maintain unallocated reserves at £6.315m for 2021/22, having considered the risk register highlighted in Appendix 1 to the report;

(d)       proceed to consider the proposed Financial Plan for 2021/22; and

(e)       note that a freeze on Council Tax at current levels was approved by Council on 25^th February 2021.