Agenda item

Consider report by Director Finance and Corporate Governance. (Copy attached.)

7.1       There had been circulated copies of a report by the Director Finance and Corporate Governance advising Council of the estimated revenue and capital resources available for financial year 2022/23 following publication of the Local Government Finance Settlement (LGFS) on 20 December 2021 and the subsequent announcement of further one off funding of £120m for Local Government on 27 January 2022.  The report recommended the financial strategy to be followed by the Council next financial year and identified the financial constraints and major risks to be addressed.  It also outlined the process supporting the construction of the draft revenue and capital Financial Plans for 2022/23 as well as draft plans for future years.

7.2       The report explained that the Strategic Leadership 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.  The principal pressures identified were 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 highlighted that total revenue resources of £324.871m were available to Elected Members assuming the Council accepted the 2022/23 settlement offer from Scottish Government.  The settlement gave Councils full flexibility to set the Council Tax rate that was appropriate for their local authority area for 2022/23.  The impact of other potential variations in the Council Tax were detailed in 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 were widely accepted.  This approach had been developed for financial year 2022/23 with a 10 year revenue financial strategy being included for approval elsewhere on this agenda.  This brought the long term planning horizon for both revenue and capital in line at 10 years. 

7.3       Financial year 2022/23 represented the fifth 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.  Estimates would continue to be updated annually as the detail of the financial settlement from Scottish Government became known.  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 continued to reshape 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.

7.4       The report also sought approval of the financial strategy for the Council covering the period 2022/23 – 2026/27.  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 2022/23 budget had once again 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.  This in turn had 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.  It was anticipated that the COVID-19 reserve would continue to be deployed in 2022/23 to support the Council during the COVID-19 recovery period.  The Council’s financial strategy had been adapted accordingly using the best information available at the 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. 

DECISION

AGREED to:-

(a)      note the estimated revenue resources for 2022/23 to 2026/27;

(b)      note the estimated capital resources for 2022/23 to 2031/32 and the requirement to adhere to the prudential code for capital borrowing;

(c)      note the flexibility provided through the LGFS process giving Councils full flexibility to set the Council Tax rate that was appropriate for their local authority area for 2022/23,;

(d)      approve the financial strategy set out in the report, including the recommendation to maintain unallocated reserves at £8.421m for 2022/23, having considered the risk register highlighted in appendix 1 to the report; and

(e)      proceed to consider the proposed Financial Plan for 2022/23.