Agenda item

Consider report by Acting Chief Financial Officer.  (Copy attached.)

         There had been circulated copies of a report by the Acting Chief Financial Officer recommending the financial strategy to be followed by the Council next financial year, confirming resources available to the Council following the publication of the Local Government Finance Settlement and identifying 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 2023/24 as well as draft plans for future years.  The Council 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.  The principal pressures identified were due to the anticipated continuing constraints on external revenue and capital funding from central government, the unprecedented level of inflationary increases first experienced in 2022/23 and extending in to 2023/24, the ongoing uncertainty around national pay negotiations, and the increasing pressures from demographics, particularly the increasing numbers of older people requiring care services and children requiring to be looked after and accommodated out with the authority.  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 £343.761m were available assuming the Council accepted the 2023/24 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 2023/24 with no cap on Council Tax increases.  The impact of 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 2023/24 with a 10 year revenue financial strategy being approved at paragraph 4 above and this brought the long term planning horizon for both revenue and capital in line at 10 years.  Financial year 2023/24 represented the first year of the current Administration’s revenue 5 year financial plan for the Council.  It was anticipated that a longer term approach to financial planning would be continued and estimates would continue to be updated annually as the detail of the financial settlement from Scottish Government became known. Council approved a report on 16 February 2023 to change the statutory accounting treatment for Service Concession Arrangements (SCAs) as set out in Finance Circular 10/2022.  This flexibility permitted Councils to undertake internal accounting changes that extend the period over which the principal repayment of the unitary charge could be made over the life of an asset rather than the life of the contract.  This resulted in a one-off accounting credit to the Council and ongoing annual savings for a period of time.  The 2023/24 budget proposals presented reflected benefits from adopting this change in accounting treatment.  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 continued to reshape the transformation programme ensuring individual projects were more cross-cutting and focused on joined up business process review.  The report also sought approval of the financial strategy for the Council covering the period 2023/24 – 2027/28.  The strategy provided the overall framework for the financial management of the Council and covered the revenue budget, capital investment plan, treasury management arrangements and the recommended policy on reserves.  A risk based approach had once again been used to set the level of recommended balances to be held in contingency. 

DECISION

AGREED to:-

(a)       note the estimated revenue resources for 2023/24 to 2027/28;

(b)       note the estimated capital resources for 2023/24 to 2032/33 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 2023/24;

(d)       approve the Financial Strategy, as set out in the report, including the recommendation to maintain unallocated reserves at £8.448m for 2023/24, having considered the risk register highlighted in Appendix 1 to the report; and

(e)       proceed to consider the proposed Financial Plan for 2023/24.