Medium Term Financial Strategy

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Medium Term Financial Strategy

• Consultation presentation to Area and Scrutiny
  Boards

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• Introduction
• The Cabinet wishes to update its MTFS each year
  on a rolling programme. This year we intend to
  present to Council one integrated MTFS which is
  driven by the Councils corporate priorities and
  the Community Strategy.
• An important part of the consultation is the
  level of council tax set by the council to
  deliver the improvements in services to
  residents, tourists and businesses.

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• The Cabinet will consider feedback from the Area
  and Scrutiny Boards prior to finalising their
  budget proposals for the Council to consider in
  February 2006.
• The final MTFS presented to Council will show the
  direction the Council wishes to take over the
  next three to five years and the resources
  available to deliver the Councils priorities.

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• The starting point is for Cabinet to alter or
  amend any of our chosen priorities. Cabinet has
  confirmed that the main thrust of our work over
  the next five years will be
• Safer, cleaner streets
• Greater economic prosperity
• Better resource management.

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• National context
• This is potentially the area with the most risk
  attached for our plans and aspirations to enhance
  services to residents.
• Council tax banding the government announced
  last week that is was postponing the 2007 council
  tax re-banding exercise. We now have some
  certainty over the tax base for the next two
  years but governments proposals for the long term
  funding of local authorities is unsure in the
  medium term.

6

• Three year grant settlements the government is
  proposing to provide local authorities this year
  with indications of the level of government grant
  for three years. This is very welcome for all
  local authorities in helping produce meaningful
  longer term plans for the communities we serve.
  However the likely settlement figures will not be
  published until December. The indications are
  that a settlement of 0.8 may be applied to
  district councils.

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• 3 Service development - The increasing number of
  initiatives we are expected to deliver, both
  Government and local, mean that we will likely
  face increased emphasis on policy prioritisation.
  
• These include recycling targets set by
  Government which we have met and then exceeded,
  new licensing requirements through to the work
  Cabinet has done on improving the street
  cleansing, public conveniences and the savings
  made on the business support contract coupled
  with 3 million of investment

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• Principles behind the MTFS
• Working to a maximum tax increase of 3
• Providing low risk strategy- Members wish to see
  sustainable growth rather than looking for
  savings over short timescales in future years.
• Continuing to see resources directed to its
  priorities.

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• Debt free status- the Councils revenue account
  currently has 810,000 of interest income from
  investments of 13m. Most of these investments
  are relating to our capital resources (9m) and
  the remainder is around cash flow management.
• As we spend capital resources income falls and
  eventually we will start to borrow and repay
  loans with interest. If we can afford to move
  this income from revenue to capital we can
  continue to fund the capital schemes needed to
  deliver services.

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• Moving this investment income may have to be
  phased over a number of years and Cabinet will be
  asked to approve this policy later in the budget
  cycle based on affordability to our tax payers.
• Income generation 2006/7 would be the year we
  revise car park charges, any increase could be
  used to fund our plans to upgrade car parks on a
  rolling programme.

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• Growth and savings.
• Portfolio holders and their officers can work up
  high level schemes to enhance service delivery
  for our consideration. The remainder of our
  budgets will be uplifted by likely inflation to
  March 2007 prices. The benefits of this approach
  are that
• The list of budget changes will be much shorter
  than in previous years.
• The 2006/7 budget will be focused on priorities.

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• The next steps
• There is much work for officers and members to
  complete before Christmas.
• Finance officers will be working on the detail of
  a five year MTFS which includes forecasts of
  revenue and capital resources.
• Service managers will be bringing their
  recommendations for the fees and charges to the
  December Cabinet.

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• We need realistic estimates for large income
  generating budgets- mainly planning delivery
  grant and car park income.
• Financial models will be prepared on the
  viability of using investment income to enhance
  our capital resources.
• We currently have healthy balances, but we may be
  given a poor government grant settlement. The
  MTFS will model using some of those balances to
  protect service delivery but staying at no less
  than 1.2 million

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• Business plans will be prepared using the
  guidelines above and relate resources to spending
  plans.
• 7. The Council will embark on a budget
  consultation exercise this involves the
  Scrutiny and Area Boards, the Mendip Strategic
  Partnership and the tax payers and business
  community of the district. The local press also
  report widely the Councils spending and taxation
  plans.

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• We are very early in the planning cycle which
  will set the Councils budget and business plans
  for next year.
• Future reports and presentations to Area and
  Scrutiny Boards will keep Members and the public
  informed as the details budget proposals from
  Cabinet. All of the reports are available on the
  Councils website.