The Director of Finance will present a report (Document “O”) on the Medium Term Financial Strategy (MTFS) update that sets out the forecast financial resources available to the Council to support the delivery of its key priorities as set out in the Council Plan 2021-2025.

Since 2010, the Council has had to deliver over £300m of budget reductions and increase council tax in order to meet the financial pressures arising from national austerity measures, rising demand and increasing costs.  Having to cut costs and increase income while continuing to meet the needs of residents has required difficult decisions and placed services under pressure. Nevertheless, a robust and prudent approach to financial management and the use of resources meant that immediately prior to Covid, Council finances had achieved a greater degree of health and stability than at any point over the previous decade. 

The continuing impact of Covid-19 on Council services through additional expenditure and reducing income, alongside inflationary pressures on both pay and prices not seen since the 1970s due at least in part to the war in Ukraine, and the effect of the cost of living crisis on demand for Council services have now altered that outlook for the worse, and created a great deal of additional uncertainty. Recent years have also seen significant growth in demand for Children’s Social Care nationally which has also been experienced in Bradford. Challenges in recruitment and retention, and pressures in adult social care are also contributing to a situation in which Council finances are under considerable strain.

These financial pressures are compounded by repeated delays to Government reforms of Local Government finance such as business rates reset, and Fair funding formula review implementation, which are expected to result in additional funding for the Bradford District. Failure to implement these measures has resulted in further financial pressures above those that would otherwise have been the case.

Despite consistently delivering a balanced budget in previous years, the factors outlined above have created a forecast budget gap that the Council will struggle to address without significant additional funding.

The revised forecast identifies for planning purposes a financial gap of c£77m in 2023-24, reducing to £72m in 2024-25 and £64m in 2025-26.

Given the level of uncertainty, a number of assumptions have had to be made, and these will need to be revised throughout the budget planning process, and in advance of setting the budget at Budget Council in February 2023.

Recommended -

            That having considered the Medium Term Financial Strategy as an assessment of the Council’s financial outlook to 2025-26, and a framework for it to remain financially viable and deliver sustainable public services, in line with its priorities, that Executive approves the updated and revised Medium Term Financial Strategy at Appendix 1 to Document “O”.

(Corporate Overview & Scrutiny Committee)     

(Andrew Cross – 07870 86523)

The Director of Finance presented a report (Document “O”) on the Medium Term Financial Strategy (MTFS) update that set out the forecast financial resources available to the Council to support the delivery of its key priorities as set out in the Council Plan 2021-2025.

Since 2010, the Council has had to deliver over £300m of budget reductions and increase council tax in order to meet the financial pressures arising from national austerity measures, rising demand and increasing costs.  Having to cut costs and increase income while continuing to meet the needs of residents required difficult decisions and placed services under pressure. Nevertheless, a robust and prudent approach to financial management and the use of resources meant that immediately prior to Covid, Council finances had achieved a greater degree of health and stability than at any point over the previous decade. 

The continuing impact of Covid-19 on Council services through additional expenditure and reducing income, alongside inflationary pressures on both pay and prices not seen since the 1970s due at least in part to the war in Ukraine, and the effect of the cost of living crisis on demand for Council services had now altered that outlook for the worse, and created a great deal of additional uncertainty. Recent years had also seen significant growth in demand for Children’s Social Care nationally which had also been experienced in Bradford. Challenges in recruitment and retention, and pressures in adult social care were also contributing to a situation in which Council finances were under considerable strain.

These financial pressures were compounded by repeated delays to Government reforms of Local Government finance such as business rates reset, and Fair funding formula review implementation, which were expected to result in additional funding for the Bradford District. Failure to implement these measures had resulted in further financial pressures above those that would otherwise have been the case.

Despite consistently delivering a balanced budget in previous years, the factors outlined above had created a forecast budget gap that the Council will struggle to address without significant additional funding.

The revised forecast identified for planning purposes a financial gap of c£77m in 2023-24, reducing to £72m in 2024-25 and £64m in 2025-26.

Given the level of uncertainty, a number of assumptions had to be made, and these would need to be revised throughout the budget planning process, and in advance of setting the budget at Budget Council in February 2023.

The Leader noted that we were living through unprecedented times where energy costs had increased by 118% and child placements had increased by 30%.  She added that the Local Government Association was predicting £2.4 billion in extra costs to Local Authorities to which there needed to be a response from government.  She referred to the impact on residents and their concerns at how they would get through the winter.  She emphasised that the Council needed to be on a frim financial footing to support them and added that she had written to the new Prime Minister to this effect.  She added that a rigorous financial review was being undertaken across all departments of the Council to identify savings.

The Healthy People and Places Portfolio Holder referred to the cost of living crisis which was compounding the funding issues for adults in receipt of social care that had been identified over a number of years and called upon the incoming Prime Minister to ensure that that adult social care was properly funded.

The Leader noted that the local authority adult social care provision supported the NHS and emphasised the pressing need for a response from Government to the current cost of living crisis.

The Children and Families Portfolio Holder noted that the cost of living crisis was effecting all of Children’s Services in the district and stressed in particular the effect of market forces regarding placements and the number of agency workers.  She called on the Government to regulate the market to enable the Council to afford services going forward.  The Leader noted that the McAlister review had called for this and hoped that action would be taken.

An opposition member referred to the projected gap in funding due to children’s social care and noted the implications for the Children’s Trust taking over in the next financial year.

The following amendment to s216 of Document “O” was noted: delete 2023 and substitute with 2025.

The Leader thanked officers for managing the current situation.  She emphasised the need for collaborative working with Government to ensure that the Council had the right tools, on the front line, to support people in the District.

Resolved -

That having considered the Medium Term Financial Strategy as an assessment of the Council’s financial outlook to 2025-26, and a framework for it to remain financially viable and deliver sustainable public services, in line with its priorities, that Executive approves the updated and revised Medium Term Financial Strategy at Appendix 1 to Document “O”.

ACTION: Director of Finance