Cabinet received and considered the report of the Chief Finance Officer (CFO) on the Council’s Medium Term Financial Plan (MTFP) 2023/24 to 2027/28.  The MTFP set the financial framework for the next five years and was subject to confirmation of Government funding and several other factors that might affect the Council’s finances.  The report had been scrutinised by the Overview and Scrutiny Committee (OSC) on 21 November 2022 and a copy of the Minutes arising from the OSC meeting had been appended to the report for Cabinet’s consideration.

The following salient points were noted:

•     Budget Process: The Council followed a three phased budget process.  The first phase was to update the MTFP, which set out budget pressures and estimated the size of the budget deficit over the next five years. The second phase was to produce a detailed draft budget in January 2023. The third phase was to finalise the budget once the Government settlement had been announced and incorporate the Capital Strategy and revised Capital Programme into the MTFP for formal approval by Cabinet and full Council in February 2023.

•     Local Government Funding: In June 2022, the Government announced the introduction of a two-year financial settlement with effect from 2023; and that the local government ‘Fair Funding Review’ in consultation with local authorities in 2022 would be completed. The 2023/24 funding settlement was expected in December 2022, but at this stage it was unclear whether it would contain further clarification about the June 2022 announcements.

•     Cost Pressures: These included inflationary increases built into certain service contracts, increasing demand in Temporary Accommodation (TA), predicted increase in external audit costs, net financing costs due to the planned increase in capital investment on major projects such as the Property Investment Strategy and TA acquisition programme, the annual pay award, non-pay inflation increases, increasing electricity costs and a budget contingency of £200,000.

•     Corporate Plan: One of its key priority objectives was to achieve financial stability by end of 2025/26.  However, the current forecast shown in Appendix A to the report identified that without further action, an underlying budget deficit would remain until at least 2027/28 and the Council would not be able to replenish revenue reserves.

•     Financial Stability Programme: To achieve financial stability within five years by delivering costs savings and income in the following areas: service devolvement, invest to save, income generation and service prioritisation.  Significant progress had been made in areas such as the devolution of services and other smaller initiatives, however further work would be required if the Council was to achieve the targets set.

•     Business Rates (Non-Domestic Rates): The East Sussex Business Rates Pool enabled the Council to retain a greater share of any business rates growth.  In September, the Government sought the Council’s preference to continue with the pooling arrangements in 2023/24; this would require approval.

•     Non-Specific Revenue Grants: The five-year forecast assumed that New Homes Bonus Grant would be significantly reduced and would cease with effect from 2026/27.  It was  ...  view the full minutes text for item 54