Agenda item

Medium Term Financial Outlook

This report sets out the overall financial position facing the Council and highlights the significant risks, issues and uncertainties with regards to the Council’s Medium Term Financial Strategy (MTFS). It also sets out the proposed budget setting strategy for 2025-26 and outlines how the MTFS will aim to provide a framework to invest in broader ambitions and long-term priorities such as the Borough Plan, the cost-of-living crisis and other future steps to ensure the Council continues to operate in a financially sustainable and resilient way as well as supporting residents in need.

Decision:

Cabinet RESOLVED to:

(1) Note the contents of the report and the potential financial impact on the Council’s Medium Term Financial Strategy, as set out within the report.

(2) Agree the budget setting process for 2025-26, as set out in section nine of the report.

(3) Endorse the response to the Minister for Local Government on Brent’s productivity plans, as set out in Appendix A of the report.

(4) Note and agree the proposed 2023-24 capital budget carry forwards and capital virements for 2024-25 as set out in section ten of the report.

(5) Note the financial position with regards to the Housing Revenue Account, as set out in section eleven of the report.

(6) Note the financial position with regards to Schools and the Dedicated Schools Grant, as set out in section twelve of the report.

Eligible for call-in: Yes

Deadline for submission of call-in: 6pm on Monday 22 July 24

Minutes:

Councillor Mili Patel (Deputy Leader and Cabinet Member for Finance & Resources) introduced a report which set out the overall financial position facing the Council and highlighted the significant risks, issues and uncertainties with regard to the Council’s Medium Term Financial Strategy (MTFS). The report also set out the proposed budget setting strategy for 2025-26, which included the proposed consultation with residents, businesses and other key stakeholders.

In presenting the report, Councillor Mili Patel highlighted the challenging financial environment in which the Council was operating. Members noted that there was the potential for significant spending pressures from demand-led services, particularly social care and homelessness, and new burdens impacting on the budget as a result of the cost-of living crisis. It was added that, whilst growth had been built into the MTFS to alleviate the pressures identified, these continued to present a significant budget risk meaning the Council was likely to require further significant savings moving forward to deliver a balanced budget.

Having explained the context of the report, Councillor Mili Patel again raised the issue of housing, which continued to be a significant area of risk for the Council with demand for housing services increasing and the number of homelessness applications rising. The economic climate was also impacting rent collection rates, resulting in increases in rent arrears, leading to increased reliance on the private rented sector for supply to address demand. With more people placed in temporary accommodation, higher costs and less supply, it was expected that housing would continue to cause financial pressure on the Council’s budget.

Concluding the presentation of the report, Councillor Mili Patel felt it was important to recognise the £210m worth of cuts already delivered in relation to the Council’s budget since 2010 and further savings already agreed amounting to £12.5m spread across 2024-25 and 2025-26 to alleviate pressures. She highlighted that the lack of clarity around the future level of local government funding and uncertainty in the economic environment made it hard to be precise about future financial targets, with the Council having therefore continued to adopt a prudent approach over the 2025-2028 MTFS in order to deliver a sustainable medium-term position. Longer term, the anticipated funding allocations and current forecast assumptions estimated a budget gap of £16m in 2025-26, rising to a cumulative £30m by 2027-28, with the Council looking to identify and deliver savings of £16m to enable it to set a balanced budget for 2025-26. The financial impact and budget beyond 2026-27 would be subject to further review once the Local Government Financial Settlement was known but in the meantime it was pointed out that the Council would need to continue taking difficult decisions about which services to prioritise and protect in order to continue delivering an affordable and sustainable budget and package of support for local communities across the borough.

Concern was expressed at the substantial nature of the ongoing financial challenges outlined during presentation of the report given the impact on the Council’s budget and potential need to deliver additional savings. In highlighting the need to continue focussing on the way in which support (including that available through the Council Tax and Resident Support Schemes) was being provided for residents moving forward, members were also aware of the need to ensure this continued to be targeted effectively on those most in need, supported by a range of other wider holistic measures designed to provide residents with the opportunities to succeed.

Officers were thanked for their work in preparing the report and it was RESOLVED that Cabinet: