Medium Term Financial Plan update to be provided to RCTC Cabinet
Cabinet will receive an update on the Council’s three-year Medium Term Financial Plan up to 2024/25 – which is based on a range of modelling assumptions and will help inform and support the Council’s budget setting preparatory work underway for the next financial year (2022/23).
A report to Cabinet on Tuesday, July 20, outlines the latest modelled financial position for the Council over the next three years, and notes that a key factor in determining the level of funding available to Welsh Government – and subsequently to local councils in Wales over this period – will be the outcome of the UK Government’s Spending Review planned for autumn 2021.
The report recognises the increasing demand and cost pressures many services are experiencing, in particular social care services, and also the huge economic impact of the pandemic going forward. The report also recognises that the majority of additional costs and income losses due to the pandemic have so far been funded by Welsh Government, with the continuation of this financial support being increasingly important.
The report sets out detailed modelling assumptions over the 3 year period and includes information on revenue spending, capital plans, funding and reserves. Due to current uncertainty around future public sector funding levels, the Council has modelled a range of local government settlement levels between +2% and +4% per year – all of which would result in a budget gap faced by the Council. For example, a settlement level of +4% would still leave a budget gap of £9.25 million for 2022/23.
The report adds that in parallel with the Council’s continued priority of responding and supporting recovery from the pandemic, and ensuring that our residents and businesses are protected and supported, options are being developed to address the potential range of budget gaps for next year. The extent of these is very much dependent on the level of funding provided by Welsh Government.
Options include maximising efficiency saving opportunities from new methods of service delivery, the continued delivery of the Council’s Social Services Transformation Programme (including provision of extracare facilities), reviewing workforce requirements and use of Council buildings and on-going focus on the principles of Independence, Early Intervention and Prevention, and maximising opportunities of Digitalisation and Commercialisation.
The updated Medium Term Financial Plan will be reported to Full Council in September and made available to the Finance and Performance Scrutiny Committee as part of the consultation process on the draft 2022/23 Budget.
Councillor Mark Norris, Rhondda Cynon Taf Council’s Cabinet Member for Corporate Services, said: “Tuesday’s Cabinet report informs Members of the work being taken to enable a balanced budget to be set for next year and the wider three-year financial modelling up to 2024/25. As has been the case in previous years, the Council will undertake an extensive consultation process this autumn, ensuring local residents and businesses can have their say on next year’s budget.
“It is clear the current uncertainty around the level of potential settlement from Welsh Government, itself determined by the UK Government’s upcoming Spending Review, will have a significant impact on the budget gap faced by the Council next year – with each 1% change in funding representing £4 million. It therefore has a direct effect on the resources available to the Council and it is critically important the Council maintains its disciplined and responsible approach to budget setting.
“For many years, the Council has done this very well. The robust approach to identifying and delivering measures to reduce the budget has allowed us to deliver £4.6 million worth of efficiency savings in the 2021/22 budget, on top of £6 million savings in each of the previous three years. This was achieved with no service cuts while also delivering major Capital investment of over £102 million in 2020/21, across the County Borough.
“The Council’s very strong track record of setting and delivering balanced budgets, alongside significant on-going additional investment in Corporate Plan priorities, is down to the constant work that goes on to plan ahead, prioritise spending and deliver budget savings on a timely basis.
“However, there are still significant challenges to be faced right across the Public Sector and it is becoming tougher and tougher to make savings year on year. We will have greater clarity on the level of savings the Council will be required to make after the Provisional Local Government Settlement later in the year, and the Council will keep residents and other stakeholders up to date with this position.”