Issue - items at meetings - GENERAL FUND MEDIUM TERM FINANCIAL STRATEGY UPDATE 2024/25

To consider the decision of the Cabinet on the General Fund Medium Term Financial Strategy (MTFS).

Notice of Decisions to follow in separate document.

The Strategic Director and S151 Officer provided an update to the Committee on the General Fund Medium Term Financial Strategy (MTFS). Members were advised that the report this year also reflected the Government’s Fair Funding Review.

From 2026/27, a three-year settlement was expected alongside a reset of business rates. While the funding position appeared positive for Stevenage, significant uncertainty remained until the final settlement announcement in December.

Members raised a question regarding Local Government Reorganisation (LGR) seeking clarification on how funding would be divided between two, three, or four unitary authorities. Members noted that Stevenage had managed their finances prudently and questioned if it would be at a disadvantage when merged with other authorities.

Officers explained that the MTFS included a three-year settlement, with the first two years taking place prior to LGR if the government timetable was maintained. It was noted that under a unitary model, district and county budgets would be combined, with major pressures arising from adult and children’s social care.

It was noted that Stevenage’s deprivation levels strengthened its funding position, and Hertfordshire had a comparatively strong balance sheet. The eventual distribution of funding would depend on principles yet to be confirmed.

Members asked for clarification on the external support referenced for Foster Country Park. Officers explained that significant preparation was required ahead of the release of the commuted sum. External support had therefore been secured to ensure the right resources, staff, and equipment were in place before the park opened.

In response to a question asking how the factors within the Fair Funding were quantified, Officers explained that the system was based on multiple weighted factors including deprivation, demographics, transport, rurality, and the local tax base. These weightings determined each authority’s share of the national funding pot, adjusted for council tax-raising ability.

It was noted that Stevenage was likely to benefit due to its smaller council tax base and higher levels of deprivation, whereas Hertfordshire County Council was expected to lose funding.

A question was raised regarding flats being occupied within the Foster County Park development without adequate access for bin lorries. Officers confirmed that if a breach of planning conditions had occurred, officers would investigate the matter.

The Chair noted that for the record of the minutes, the Council’s Tax Support Scheme would not change at this stage. A banded scheme would likely be required under LGR from 2027/28 to ensure consistency across Hertfordshire.

The Committee noted the decision of the Cabinet.

To update Members on the General Fund Medium Term Financial Strategy (MTFS).

Cabinet received a report updating Members on the General Fund Medium Term Financial Strategy (MTFS) which provided a comprehensive overview of the financial landscape and strategic planning for the Council.

The report highlighted the significant changes and challenges faced by the Council, including the impacts of Local Government Reform (LGR) and the upcoming Fair Funding reforms. Members were pleased to note that the changes were projected to improve the Council's funding position, allowing for better financial resilience.

Officers advised that although the provisional settlement would not be known until mid-December, when the Fair Funding reforms took effect, there would be the opportunity to include some one off revenue or capital growth once known, and future years savings targets were now projected to be much lower than in recent years.

It was RESOLVED:

1. That the MTFS principles, as outlined in paragraph 3.10 be re-approved.

2. That, for modelling purposes, Council tax increases be set at the threshold assumed by the Government in the Fair Funding consultation in order to support the resilience of the Council’s finances as set out in paragraph 4.7.5.

3. That the updated inflation assumptions used in the MTFS as set out in section 4.1 of the report be approved.

4. That the impact of Fair Funding grant funding as set out in the report be noted, noting this could be subject to change following consultation feedback.

5. That the approach to the ‘Balancing the Budget’ options as set out in section 4.10 be approved.

6. That the Balancing the Budget options identified of £776K be noted (excluding the Fees and Charges estimates including taxi licence fees) to be presented to the October 2025 Cabinet and General Purposes Committee.

7. That the Balancing the Budget target of £2.284Million, be approved for the period 2026/27- 2029/30, as set out in section 4.10 of the report.

8. That the indicative General Fund borrowing costs for the Oval as set out in of the paragraph 4.10.3 (3) be approved and included in the MTFS.

9. That the additional funding to be set aside in an earmarked reserve for the Council’s Queensway LLP of a further £50K per year, (paragraph 4.10.3 (6)) be approved.

10. That the set aside of £150K per year to support the Council’s apprentice programme as set out in paragraph 4.10.3 (2) be approved.

11. That the General Fund growth allowance of £75K be noted and approved for the use of the Council’s FTFC priorities.

12. That a minimum level of balances for the General Fund of £3.57million be approved for 2026/27 as set out in paragraph 4.11.7.

13. The MTFS be regularly reviewed and revised to reflect any material financial pressures, so forecasts are updated and re-presented to the Cabinet for approval.

14. That the Trade Unions and staff be consulted on the key messages contained within the MTFS and more specifically when drawing up any proposals where there is a risk of redundancy.