To consider the Financial Strategy and to consider the establishment of the Financial Strategy (2018/19 to 2020/21) Task and Finish Group.

Contact: James Walton, Head of Finance, Governance and Assurance, james.walton@shropshire.gov.uk

The Head of Finance, Governance and Assurance introduced the report on the Financial Strategy (copy attached to signed minutes) and explained the reasons for the increase in funding gap for 2018-19 from £24m to £36m.  This was then predicted to grow by £6m a year subsequently.  Cabinet and officers would develop an approach in response which would be presented to Cabinet on 6 December 2017 and consulted on in the new year.  Council would then set the budget for 2018/19 and agree proposals for the following two years at its meeting on 22 February 2018.  He also reported that an overspend of £5m for 2017 – 18 was currently predicted and addressing this in-year was an imperative as using one offs to try to offset this next year would not be enough.

Discussion covered cuts to the Education Improvement Service, how the Financial Strategy could be scrutinised and whether there would be enough time for PMSC to comment on the proposals and feed these to Cabinet on 6 December.  Members asked what the management action would be to minimise the £5m overspend, for detail around how savings would be achieved in adult services and how any actions taken now would impact on the following year’s budget. 

Members also asked about the Council’s investment strategy and whether plans for income generation would eventually be able to place the Council in a sustainable position.  Officers reported that the Council was not just looking at the short term, but also the long term, with a clear ambition to generate enough income and reduce costs to achieve a sustainable position.  Short term decisions were however required to achieve a balanced budget. 

In response to further questions, the Chief Executive explained that Shropshire was funded at a level significantly less than other Councils and that joint activity with other authorities had already been investigated.  As Shropshire was such a low cost and high quality authority any such activity would be more beneficial for other authorities.  It was confirmed that Shropshire Council was currently exploring work it could do for the CCG.  

The Head of Finance, Governance and Assurance confirmed that implications of action needed for 2017 – 2018 for future years were under discussion.  A spending freeze until 31 March 2018 was likely in a number of areas and there was an opportunity to do that in Adult Social Care using one off grants.  This would reduce expenditure and deliver an underspend in Adult Social Care which would be offset by an overspend in Children’s Services.  The Chief Executive added that although predictive tools used by the Council were good, they could not cover completely unforeseen circumstances. 

Members asked if the Head of Finance, Governance and Assurance’s membership of the Government Technical Working Group on funding had provided a clearer picture of the future.  He reported that the main concern of urban areas was deprivation whilst in rural areas it was older people.   An attempt was being made to establish a fair funding formula which identified need and growth in need in particular areas on an equitable basis.  Currently amount spent was used as a determiner and as Shropshire was in the bottom quintile for ASC costs, despite being rural, the danger was that it was locked in a continuing funding mechanism on this basis.  Local Authorities were all of one mind that if ‘need’ could be identified rather than spend than the system would be fairer, but the problem was establishing a robust measure. 

The Chief Executive also reported that although many Councils had put precepts up, expenditure in Adult Social Care had not gone up in all authorities.

A Member asked about selling services to the CCG and provided feedback around the service provided to schools.  Officers confirmed they were aware of and addressing issues around this support.

It was confirmed that there was not any further information available to scrutinise at this stage and would not be until the next iteration of the Financial Strategy was available for the Cabinet meeting on 6 December.  

AGREED

That an additional meeting be scheduled for the morning of 6 December 2017, with a view to providing comments from the Committee to the Cabinet meeting later that day.

That the terms of reference for the Financial Strategy Task and Finish Group be approved (copy attached to the signed minutes)