Financial planning

Last Updated: 12 July 2022

Our medium term financial plan tells you what income we think we'll have and the amount we think we'll spend over the next five years.

Our 'efficiency plan' helps us to understand what good and efficient service for our customers will look like and to develop a strategy for funding and delivering our services.

Medium term financial plan

We produce a Medium Term Financial Plan annually which looks at the Council's expected income and expenditure for a rolling five year period.

The Plan looks at how we will ensure it has sufficient financial resources to deliver our Council Plan and includes our Financial Strategy, Capital Strategy, Reserves Strategy and Financial Risk Register.

Medium Term Financial Plan 2022-23 (PDF 4MB / 66 pages)

Our latest MTFP was approved by Council in July 2021. Our MTFP is refreshed during the year as circumstances change. Due to Local Government Reorganisation there will be no MTFP prepared for this Council in July 2022: a MTFP is being prepared for the new Westmorland and Furness Council and will be published on their website during summer 2022.

This plan includes high-level projections based on the information available as at early July 2021. The projections will be regularly reviewed and reported during the 2022/23 budget preparation process. The Council is required by statute to set a balanced budget in February/March 2022.

Based on current projections within the plan of the impact of Covid-19 in 2020/21, combined with budget deficits reported in February 2021, the Council will need to find revenue savings (including potential additional income) of £0.3m to set a balanced budget for 2022/23. Further recurring savings of £2.6m will need to be identified by February 2025.

The financial model within the MTFP shows deficits over the future 5 year period of between £0.0m and £2.6m.

Income and expenditure

2021/22

£000

2022/23

£000

2023/24

£000

2024/25

£000

2025/26

£000

Service Expenditure 25,761.9 24,223.2 24,246.2 24,682.2 24,963.9
Service Income (13,301.6) (12,632.5) (12,953.7) (13,241.5) (13,622.8)
Net Service Budget (excluding capital charge) 12,460.3 11,590.7 11,292.5 11,440.7 11,341.1
Council Tax (9,285.4) (9,564.8) (9,846.7) (10,131.1) (10,417.9)
Business Rates (4,001.9) (3,694.8) (2,161.2) (2,302.0) (1,956.7)
Government Grant (809.2) (648.5) (145.7) 0.0 0.0
Interest Receivable/Payable 530.7 662.0 843.0 945.4 1,019.8
Minimum Revenue Provision 1,187.5 1,379.4 1,395.5 1,656.5 1,911.6
Other Corporate Items (64.1) 573.6 721.1 542.2 733.2
(Surplus)/Deficit assuming £5 Band D Council Tax increase from April 2021 onwards 17.9 297.6 2,098.6 2,151.7 2,631.1

The Council re-approved its financial strategy in the Medium Term Financial Plan approved in July 2021. The following principles were approved:

a) balanced budgets: maintain a balanced budget position, and to set a medium term financial plan maintaining and strengthening that position
b) five year budgets: the Council sets budgets for a five year period
c) strong financial management: the Council controls and monitors the actual position of the authority on a regular basis setting out actions to correct any emerging issues;
d) understanding of key cost-drivers: the Council analyses and reviews the key elements of the service areas including the use of benchmarking;
e) asset maintenance: the Capital Programme should ensure adequate programmes of maintenance to sustain values of key assets, especially income-generating assets
f) legal transactions: the approval and adoption of the Council’s Constitution, particularly the Financial Procedure Framework and the Contract Procedure Rules set foundations for ensuring legal transactions alongside the whole system of internal control reviewed annually in the Annual Governance Statement.
g) affordable investment; to undertake a prudent level of capital investment to meet the Council’s strategic priorities and remain within prudential borrowing limits
h) maximise resource base; the Council will ensure the best use of physical and other assets including staff time;
i) value for money; continuous review of budgets to ensure resources are targeted on key objectives and deliver value for money to local taxpayers
j) working with others: to ensure all services are delivered by the most appropriate body. This may require the Council to work in partnership or to facilitate provision by other bodies
k) minimise financial risk including holding reserves as appropriate and sustainable levels of debt
l) strategic risk management: to identify, monitor and mitigate significant risks to the Council’s services, performance and resources

These principles have been used to guide the Council’s financial plans.

The Council has a proven track record in responding to the financial pressures in local government, managing with significantly reducing resources, minimising Council Tax increases and delivering savings.

The Council’s priorities are set out in the Council Plan.

As well as identifying and delivering financial savings, the Council has ensured there is investment in the future by identifying both revenue and capital funds for service development based on the Council’s priorities and invest to save initiatives.

The Council takes a strategic approach to service delivery. A number of major strategic reviews are currently underway including the Corporate Property Strategy and review of core corporate assets, review of housing alternative models for delivery, the Kendal Town Centre Masterplan and use of Community Infrastructure Levy, replacement of the Local Plan with a new framework and Objectively Assessed Need, the Leisure Facilities strategy and the Economic Development Strategy. These may require changes in current spending and funding plans.

The Council has invested in transformation projects to deliver service improvements and savings. The main Customer Connect programme will deliver the Customer Contact Strategy: To improve the lives of our residents by delivering the services and support they require in a way which suits them and provides the best value for money for taxpayers.

The largest variables in the financial model are the timing and nature of change in Government funding and the nature and the extent of disruption from Covid-19.

The MTFP should be considered in the context of the following issues:

a. The Council is now in a much-improved financial position compared to 12 months ago due to adequate General Fund balances and reserves before the pandemic, robust financial management practices, additional short-term Government support and an excellent track record in achieving efficiency savings should assist the resolving of the current position.

b. The underlying financial model has not been updated except for the impact of a potential pay award, the impact of Covid-19 on reserves, borrowing forecasts and the business rate timing changes. Full reviews of the model are underway, particularly around the impact of Covid-19 on collection of business rates, council tax and the timing of changes in these estimates. The model will be updated in future updates of the MTFP projections.

c. Further significant key decisions will still be needed to deliver savings while safeguarding frontline services to maintain a balanced budget beyond the Customer Connect programme.

d. Significant changes were expected to the local government finance system from April 2021 which are expected to reduce income available to the Council: the timing of these changes is now very uncertain.

e. The size of the capital programme significantly increased in 2020/21 to reflect 2 major grant-funded schemes and major renewals of Council assets. The Property and Land Management Strategy identifies the need for further significant spending if services are to continue using the existing assets. A capital prioritisation exercise will be required to ensure the capital programme is deliverable.

f. Inflation and other budget pressures may increase spend above the projections included in the financial model.

Any changes to the financial position will be closely monitored and updates to the financial projections will be reported during the 2022/23 budget process. The financial model is reviewed at least quarterly and forecasts are updated as necessary and reported as part of the Quarterly Corporate Financial Update process.