Agenda item

To receive a presentation on Budget and the Medium Term Financial Plan (MTFP) decision making process, governance and safeguards.

The Chief Finance Officer gave a presentation on the Budget and Medium Term Financial Plan Decision Making, a copy of which appears as Appendix 'A' to these Minutes in the Minute Book. The Committee received information around the governance for the process, an outline of good governance in the public sector, information on what a budget was as a financial expression of the Council’s ambitions and priorities and the budget setting process and timeline. The Committee was informed that services were required to manage their income and expenditure within the limits of the budget allocated for them. It was explained that it was unlawful to set a deficit budget and that the budget was set annually within the context of ta three-year MTFP. The Committee also considered the budget framework procedure rules and the safeguards in place. A number of issues were raised by the Committee and responded to throughout the discussion, these included:

The impact of the Dedicated Schools Grant override. This would not be a concern until the 2026/27 budget but there were issues regarding the ability to ensure cashflow for the deficit which was expected to be in the region of £100million for the 2025/26 budget. The DfE was looking into BCPs current situation, and a response was expected on this issue. A basic principle of local government finance was that borrowing could only be for capital expenditure and the position was now that all of the Council’s treasury management advantage had been utilised.

The impact of managing income and expenditure within an allocated budget for statutory services. It was noted these were based on a forecast and that if a service could not deliver within the budget it would need to seek an amendment to the budget through Council.

Cashflow difficulties as a result of the DSG deficit. It was noted that other authorities shared these issues but that the BCP deficit was at the extreme end. Spending on SEND was in excess of £30million more than the government grant.

Processes and support systems in place to navigate the budget process. All authorities needed to ensure that appropriate support mechanisms were available and structured support mechanisms were in place including reaching out to the MHCLG and keeping CIPFA involved in the process.

Targeted funds received by local government including those for homelessness prevention. It was hoped that the MHCLG were fully aware and engaged with these issues. It was noted most councils were waiting to see what the government position was and the outcome of the October budget. The deficit in relation to reserves was high and there had been higher reserves previously.

The composition of spending between statutory and non-statutory services. There hadn’t been a detailed costing in terms of statutory and non-statutory spending. It was noted that the process of clarifying statutory obligations may be helpful in future years if the budget setting process became more difficult.

Thresholds for certain decision-making processes. It was noted that the values set out in the BCP Constitution were agreed by Council and had been tested since the inception of BCP. These have been benchmarked against other similar sized local authorities and would be reviewed on an annual basis. 

The Chairman proposed and it was agreed that the slides from the presentation should be shared with all Councillors.