Medium Term Financial Plan

Medium Term Financial Plan

The annual Revenue and Capital Budget is prepared in line with the principles and overall financial strategy set out in the Council’s Medium Term Financial Plan.

The Medium Term Financial Plan puts in place a strategy to guide the Council’s financial planning over a five year period to address the national and local challenges faced, deliver the Council’s strategic aims and meet community priorities.

The Plan forecasts the future financial outlook for the Council based on a number of assumptions, setting out indicative Revenue and Capital Budgets including projections of the likely level of Council Tax and Council Balances.

The current Medium Term Financial Plan covers the five year period 2021/22 to 2025/26.

The Medium Term Financial Plan and its associated appendices can be downloaded from the links below:-

2021/22 to 2025/26 Medium Term Financial Plan – Report to Policy and Resources Committee

2021/22 to 2025/26 Medium Term Financial Plan

Appendix A-E – MTFP Revenue and Capital Budget Projections 2021-22 to 2025-26

Appendix F – 2021/22 Council Aims and Targets

Appendix G – Financial Risks 2021/22

Executive Summary of the 2021/22 to 2025/26 Medium Term Financial Plan

The Council approved the annual update of its Medium Term Financial in July 2021.

The Plan covers the five year period 2021/22 to 2025/26.

The Plan puts in place a strategy to guide the Council’s financial planning over the next five years, and help the Council proactively manage and address the various financial risks and challenges that it faces, and maintain its strong and healthy financial position for as long as possible.

The Plan also helps ensure that there is a link between the Council’s strategic aims and targets and the priorities of the local community, as set out in the Council Service Delivery Plan, and the resources that are likely to be available to fund the achievement of these over the next five years.

The Plan will help guide the Council’s financial planning over the next five years and in particular provide the principles and framework for the forthcoming setting of the 2022/23 Revenue and Capital Budget.

The Plan has been prepared on the basis of four key principles:-

1. Maintaining existing services and ensuring a balanced Revenue Budget;
2. Facilitating the continued delivery of the Asset Management Plan via the Capital Programme Budget;
3. Safeguarding a prudent level of balances and reserves; and
4. Keeping any future increases in council tax as low as possible.

The Council is currently in strong financial health, with ongoing savings on the Revenue Budget, good progress in delivering the Asset Management Plan, and healthy levels of balances and reserves. This means that the Council has strong foundations in place and the medium-term financial outlook is relatively positive.

The decision to increase the Town Council Tax by 5% in 2019/20 and boost the contribution to capital reserves and contingency sum, whilst unpopular with some local taxpayers, has definitely helped contribute towards the Council’s improved financial situation and the fact that the Coronavirus pandemic has not had as severe an impact on the Council Revenue Budget as it could have done.  These have helped address the key risks highlighted in the 2019/20 to 2023/24 Medium-Term Financial Plan in relation to diminishing balances and reserves.

In terms of this year’s Medium Term Financial Plan, the Revenue Budget Forecast confirms that the Council will be able to deliver a balanced Revenue Budget over the next five years that will ensure the delivery of the Council’s strategic aims and the maintenance of current services, whilst maintaining a contingency budget until 2025/26 when this will be removed, and maintaining a £50,000 contribution to capital reserves in the 3 years to 2023/24 reducing to £25,000 in 2024/25 and £22,950 in 2025/26.

In order to achieve this, it is likely that a council tax increase in the region of 1.99% will be required over the life of the Medium-Term Financial Plan. 

This forecast would see the Town Council Tax increase by an average of £3.40 per year at Valuation Band A between 2021/22 and 2025/26.

In relation to the Capital Budget, the Council is still facing potentially significant capital investment commitments over the medium term of up to £1.35 million.

The funding of this capital investment will undoubtedly see the Council’s balances and reserves fall back over the five years, although this mitigated by the contribution to capital reserves and any ongoing savings on the Revenue Budget, and the Council should still hold balances in the region of £660,000 by the end of the 2025/26 financial year.

In the longer term, it is expected that the process of balancing the Revenue Budget will become increasingly difficult with the Council facing cuts to the Council Tax Support Grant funding and potentially significant increases in staffing costs linked to increases in the National Living Wage.

Beyond the end of this Medium-Term Financial Plan i.e. from the middle to end of the next decade, it is likely that the Council may reach the position whereby the contingency sum and contribution to capital reserves will need to be used up, and where all options for achieving further savings, without cutting services, will have been exhausted.

It is also likely that balances and reserves will have been significantly diminished as the Council continues to fund essential capital investment delivering its Asset Management Plan.

The Plan therefore recommends that the Council continues with its programme of service reviews and undertakes a review of its strategic aims and a survey of community priorities, with a view to determining which services are to be protected and which may be subject to budget reductions in the longer term.

In overall terms however, the Council’s current financial situation and the outlook for the next five years are much improved on where they were a year ago.

The Council is confident that this Medium-Term Financial Plan will help build on the strong foundations that are currently in place and ensure that the Council maintains a healthy financial position for at least the next five years, whilst providing improved value for money to local taxpayers through lower future increases in the council tax.