Medium Term Financial Strategy 2019/20 - 2021/22 · 2019. 10. 18. · Medium Term Financial...
Transcript of Medium Term Financial Strategy 2019/20 - 2021/22 · 2019. 10. 18. · Medium Term Financial...
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Medium Term Financial Strategy 2021/22 to 2024/25
Introduction
The Medium Term Financial Strategy (‘MTFS’) is a four year plan which sets out the
Council’s commitment to provide services that meet the needs of people locally and
that represent excellent value for money within the overall resources available to it.
The MTFS is refreshed annually with the next update scheduled for October 2021.
This MTFS is what links the Council’s vision and priorities with estimated resources
and shows how the Council’s finances will be structured and managed to support the
delivery of the Council’s ambitions and priorities.
The strategy considers:
International and national economic influences on the Council.
The influence of Central Government policy and strategy.
Local factors which influence policy within the Council.
Delivering key Council policies and priorities.
The strategy brings together the key issues affecting the:
Revenue Budget
Capital Programme
Treasury Management Strategy
Capital and Investment Strategy
With local authorities across the Country facing the challenges of reduced funding
and increasing demand for services, the need for robust financial management has
never been more important. To be truly effective, financial planning needs to balance
the immediate service needs and pressures against the long-term financial resilience
and sustainability of the Council.
A key part of this strategy is therefore to forecast the key budget issues that will need
to be addressed by the Council over the coming financial years by estimating the
level of available funding available and the potential costs, both in terms of revenue
and capital spending.
There remains significant uncertainty around the funding for local government
funding with a delay in the Fair Funding Review from 2021/22 to 2022/23 or even
later, uncertainty around a sustainable funding model for health and social care and
the current coronavirus (COVID-19) pandemic which is eclipsing anything we have
seen in recent decades. In addition the impact on the economy from leaving the
European Union (‘EU’) may also affect local government funding and demand for
services.
In recognition of the impact of the COVID-19 pandemic on the economy the
Government have responded by announcing a range of measures to help
businesses and residents which include furloughing staff, the provision of targeted
business rates reliefs, business grants and loans, deferral of VAT and self-
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assessment payments and a Hardship Fund which is a grant payable to local
authorities to provide council tax relief alongside existing council tax support
schemes.
The Government has also recognised that COVID-19 has had a direct impact on
local authorities in 2020/21. Funding has been provided nationally to compensate
local authorities for additional expenditure incurred and loss of income and other
targeted initiatives including Test and Trace and Infection Control. There is, however,
significant uncertainty about the extent to which Covid related pressures and income
losses will recur in 2021/22 and beyond. It is likely that as a result of the recession
and behaviour changes, some Council income sources will be adversely affected.
The latest funding gap in respect of COVID-19 for the Council is forecast to be
around £15m with anticipation that there will be longer-term financial impacts through
additional demands for services coupled by sustained reductions in income and
funding.
All these issues will have significant financial implications for the Council with
potential impact on the Council’s revenue budget, its revenue reserves and its longer
term financial resilience making it extremely difficult for the Council to plan effectively
and inevitably shortens our financial and service planning horizons.
Neil Warren FCCA
Chief Finance Officer
October 2020
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Contents
Part 1: The Financial Challenge for the Council
1.1 Key objectives of the MTFS
1.2 Financial savings generated by the Council since 2010/11
1.3 Changes to central Government funding since 2010/11
1.4 Beyond March 2021
1.5 Our demographics
1.6 Principles of Wakefield’s MTFS
Part 2: The factors influencing the MTFS
2.1 Overall economic forecasts and influences
2.2 Regional influences
2.3 Resources available
2.4 Budget position for 2021/22 to 2024/25
2.5 Budget pressures and increased costs
Part 3: How the Council will meet the Financial Challenge
3.1 Revenue budget plan
3.2 Savings options
3.3 Balances, Reserves and Provision Strategy
Part 4: Financial Assurance
Part 5: Strategies which the MTFS supports
Part 6: Value for Money and Assurance around Financial Management
Part 7: Strategic & Corporate Asset Management Plan
Part 8: Treasury Management Strategy
Part 9: Capital and Investment Strategy
Part 10: Linked Strategies
Part 11: Conclusion
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Part 1: The Financial Challenge for the Council
1.1 Key objectives of the MTFS
1.1.1 The Medium Term Financial Plan (‘MTFS’) is an overarching document that
ensures the Council’s financial resources are directed towards priorities, that
the risks are effectively managed, and that value for money is achieved. With
other key strategies and plans, it ensures that the Council remains financially
viable and is best placed to deliver on its priorities.
1.1.2 The MTFS forms part of the Council’s planning and performance framework,
and provides the context for the more detailed budgeting process.
1.1.3 The MTFS is refreshed each year to give a rolling three year assessment of
the fiscal environment, after the close of the previous year, and before the
budgeting round commences. It also provides a forecast for a further two
years but given the uncertainty on any reforms to local government financing
this forecast will need to be refreshed as further information becomes
available.
1.1.4 The key objectives of the MTFS are as follows:
To ensure that effective financial planning and management
contributes to the Council achieving its priorities.
To direct resources to the Council’s priorities.
To maximise the income from council tax and business rates to support
the priorities of the Council.
To analyse budget performance to assess the effectiveness of
resource allocation.
To ensure the Council’s financial standing is robust, stable and
sustainable.
1.1.5 The period covered by this MTFS will continue to present to local
government some of the most significant operational and financial
challenges ever experienced by those leading and managing the delivery of
local services. Managing our money well is now more important than it has
ever been.
1.1.6 Whilst there is a growing national awareness of the demand on council
services with reduced funding, there are several fundamental reforms being
proposed but with no detail at this stage, this makes financial planning
difficult. This MTFS sets out the financial envelope for the Council to deliver
its key priorities based on assumptions made from the relevant data
available.
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1.1.7 The ambition for the District is clear – to be a place where people thrive,
businesses succeed and visitors are welcome. Supporting this ambition, the
Council’s priorities are:
Successful businesses – growing a higher value economy and creating good jobs.
Successful people – reducing inequalities, growing skill levels, enabling a good quality of life and supporting families.
Successful places – celebrating a unique cultural offer and creating vibrant communities that are better connected.
Successful Council – ambitious, enterprising, dedicated and efficient in delivering excellent services.
The implication for Wakefield Council alongside demographic and
inflationary cost pressures is an estimated budget gap of £57.2m over the
period 2021/22 to 2024/25.
1.2 Financial savings generated by the Council since 2010/11
1.2.1 Changes in local government funding streams have obscured the true
reduction in the funding available to councils since 2010. However, using the
Government’s own measure of core spending power it can be seen that local
government has undergone a sustained and significant reduction in total
funding.
Furthermore the cuts have not been borne evenly across the country, with
some authorities, notably London borough councils and metropolitan district
councils, bearing a much higher burden of cuts than the national average.
1.2.2 Between 2011/12 and 2020/21 Wakefield Council has made a total of £242m
of savings/additional income. In spite of these challenges the Council
expects to be able to deliver a balanced budget in the current 2020/21
financial year.
The forecast budget gap for the next four years of £57.2m brings this total of
savings/additional income to around £299m over the thirteen year period
since 2011/12.
1.3 Changes to central Government funding since 2010/11 & the impact on
local authorities
1.3.1 Despite the Government’s statement that austerity has ended, funding of
public services remains significantly lower than at the onset of austerity in
2010. In 2020/21, the day-to-day budget for the Department of Health and
Social Care will be £25.3bn (23%) higher in real terms than a decade earlier.
In contrast, spending on Justice, the Home Office and Environment, Food &
Rural Affairs will be £4.6bn (17%) lower than in 2010/11. Government
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spending on non-care local authority related funding is still estimated as
being 16% lower overall than in 2010/11.
1.3.2 It is estimated that if 2010 spending levels had been maintained, the Council
would have an additional £134m to spend each year. The additional grant
funding announced through the 2019 Spending Round (SR 2019) and local
government finance settlement in the autumn of 2019, whilst positive,
continued the Government’s previous stop-gap solution and is not sufficient
to meet rising demand and costs.
Spending Review 2019
1.3.3 The SR 2019 was published in September 2019. Unlike the three year scope
of previous statements, the review only covered the government’s spending
plans for 2020/21. The Chancellor confirmed that the ‘Fair Funding Review’
and 75% business rate retention, previously scheduled for implementation
from April 2020, were to be delayed.
1.3.4 In terms of overall funding, from 2019/20 to 2020/21, day-to-day UK
Government departmental spending grew 4.1% in real terms, a rise of
£13.8bn. Every department had an increase in funding that at least matched
inflation. The Local Government Departmental Expenditure Limit (DEL)
increased by 12.4% (£1.1bn). The bulk of the increase, however, was the
increase in funding for the Social Care grants (£1.0bn) with the remaining
local government DEL increasing in line with inflation (1.8%). The local
government core spending power increased by £2.9bn. The review included;
1.3.5 Health – the Spending Round reaffirmed the Government’s commitments to
increasing NHS funding, with an additional £33.9bn more per year by
2023/24 compared to 2018/19 budgets. It also confirmed an increase to the
Health Education England budget, including an additional £150 million for
Continuing Professional Development, providing a £1,000 central training
budget over three years for each nurse, midwife and allied health
professional, as well as increased funding for wider education and training
budgets.
1.3.6 Social care – the Spending Round included an additional £1bn for adult and
children’s social care. This was in addition to the continuation of the existing
£2.5bn of social care grants (£1.837bn Improved Better Care Fund, £240m
Winter Pressures and £410m of Social Care Support grant). There was
however no announcement in the Review around any publication date for a
Social Care Funding Paper.
1.3.7 Public Heath – the Spending Round included a real terms increase in the
public health grant equivalent £170m nationally.
1.3.8 Community Safety – an extra £750m for policing to begin delivery of the
Government’s commitment to recruit 20,000 additional officers by 2023 (up
to 6,000 officers are to be in place by the end of 2020/21), with additional
funding for probation reforms ‘that will help reduce reoffending and improve
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postcustody supervision’. Some £2.5bn was allocated for an extra 10,000
prison places with an additional £30m to safeguard children from child
sexual exploitation and abuse. And £110m additional funding, plus £65m of
Official Development Assistance, for the asylum system and continuing
£150m funding for the Global Resettlement Programme.
1.3.9 Education and Skills – A £7.1bn increase in funding for schools by 2022/23
(£4.6bn above inflation), compared to 2019/20 funding levels. Ahead of that,
the schools budget would rise by £2.6bn in 2020/21 and £4.8bn in 2021/22,
compared to 2019-20 funding levels. Per pupil funding for all schools rose in
line with inflation (1.8%). The minimum per pupil amount for 2020/21
increased to £3,750 for primary schools and £5,000 for secondary schools,
with the primary schools minimum rising to £4,000 in 2021/22.
There was £700m more funding in 2020/21 compared to 2019/20 funding
levels for local authorities to support children and young people with special
educational needs. The increase in the total DSG for the council was £15.5m
rising from £272.5m to £287.0m with a High Needs block allocation of
£36.1m in 2020/21.
There was £400m of additional funding in 2020/21 for Further Education
which included £190m to increase core funding for 16-19 year-olds and
£210m in targeted interventions such as high-cost programmes, English and
Maths resits, T Levels, the Advanced Maths Premium and workforce
investments. There was also an increase in early years spending of £66m to
increase the hourly rate paid to childcare providers through the existing free
hours offers. This equated to an additional £58 per child based on current
pupil numbers, an additional allocation to the Early Years’ Block of £0.4m for
Wakefield.
The Spending Round also included £7m to expand job centre advisor
support in schools for young people with special educational needs and
extending eligibility for Access to Work to internships for disabled people.
1.3.10 Regeneration – There was £241m made be available from the Towns Fund
in 2020/21 to support the regeneration of high streets, town centres and local
economies.
1.3.11 Housing – the Spending Round also indicated some £422m of funding to
help reduce homelessness and rough sleeping, including an additional £54m
in 2020/21, a real-terms increase of 13% compared to 2019/20. An
additional £40m of funding for Discretionary Housing Payments to tackle
affordability pressures in the private rented sector was also announced.
1.3.12 Transport – also included in the Spending Round was £200m of increased
funding for bus services, ‘making best use of technology and promoting
decarbonisation’, plus continued support for the development of major
transport projects, ‘including pushing on with work on the Leeds to
Manchester route of Northern Powerhouse Rail’
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2020/21 Local Government Finance Settlement
1.3.13 The 2020/21 Settlement was significantly delayed due to the December
general election and was eventually announced on Friday 20th December
2019. The announcement was followed by a 4-week consultation period,
which ended on the 17th January 2020 with the Final Settlement presented in
February 2020. It is usual for the Provisional Settlement to be accompanied
by an Indicative Settlement for the following year but the last Spending
Round (see above) which sets Department Expenditure Limits, only
extended for one year to 2020/21. Councils therefore have no information
about funding beyond March 2021.
1.3.14 The Settlement was effectively an extension to the four-year settlement that
covered the 2016/17 to 2019/20 financial years. With the delay in both the
Fair Funding Review and reform of business rates, combined with a one-
year spending review, the 2020/21 settlement was only ever going to be a
‘roll-over settlement’. The operation of the funding schemes and the values
within it have broadly been rolled-over either in cash terms from 2019/20 or
increased in line with the level of inflation.
1.3.15 December’s Settlement was positive overall for local government and
effectively confirmed what was previously announced in the Spending Round
in September. The key headlines for Wakefield were;
Settlement Funding Assessment – confirmation that SFAs would
increase by inflation. For Wakefield, an increase of £1.4m (1.6%) to
£86.4m.
Council tax – continue a referendum cap of up to 2% - a 1.99%
increase generated £2.8m of additional funding for Wakefield in
2020/21.
ASC Precept – flexibility to add a further 2% rise to council tax to fund
rising Adult Social Care costs. A 2% increase generated £2.9m of
additional funding for Wakefield in 2020/21.
Parish & Town Councils – Government has again deferred its
decision to impose a referendum limit on Town and Parish Councils.
Negative Revenue Support Grant – due to pressure from district and
county authorities, Government decided to eliminate negative RSG
amounts. Whilst this didn’t directly affect Wakefield there was an
indirect impact as it essentially diverts scarce funding away from
where it is most needed.
New Homes Bonus (NHB) – NHB was confirmed to continue into
2021/22 with baseline growth remaining at 0.4%. The funding for
Wakefield in 2020/21 was £9.3m which is an increase of £0.5m
compared to the previous financial year.
Independent Living Fund (ILF) – the former ILF Recipient Grant would
continue to be paid to local authorities in 2020/21 and will be
maintained at the 2019/20 value with the same approach to individual
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local authority allocations. The allocation for Wakefield in 2020/21
was £0.8m
Social care grant – the Settlement confirmed the increased funding
which was announced in the Spending Round. For Wakefield, the
allocation was £10.1m which represented an increase of £7.3m over
the 2019/20 funding.
1.4 Beyond March 2021
1.4.1 Whilst the 2020/21 Local Government Finance Settlement was broadly
positive for local government, the underlying financial environment remains
extremely challenging. There remains considerable financial uncertainty
beyond March 2021 which inevitably creates risks and shortens financial and
service planning horizons.
1.4.2 As a result of the COVID-19 pandemic, the Council has incurred significant
additional expenditure whilst at the same time seeing reductions in the level
of resources available through a combination of lower forecast income levels
for local taxation and a reduction in the level of income receivable from
sales, fees and charges.These are substantial and will, in the main, be offset
in 2020/21 through specific government funding provided to alleviate budget
pressures caused by the pandemic. There remains, however, uncertainty
about the extent to which these pressures will recur in 2021/22 and in future
years. The loss of income received by the Council due to the collection of
council tax and business rates will not, however, impact on the revenue
budget until 2021/22.
1.4.3 In addition to the above, there are a number of key financial risks and
uncertainties beyond March 2021, including:
The implementation of business rates retention, the timing of any
implementation and transitional arrangements and what additional
responsibilities and or reductions in specific funding would
accompany the implementation.
The implementation of the Government’s Fair Funding Review –
Government has confirmed that the review will continue, however the
impact of the review is not clear as is the timing of implementation
and the impact of any transitional arrangements.
Future council tax referendum limits and any continuing flexibility to
levy an Adult Social Care precept.
The potential impact of Brexit on the national economy and potential
impact on public sector finances.
The impact of housing growth and population growth generally across
the District on infrastructure and the demand for public services
across all partners.
Any potential financial impact arising from devolution.
The future of the ‘New Homes Bonus’ grant funding.
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1.5 Our demographics
1.5.1 The Wakefield District currently has a population of 345,038 people, with that
number estimated to rise to around 358,200 by 2023. The increase from the
previous year (4,250 more people) is the largest in at least the last 25 years.
The main component of this change is a continuing increase in net internal
migration – more people moving to Wakefield from elsewhere in the UK than
leaving, primarily due to housing growth locally. It is also estimated that the
working-age population in the District will continue to grow, mainly driven by
increases to State Pension Age and immigration. Around 19% of the
population (65,200) is aged 65 or over and this percentage is set to grow in
future years. 7% of Wakefield’s population does not describe themselves as
‘White British’, with 9% of the District’s current population born outside the
UK. Around 5,000 pupils at school in Wakefield have a first language that is
not English. This is 11% of all primary pupils and 7% of secondary pupils.
1.5.2 Employment continues to be high with 78.2% of all Wakefield adults in
employment. Rates have risen in line with national trends, and increases
have been similar for men and women. There has also been a growth in full-
time employment and a reduction in part-time employment. There are an
estimated 9,460 VAT registered businesses in Wakefield, around 88% of
these businesses employ less than 10 staff.
1.5.3 The health sector remains the largest employer in Wakefield, but the
District’s industry profile is also characterised by high levels of employment
in the logistics and distribution sector, and this sector continues to grow.
There is also more employment in public administration than is typical in the
Leeds City Region.
1.5.4 Around 14% of people in employment within the District are however working
in low wage elementary occupations, compared to 11% across the region as
a whole. While this trend hasn’t changed significantly over time, there have
been increases in the proportions of men and women employed in the higher
occupation groups – directors, managers, professionals and associate
professionals, etc.
1.5.5 Whilst unemployment continues to be low – low wages remain an issue.
Average full time wages for Wakefield residents are currently £518.10 per
week (£26,900 per annum), £69 per week below the UK average and the
lowest in the sub region.
1.5.6 There are around 19,000 workless households within the District, primarily
linked to ill health issues. This is a growth of around 4,000 since 2018/19
year.
1.5.7 Research by Sheffield Hallam University also estimates that the impact of
welfare changes since 2010 will reduce working age benefit payments to
Wakefield residents by £166m per annum by 2021 from their 2010 level.
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This figure equates to 2.63% of Wakefield’s GDP, around one year’s
average annual growth figure for GDP in the District over the last decade.
1.5.8 Deprivation in the District continues to be a long term issue and challenge. In
October 2019 the UK government released an updated index of multiple
deprivation analysis for England (IMD 2019). This index ranked Wakefield as
the 54th most deprived district in England, out of 317. In 2015 Wakefield was
ranked 65th (from 326 – the reduced number from 2015 is due to local
government reorganisation and other councils across the country merging).
Wakefield was also ranked as the 7th most deprived district in the Yorkshire
and Humber region, down from the 8th most-deprived in 2015.
1.5.9 Wakefield’s IMD deprivation scoring was most shaped by high levels of
education and skills deprivation and crime deprivation. The education and
skills ranking has deteriorated slightly compared to IMD 2015 and Wakefield
is ranked as the 20th most deprived local authority in England for this type of
deprivation. Measures used in this area include Key Stage performance;
school absence; post-16 and higher education participation. The adult skills
component is measured using no, or low, qualification levels and poor
English language skills. Crime deprivation appears to have risen significantly
since IMD 2015. This includes rates of recorded theft, burglary and criminal
damage.
1.5.10 The District’s relative income deprivation ranking has changed very little
compared to 2010, and employment deprivation has improved slightly.
Health and disability deprivation has also improved relative to elsewhere in
England but still remains poor. Barriers to housing deprivation are ranked as
being relatively low in the District, reflecting good geographic access to
public services; relatively low levels of homelessness and overcrowding; and
relatively good levels of affordability. Levels of living environment deprivation
are also low, and continue to improve. This type of deprivation reflects poor
housing conditions, levels of air pollution, and road traffic accidents.
1.5.11 IMD 2019 ranks 34% percent of the District’s neighbourhoods as being in the
top-20% most deprived in England. It was 31% in 2015 and 29% in 2010.
There are 54,200 people living in neighbourhoods among the top-10% most
deprived in England. In 2015 the number was 47,400 people and 40,500 in
2010.
Children’s Services
1.5.12 Wakefield’s population is projected to further increase and as such it is
projected that the number of children and young people living in Wakefield
will continue to increase over the next few years. The population of young
children aged 0-17 in Wakefield is 72,893 and it is expected to increase by
over 5% by 2025. This increase in population will likely result in an increase
in the number of children with special educational and other very complex
needs which would impact particularly on the placements budgets for
children in care, home to school transport as well as the high needs block of
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the dedicated schools grant. An increase in population of young children also
places greater demand on the provision of school places across the District
for which the Council has a statutory duty. The Council produces a schools
organisation plan which is reviewed on an annual basis and includes both
present and predicted pupil numbers at each school across the District as
well as information about birth rates and school capacity. The plan considers
the impact of legislation, funding changes and new/proposed housing
developments in order that the local authority can meet its statutory duties to
provide sufficient school places.
1.5.13 The Children’s Services directorate has been on a significant and rapid
improvement journey since the Ofsted inspection of children’s safeguarding
services in June 2018 which resulted in an overall judgement of ‘inadequate’.
In December 2018 the Council received confirmation that no alternative
delivery model was required and, in January 2020, it was confirmed that the
independent Commissioner, appointed to oversee further improvement, is no
longer required due to the progress made within Wakefield.
1.5.14 Following additional investment in previous years, the Council has
implemented a strategic three year plan for Children and Young People that
focuses on the rapid improvement of the current service to ensure the
appropriate safeguarding of children. This is the precursor for a longer term
vision of earlier intervention and support for vulnerable children and families.
The additional investment has strengthened front line social work teams and
has provided a focus on early help services to achieve the longer term goal
of prevention and decrease in demand.
1.5.15 The number of children in care population as of December 2019 was 634
children and young people. The number of children looked after in Wakefield
has risen significantly over the last three years. This has, in part, been due to
a large number of children coming into care that were previously on child
protection plans. The children in care rate per 10,000 in Wakefield is 87.
Whilst this is higher than the England and regional average it is lower than
some of our statistical neighbours.
1.5.16 In line with the national picture there has been a substantial increase in the
number of children & young people in Wakefield with an Education, Health &
Care (EHC) plan (2,152 as at 1st Jan 2020 compared with 1,785 in January
2018). This has led to the directorate facing significant pressure due to the
ongoing increase in the number of children requiring support and transport to
school and college.
1.5.17 There has been an increase in the skills payments to the Council’s foster
carers to support the drive to increase sufficiency and placement choice for
children and young people in care within the District. There has been
additional investment provided to enhance front line early help capacity with
the intention of reducing demand on high cost children’s social care services.
The additional capacity has strengthened the prevention focus on the
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service, build stronger links with partner agencies and increased the ‘step
down’ capacity of the service in order to reduce the requirement for more
costly interventions.
Adult services
1.5.18 The national context around Adult social care continues to be one of
demographic increases, increased life expectancy, increased complexity of
need, support for people to remain living independently and the aim to work
towards integration of health and social care services.
1.5.19 In the Wakefield District the adult population is estimated to be around
269,000. Around 19% of the population (65,200) is aged 65 or over and this
percentage is set to grow in future years. The population aged 75+ is
projected to increase by over 40% by 2030 to almost 40,000. This will have a
large impact on the types of needs the population exhibits.
1.5.20 Life expectancy in Wakefield is lower than the England average. Male life
expectancy has remained steady at 78 years for the last three periods, the
average across England as a whole is 79.6 years. Males born in the most
deprived areas of Wakefield are expected to live around 8.5 years less than
those in the least deprived areas, however this gap is reducing. Female life
expectancy has fallen recently to 81.8 years. This compares to the national
life expectancy for females of 83.1 years. There is a large inequality gap (9.1
years) between those most and least deprived.
1.5.21 Dementia is a condition that primarily affects people aged 65 and over, and
in August 2019 there were 2,547 people aged 65+ with a recorded diagnosis
of dementia. Rates of emergency admissions to hospital where there was a
mention of dementia are higher than the England average.
1.5.22 In the Wakefield District there are an estimated 37,000 carers which means
that over 10% of the District’s population have caring responsibilities. A large
amount of care is provided unpaid by family members and others. Over 600
people aged under 16 are providing unpaid care and one-in-five people aged
50 to 64 provide some unpaid care.
1.5.23 Similar to other local authorities in England, Wakefield has seen an increase
in the number of households living in temporary accommodation. The
numbers had been increasing slightly but then rose markedly when the
Homelessness Reduction Action 2017 came into force. At the end of
September 2019 there were 198 households in temporary accommodation.
1.5.24 National estimates suggest that around 5,000 people aged between 18 and
64 living within Wakefield have a serious physical disability, with a further
16,500 having a moderate physical disability. Local data for adult social care
users identifies that just over 4,000 people receive physical, mental, sensory
or learning disability support from Wakefield Council.
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1.6 Principles of Wakefield’s MTFS
1.6.1 The principles which provide the basis for the Medium Term Financial
Strategy for 2021/22 to 2024/25 include the following:
The Council will estimate both the level of funding that can be made
available for the delivery of services and the gap between income and
expenditure for which income generation, savings options and further
efficiencies will have to be implemented.
The Council’s resources will be directed to achieving the overall
objective and key priorities as agreed by the Council.
An assumption that central Government funding will increase in line
with inflation.
Collecting as much council tax, business rates and other monies
rightfully owed so the Council can ensure that it has the resources
needed to deliver service priorities.
The Council will continue to improve value for money - managing
people and our money more efficiently, streamlining processes and
systems, getting better value from commissioning and procurement,
whilst seeking to minimise the impact of budget savings on priority
services.
Opportunities for working in collaboration and partnership and working
differently will be identified and developed where this supports the
overall objective and key priorities as agreed by the Council. This may
include different service delivery models and sourcing and securing
external funding.
The Council will maintain unallocated revenue reserves at a level to
mitigate risks, the level of unallocated reserves will be reviewed
annually as part of setting the revenue budget and council tax each
year. It will also maintain earmarked reserves for specific purposes
which are consistent with achieving its key priorities. The use and level
of earmarked reserves will be reviewed at least annually.
The Council will seek in the first instance to balance its revenue budget
over the period of the MTFS without reliance on the use of unallocated
reserves and contain overall Council spending within original estimates.
In summary the forecast budget position for the Council shows an
ongoing challenge, where financial resources are currently not enough
to meet the budget requirement to deliver current service provision. The
period covered by this MTFS will continue to present the Council with
some of the most significant operational and financial challenges ever
experienced by those leading and managing the delivery of local
services.
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Part 2: The factors influencing the MTFS
2.1 Overall economic forecasts and influences
2.1.1 The one-year Spending Review 2019 made the significant funding changes
that affected the 2020/21 settlement. These were:
£1bn additional funding for social care;
2% adult social care precept, which could generate a further £500m;
Reduction in the maximum increase in core Band D council tax from
2.99% to 1.99%; and
Settlement Funding Assessment (SFA) increases (1.6%, £237m) in line
with the multiplier (equivalent to £1.4m for Wakefield)
2.1.2 This was the first increase in SFA in over a decade. Over the five years to
2020/21, the cut in SFA has been 30% in cash terms, with the increase in
2020/21 changing the direction of travel but not replacing the significant cuts
in local government funding.
2.1.3 The Chancellor has launched the 2020 Comprehensive Spending Review
(CSR), which is due to report in October 2020 and will set out the
Government’s revenue spending plans for 2021/22 to 2023/24 (and capital
plans to 2024/25). No spending envelope has been set by the Chancellor in
advance of the spending review because of the ‘unprecedented uncertainty’
caused by COVID-19-19. He has, however, ‘confirmed that departmental
spending (both capital and resource) will grow in real terms across the CSR
period’.
2.1.4 This suggests that there will be no return to austerity but the redirection of
resources within the public sector means that there will still be cuts in lower
priority services. The Chancellor refers to the ‘tough choices in other areas
of spending’ and that ‘departments have been asked to identify opportunities
to reprioritise and deliver savings’. Local government will certainly not be
excluded from these cuts, although funding increases, alongside reform, are
expected in adult social care.
2.1.5 Government has also announced that the Fair Funding Review, the business
rates baseline reset and 75% business rates retention has been delayed by
suspending implementation in 2021/22. Changes were expected to be
implemented in 2022/23 however there is a very real risk that they will be
delayed for a further year because:
it will be impossible to reset business rate baselines and equalise
council tax if the future levels of taxation have not stabilised by
2021;
major changes are likely for both social care and public health
which are unlikely to be ready by 2021; and
authorities will still be reeling from the major financial upheaval
following the current pandemic.
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2.2 Regional influences
Devolution
2.2.1 Devolution is one of the most fundamental changes to the way decisions are
made for local areas and how public services are funded. The transfer of
power and funding from national to local government will ensure decisions
are made closer to the local people, communities and businesses and
provide greater freedoms and flexibilities for councils to work more
effectively to improve public services for their area. The result will be more
effective, better targeted public services, greater growth and stronger
partnerships between public, private and community leaders in local areas.
The West Yorkshire ‘minded-to’ Devolution Deal was announced as part of
the Budget on 11th March 2020. Subject to statutory processes, this will lead
ultimately to the adoption of a mayoral combined authority model with
additional functions, and will require an Order of the Secretary of State.
Consent to the draft Order will be in November 2020.
The Deal will devolve a range of powers and responsibilities to West
Yorkshire Combined Authority, supporting the region to drive economic
growth and prosperity within its communities and across the north. In
addition, it will unlock significant long-term funding and give the region
greater freedom to decide how best to meet local needs and create new
opportunity for the people who live and work here.
The initial gainshare funding for the financial year 2020/21 will be available
prior to the first Mayoral election in May 2021 but subject to: the establishing
legislation being in place; and a revised Assurance Framework being
approved.
The Deal includes a number of flagship funding arrangements including
£38m for 30 years into the West Yorkshire Investment Fund, £317m from the
Transforming Cities Fund and control over the £63m annual Adult Education
budget.
Leeds City Region Strategic Economic Plan (‘SEP’)
2.2.2 Wakefield Council (and the Wakefield District) is a key stakeholder and
influencer within the Leeds City Region (LCR). The LCR SEP vision is “to be
a globally recognised economy where good growth delivers high levels of
prosperity, jobs and quality of life for everyone”.
In achieving this, the City Region will:
Deliver upwards of 35,000 additional jobs and an additional £3.7
billion of annual economic output by 2036.
Become a positive, above average contributor to the UK economy.
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Seek to exceed the national average on high level skills.
Make good progress on headline indicators of growth and
productivity, employment, earnings, skills and environmental
sustainability.
2.3 Resources available
2.3.1 Wakefield Council services are funded through a mix of revenue streams
including central government funding and local taxation. The funding
package to cover the costs of providing services for 2020/21 is reflected in
the chart below. Local taxation now contributes 40% towards the gross cost
of council services.
Chart 1 - Breakdown of 2020/21 Council Funding
* Government grants includes Housing Benefit Subsidy payments of £88m, Public Health
Grant £24m and New Homes Bonus £9M
Business rates
2.3.2 Business rates are set by the government and based upon a rateable value
of non-domestic properties. The rateable value is determined by a
government agency called The Valuation Office Agency (‘VOA’). Annually
Government set a business rates multiplier which when applied to the
rateable value determines the amount of rates business are liable to pay.
Business rate retention
2.3.3 Prior to 1st April 2013, councils had no financial interest in the collection of
business rates, acting purely as a collection agent for the Government. The
Business Rates Retention Scheme (‘BRRS’) was introduced in April 2013 to
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provide councils with stronger financial incentives to support property
development and boost the economy in their local areas. This introduced an
element of risk and reward not previously seen in a key source of council
funding. It means that councils bear a proportion of the real-terms change in
business rates revenues in their areas: gaining when revenues grow in real
terms, losing when they fall. That proportion was initially set at 50% across
England, resulting in the Council retaining 49%, West Yorkshire Fire &
Rescue Authority 1% with government retaining the other 50%.
2.3.4 The Wakefield District has a long traditional of attracting business
investment in the area as reflected in the chart below which highlights the
growth in the total rateable value in the District.
Chart 2 - Movement in Rateable Value in Wakefield
2.3.5 Business investment continues to grow in the District with a number of sites
currently being developed. In developing the MTFS the Council has been
able to factor in this growth at approximately £14m growth in rateable values
over the next 4 years from 2021/22 and 2024/25.
Business rate retention - further development
2.3.6 On 5th October 2015 the then Chancellor of the Exchequer, George
Osborne, set out plans in his ‘devolution revolution’ to take Business Rate
Retention even further with the aim of councils retaining 100% of business
rates by the end of that parliament. This plan, however, was put on hold,
when the bill required to implement the plan fell in Parliament as a result of
calling the June 2017 General Election.
2.3.7 Government have continued to push for further business rate retention within
the existing legislative framework and are currently progressing plans for a
75% scheme with the original aim to be introduced by April 2020, though this
has now slipped. In order to better understand the issues of further rate
retention the Government has been piloting 100% retention of real-terms
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changes in business rates revenues in parts of England since April 2017 with
additional areas piloting 75% from April 2019 until March 2020.
2.3.8 Wakefield in conjunction with other councils in the region applied and were
successful in piloting 100% business rate retention in 2018/19 as part of the
LCR business rates pilot, and 75% rate retention in 2019/20 as part of a
wider pilot with North and West Yorkshire Councils. The latter resulted in the
Council retaining 74% and West Yorkshire Fire & Rescue Authority 1%.
Through both pilots the Council and other members of the pilots have been
able to share a greater proportion of growth in business rates income in the
region.
2.3.9 The 75% rate retention pool with North and West Yorkshire Councils was
dissolved by central government as part of the 2020/21 Local Government
Settlement along with other regions piloting 75% retention. The Council
applied for and was granted permission to form a pool with North and West
Yorkshire Councils (but excluding Selby District Council) for 2020/21 based
upon the normal 50% rate retention principles. The formation of the pool will
help to retain what would otherwise have been levy payments payable to
central government.
Business rates income
2.3.10 The level of rates businesses are liable to pay is dependent upon a number
of factors including the rateable value, business rate multiplier, set annually
by government, reliefs businesses may be entitled to, and any transitional
relief following a national business rate revaluation. The estimated business
rates collectable by the Council in 2020/21 are highlighted in Table 1 below.
2.3.11 The introduction of the system has not been without complication. Each
business has the right to appeal the valuation of its premises and the
grounds for many of these are such that the liability extends back before the
new system was introduced. Each council has been required to raise a
provision against which these potential costs can be charged against, which
has served to reduce income. The risk for all councils is whether the
provision raised is sufficient to cover refunds as they materialise. Business
Rateable Values were revalued from April 2017, resulting in further volatility
in the system.
The Council sets aside some of this funding to provide for the future impact
of appeals against rateable values. As at 1st April 2020 the value of the
provision for appeals was £11.1m and is thought to be sufficient to meet the
risk of potential future refunds and it is not anticipated that the Council will
need to set aside further sums during 2020/21 or beyond.
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Table 1 - Estimated Business Rate income 2020/21
Based upon the councils NNDR1 return submitted to central government pre-Covid
pandemic implications
Mandatory & discretionary business rate reliefs
2.3.12 A number of reliefs are available to businesses that reduce the amount of
business rates that they have to pay; some are mandatory and set by statute
and others are at the discretion of billing authorities. The Council estimates
that it is likely to award £24.4m of mandatory reliefs and £3.2m of
discretionary reliefs in 2020/21. Through the discretionary relief scheme the
Council is supporting local charities with headquarters in the Wakefield
District by topping up the 80% mandatory relief by a further 20%, meaning
none of these charities will be required to pay business rates. In addition
non- profit making bodies and community amateur sports clubs can also
benefit from 100% relief through the discretionary scheme. It should be
noted that following the Government’s announcement that it would increase
retail rate relief from 50% to 100% and expand it to include the leisure and
hospitality sectors, there will be a loss of business rates income to the
Council in 2020/21 (£21.1m) although this will be compensated by
Government through a section 31 grant.
2020/21
Estimated
£m
Rateable Value of all Businesses in Wakefield
District327.7
National Business Rate Multiplier for 2020/21 -
pence per pound of rateable value0.499
Gross Business Rate Liability 163.5
Estimated Growth In Business Rates 2.1
Mandatory Reliefs
Small Business Rate Relief (SBRR) (11.2)
Charity relief & other minor reliefs (8.0)
Unoccupied property relief (5.2)
Discretionary Reliefs
Charitable occupation 20% top up (0.6)
Non-profit making bodies & community amateur
sports clubs 100%(0.4)
Specific time limited Government initiatives (2.2)
Other adjustments (2.6)
Net Business Rates Due 135.3
Under Business Rate Retention 50% Pool
Wakefield retain 49% of rates due66.3
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Business rate retention & resetting of baselines
2.3.13 In setting up the business rate retention scheme at the outset in April 2013
the Government calculated a business rate baseline, being the amount of
business rates it expects councils to collect, which has been inflated in line
with the increase in business rates multiplier.
2.3.14 The business rates baseline for Wakefield in 2020/21 and estimated retained
business rates after setting aside amounts for bad debt provisions are
reflected in the following table.
Table 2 - Growth in income above Business Rate baseline 2020/21
2.3.15 The Government is still committed in implementing the Fair Funding Review
and reforms to the Business Rate Retention Scheme although these have
been delayed from 2021/22. This will involve the recalculation of business
rate baselines and the loss of the growth achieved to date against the 50%
retention baselines. This could mean a loss of growth of £8.8m.
2.3.16 In planning for the introduction of 75% rate retention, resetting of baselines
and the wider impact of the Government’s Fair Funding Review, the Council
have assumed a net neutral impact on the basis that no detail has yet
emerged to indicate the likely impact on the Council and, regardless of the
outcome, the Government will have to provide some level of transitional
funding or restriction to move councils across to their new level of funding
over a period of time.
Appeals against rateable values
2.3.17 As a consequence of the Government introducing the business rate retention
scheme in April 2013, the Council, whilst being rewarded for the growth in
businesses in the District, is now open to the negative impact of the cost of
businesses appealing against the rateable value set by the VOA.
2.3.18 A large number of appeals remain outstanding from the 2010 business rate
revaluation. The Council has no involvement in the appeals process, which
is administered by the VOA.
2.3.19 The Council is required to set aside what it estimates could be the potential
refund to local business from successful appeals. The provision for appeals
2020/21
Estimated
£m
Business Rates Baseline 57.5
Income estimated due in year 66.3
Income (growth) above baseline 8.8
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against the 2010 rating list at 1st August 2020 was £5.1m of which
Wakefield’s share on a 49% basis would be £2.5m, see Table 3 below.
Table 3 - Outstanding appeals against 2010 Rating List
2.3.20 The business rate revaluation in 2017 created further uncertainty around the
impact of appeals against rateable values as at the same time Government
introduced a new system of ‘Check, Challenge and Appeal’. Under this
system, businesses or their property agents could check the basis of a
valuation and challenge that assessment before actually proceeding to
appeal should they still not be satisfied with the rateable value. Very little
information has so far been provided by the VOA to highlight the impact of
‘Check, Challenge and Appeal’ on the original rating assessments. In the
absence of VOA data the Council has provided for potential refunds
following successful challenges or appeals on the basis of a percentage of
income. The provision for appeals against the 2017 list at 1st August 2020
was £6.0m, of which Wakefield’s share on a 49% basis would be £2.9m.
Operation of the Collection Fund
2.3.21 The difference between budgeted business rates income and actual in-year
income is managed through the Collection Fund and impacts in the following
financial year. The MTFS reflects the financial consequences of the current
COVID-19 pandemic on local businesses with a forecast increase in empty
property relief, business insolvencies and increases in provisions for bad
debts as in-year collection rates suffer. Business rates collection within the
MTFS is currently forecast to be 95% in 2021/22 and 99% thereafter,
reflecting the correction to business rates to normal levels following the
impact of the pandemic.
Section 31 Grant Compensation
2.3.22 Government sets the multipliers for each financial year for England
according to formulae set by legislation. Previously, the multipliers increased
in line with the RPI in September of the preceding year however in 2014/15
and 2015/16 the Government capped the increase in the multiplier at 2% to
provide business rate payers with additional support, and this has had a
knock on effect in subsequent years which authorities are being
compensated for this through a section 31 grant. In the autumn 2017
Budget, Government announced that the multipliers would increase in line
with the CPI in September of the preceding year from 2018-19. This change
was compensated for through a section 31 grant.
Number Rateable Value £m
All Appeals 440 157.8
Number of individual sites 171 39.2
Potential refunds following successful appeal £5.1m
Wakefield Share at 49% £2.5m
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2.3.23 In addition to section 31 grant to compensate local authorities for capping,
the increase to multipliers in 2014/15 and 2015/16 and the move from RPI to
CPI as a basis for setting the multiplier in 2018/19; local authorities also
receive section 31 grants to compensate them for lost income as a result of
implementing government policy through the discretionary business rate
relief scheme. For 2020/21, this includes additional grant of £21.1m to
compensate for the expanded COVID-19 related retail relief.
Council tax
2.3.24 Council tax is one of the main sources of income for councils to meet the
costs of running local services. It is a tax on domestic property which was
introduced in 1993 by the Local Government Finance Act 1992, replacing the
short lived community charge, which in turn replaced the domestic rates.
Each property is assigned one of eight bands A to H, based on property
value, and the tax is set as a fixed amount for each band.
2.3.25 The level of income available to councils through charging council tax is
dependent upon a number of factors including the tax base (number of
dwellings expressed as band D equivalents), the level of discounts and
reliefs claimed by residents, the council tax level set annually by councils
and income set aside to cover potential bad debts.
2.3.26 In addition to the charges levied by the Council on residents in the District,
the major preceptors of West Yorkshire Police & Crime Commissioner and
West Yorkshire Fire & Rescue Authority levy charges on residents across
the District. In certain parishes within the District, local town and parish
councils also levy charges.
Council tax base
2.3.27 The council tax base is estimated annually around the time the Council sets
its budget and is based upon the number of liable properties in the District
net of reliefs and discounts and adjusted for an assumed collection rate. The
council tax base is expressed in band D equivalents to allow consistency
and comparison between authorities, see Table 4 below.
2.3.28 In recent years the Council has experienced substantial housebuilding within
the District, resulting in significant growth within the tax base. In setting this
MTFS the Council has reviewed future forecast house building and trends in
reliefs and discounts, projecting the net growth forward into future years.
Increases in the tax base creates additional income for the authority.
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Table 4 - Council Tax Base Calculation 2020/21
2.3.29 The movement in the tax base in recent years and forecast for the next few
years are reflected in Chart 3, below.
Chart 3 - Movement in Wakefield’s Council Tax base & forecast to 2024/25
2.3.30 Prior to 2013, residents struggling to pay their council tax bills could apply for
council tax benefit with the Council being reimbursed by Government for the
cost of benefit awards. The Government scrapped the council tax benefit
system in April 2013, replacing it with council tax support schemes which
rather than award a benefit to offset council tax liability, reduce an
applicant’s council tax bill by means of a discount. The introduction of the
new discount in 2013 resulted in a large reduction in the council tax base as
reflected in the chart. The Council was partially compensated for the impact
on the council tax base through a grant rolled in to the Council settlement
Council Tax Band A B C D E F G H Total
Number of dwellings in Rating List at
1 Dec 201979,401 29,696 22,955 14,997 7,945 2,436 1,138 83 158,651
Equivalent discounts & exemptions (23,541) (4,405) (2,457) (1,039) (486) (138) (64) (42) (32,172)
Equivalent number of dwellings after
discounts & exemptions55,860 25,291 20,498 13,958 7,459 2,298 1,074 41 126,479
Appropriate proportion applicable to
dwellings in band 6/9 7/9 8/9 9/9 11/9 13/9 15/9 18/9
Number of Band D Equivalents 37,240 19,671 18,220 13,958 9,117 3,319 1,790 82 103,397
Estimated Tax Base Growth 1,349
Sub-total 104,746
Estimated Collection Rate 98.5%
Estimated Tax Base 2019/20 103,175
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funding assessment. The Financial Health report to Cabinet in September
2020 recommended to Council that the Local Council Tax Support Scheme
for 2021/22 remains unchanged from the 2020/21 scheme. There are
currently around 29,500 residents receiving council tax support in the District
and approximately 19,000 of these are of working age. Alongside these
there are around 900 claims awaiting assessment. Pension-age residents
have their own scheme with rules being set by Government. The scheme for
those of working age was forecast to cost £10.3m based on a caseload of
15,700. However additional costs have been incurred due to a recent sharp
increase in the caseload due to the COVID-19 pandemic. It is estimated that
the caseload will start to reduce as the Government’s Coronavirus Job
Retention Scheme comes to an end. Current claims of 20,000 will reduce to
around 17,000 by March.
Council tax rate
2.3.31 As part of the budget setting process the Council annually reviews the
council tax rate to be applied to bills. Government controls the maximum
level a council can increase its council tax rate through setting a referendum
limit. Any council wishing to set a rate about that level is required to hold a
referendum and seek approval from its residents. For a number of years the
referendum limit had been set at 2%, although for 2019/20 Government
increased the limit to 3%. The referendum limit is set annually by
Government who, as part of the Spending Round 2019, reverted the limit
back to a 2% level for 2020/21.
2.3.32 In 2017 Government recognised the financial pressures affecting local
authorities providing adult social care responsibilities. The Government’s
response was to pass on the burden of meeting some of the pressure to
local tax payers rather than fund directly through central grant funding to
councils. The Government directive allowed councils to charge an additional
amount on council tax bills as an adult social care precept, restricting annual
increases to a maximum of 3% and a total of 6% across years 2017/18 to
2019/20 on top of the general increase in council tax. The Council introduced
a precept at rates of 2% in 2017/18, 3% in 2018/19 and 1% in 2019/20.
Government announced within the Spending Round 2019 that they would
allow councils to charge a 2% adult social care precept in 2020/21. The
MTFS reflects no further precepts up to March 2025.
Historic council tax levels are reflected in the tables below:
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Table 5 - Movement in Wakefield Council Tax levels (expressed in band D equivalents and
excluding major preceptors & Parish / Town Councils)
Chart 4 - Graphical representation of movement in Council Tax Rate (expressed in band D
equivalents) compared to 2010/11 rate had this been increased by inflation over the period
2.3.33 As evidenced in Chart 4, above, the freezing of council tax in 2011/12 and
2012/13, means the council tax rate is about on par with the rate it could
have expected in 2020/21, had it been increased in line with inflation despite
Year
General
Council Tax
Rate
Adult Social
Care PreceptTotal
£ £ £
2005/06 921.02 921.02
2006/07 953.26 953.26
2007/08 986.62 986.62
2008/09 1,035.49 1,035.49
2009/10 1,074.79 1,074.79
2010/11 1,100.59 1,100.59
2011/12 1,100.59 1,100.59
2012/13 1,100.59 1,100.59
2013/14 1,116.55 1,116.55
2014/15 1,138.77 1,138.77
2015/16 1,161.43 1,161.43
2016/17 1,207.77 1,207.77
2017/18 1,208.58 59.46 1,268.04
2018/19 1,246.49 84.82 1,331.31
2019/20 1,286.29 98.14 1,384.43
2020/21 1,313.84 125.83 1,439.67
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the much larger increases in recent years which also include the adult social
care precept.
2.3.34 Wakefield remains the second lowest of the West Yorkshire local authorities
in terms of the band D council tax level. It is worth noting that if Wakefield’s
band D council tax was set in line with the highest of the West Yorkshire
Districts it would generate an additional £13.4m each year to support service
provision.
Table 6 - Council Tax rates in West Yorkshire (expressed in band D equivalents)
Collection rates & provisions for bad debts
2.3.35 In estimating the level of income that councils can expect from council tax
payers in its area, an assessment is carried out as to the likelihood of non-
payment of council tax liability. Wakefield Council, in setting its budget for
2020/21, assumed an overall long term collection rate of 98.5%. Actual in
year collections will be lower than 98.5% but the long term rate reflects the
fact that outstanding amounts will continue to be pursued in future periods.
In setting a 98.5% collection rate the Council is estimating that at some point
in the future, when all courses of action have been exhausted to recover
amounts outstanding, there could be 1.5% of council tax liability to be written
off as irrecoverable. The Council has reviewed its collection rate as a result
of issues created by the COVID-19 pandemic and lowered its estimated
collection rate for 2021/22 to 98% before returning to normal levels the year
after.
2.3.36 As at 31st March 2020, council tax outstanding balances amounted to
£22.6m for which there has been a provision set aside of £13.9m for future
debt write-offs. The overall value of the balances outstanding and provisions
made are shared between the Council, West Yorkshire Police & Crime
Commissioner and West Yorkshire Fire & Rescue Authority in proportion to
their precept.
The table below reflects the balances attributable to each:
£
Kirklees 1,569.80
Calderdale 1,548.36
Leeds 1,449.00
Wakefield 1,439.67
Bradford 1,427.86
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Table 7 - Council Tax Arrears & Provisions for Bad Debts at 31st March 2020
The Council continues to monitor the outstanding sums and revises its
estimates of non-collection accordingly. The collection rates in 2021/22 are
currently forecast to be lower than those budgeted for in 2020/21 due to the
impact of the pandemic. The rates are expected to improve in 2021/22 with a
return to normal levels by 2022/23. The MTFS assumes a collection rate of
98% in 2021/22; and 98.5% in 2022/23 and thereafter.
New Homes Bonus
2.3.37 The New Homes Bonus (‘NHB’) was introduced in 2011 and was funded by
top-slicing existing revenue support grant funding. It was introduced as an
incentive scheme to encourage housing growth across the country with local
authorities receiving grant funding equivalent to the average council tax for
each net additional property each year. The 2015 spending review made a
number of changes to the scheme, including receiving the grant over a four
year period (previously it was six years) and the imposition of a national
growth baseline before the grant is paid. The MTFS assumes a pressure of
£1.08m in 2021/22 due to the gradual phasing out of NHB and payments in
future years impacted by a stall in house building resulting from the current
pandemic (£0.3m in 2022/23 and £0.7m in 2023/24).
2.4 Budget position for 2021/22 to 2024/25
2.4.1 Table 8, below, presents a summary of the Council’s MTFS through to
March 2025. The table sets out the estimated changes in core funding
(Government grant, retained business rates etc.) as well as the forecast
changes in key areas of spend through to 2024/25.
2.4.2 The budget gap over the four years from 2021/22 to 2024/25 amounts to
£57.2m (£16.2m in 2021/22; £20.2m in 2022/23; £15.9m in 2023/24 and
£4.9m in 2024/25).
TotalWakefield
Council
WY Police &
Crime
Commissioner
WY Fire &
Rescue
Authority
£m £m £m £m
Council Tax Amounts Outstanding 22.6 19.2 2.5 0.9
Provision for Bad Debts (13.9) (11.8) (1.6) (0.5)
Assumed Further Collectable Amount 8.7 7.4 0.9 0.4
Proportion of Total
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Table 8 - Estimated funding changes & cost pressures
2021/22 2022/23 2023/24 2024/25 2021/22 2022/23 2023/24 2024/25
£m £m £m £m £m £m £m £m
1) Funding changes
A) Business rates/SFA
Revenue support grant (0.16) (0.16) 0.16 0.00 0.00
Phase 2020/21 collection fund deficit 8.47 8.47 8.47 8.47 0.00 0.00 (8.47)
2019/20 collection fund balance (4.19) (4.19) 4.19 0.00 0.00
Funding above the baseline 2.34 (2.06) (3.06) (4.06) 2.34 (4.40) (1.00) (1.00)
Top-up/tariff & baseline funding (0.79) (1.79) (2.79) (3.79) (0.79) (1.00) (1.00) (1.00)
Sub-total - business rates 5.67 4.62 2.62 (7.85) 5.67 (1.05) (2.00) (10.47)
B) Council tax
Phase 2020/21 collection fund deficit 1.18 1.18 1.18 1.18 0.00 0.00 (1.18)
Housing growth (0.12) (2.22) (4.32) (6.42) (0.12) (2.10) (2.10) (2.10)
Changes to council tax base 1.25 1.25 1.25 1.25 1.25 0.00 0.00 0.00
Provision for bad debts 0.73 0.73 0.73 0.73 0.73 0.00 0.00 0.00
Sub-total - council tax 3.04 0.94 (1.16) (4.44) 3.04 (2.10) (2.10) (3.28)
C) Grant funding
Assumption re: ASC additional funding (2.90) (2.90) (2.90) (2.90) (2.90) 0.00 0.00 0.00
New homes bonus 1.08 1.38 2.08 2.08 1.08 0.30 0.70 0.00
Other specific grant funding (0.57) (1.17) (1.77) (2.37) (0.57) (0.60) (0.60) (0.60)
Sub-total - grant funding (2.39) (2.69) (2.59) (3.19) (2.39) (0.30) 0.10 (0.60)
Sub-total - funding changes 6.32 2.87 (1.13) (15.48) 6.32 (3.45) (4.00) (14.35)
2) Cost pressures
A) Inflation
General inflation 5.30 10.60 15.90 21.20 5.30 5.30 5.30 5.30
National living wage 5.30 10.80 16.30 16.30 5.30 5.50 5.50 0.00
Waste PFI contract 0.70 1.40 2.10 2.80 0.70 0.70 0.70 0.70
Sub-total - grant funding 11.30 22.80 34.30 40.30 11.30 11.50 11.50 6.00
B) Service pressures
Adults and Public Health 0.56 1.17 2.04 3.30 0.56 0.61 0.87 1.26
Children's Services 3.31 4.67 5.33 6.08 3.31 1.36 0.66 0.75
Regeneration & Economic Growth 5.12 6.03 6.24 6.24 5.12 0.91 0.21 0.00
Communities, Environment and Climate Change 3.19 3.47 3.47 5.39 3.19 0.28 0.00 1.92
Chief Executive Unit 3.32 3.63 3.88 4.13 3.32 0.31 0.25 0.25
Council-wide budgets 2.61 4.11 5.61 7.61 2.61 1.50 1.50 2.00
Sub-total - service pressures 18.11 23.06 26.56 32.74 18.11 4.95 3.50 6.18
Sub-total - cost pressures 29.41 45.86 60.86 73.04 29.41 16.45 15.00 12.18
3) Headline budget gap 35.73 48.73 59.73 57.56 35.73 13.00 11.00 (2.17)
To be met by:
A) Earmarked reserves
Business rates reserves (7.03) (7.03) (7.03) (7.03) 0.00 0.00 7.03
Collection fund reserve (5.22) (5.22) 5.22 0.00 0.00
Regen earmarked reserves (1.76) (1.76) (0.36) (0.36) (1.76) 0.00 1.40 0.00
Release of reserves to smooth budget gap (5.50) (3.50) (5.50) 2.00 3.50 0.00
Sub-total - earmarked reserves (19.51) (12.29) (7.39) (0.36) (19.51) 7.22 4.90 7.03
16.22 36.44 52.34 57.20 16.22 20.22 15.90 4.86
Change from 2020/21 baseline Year on year change
4) Budget Gap after use of earmarked reserves
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Settlement Funding Assessment
2.4.3 The Settlement Funding Assessment (‘SFA’) is the total of the revenue
support grant from the government and business rates baseline funding.
Since 2011/12 the Council has seen significant reductions in its SFA as a
result of government austerity measures and had anticipated that this would
likely continue in to the future. In recognition of pressures facing local
authority funding the Government’s Spending Round 2019 announced a real
terms increase in SFA of 1.8% above 2019/20 levels, equivalent to £1.531m
for Wakefield.
2.4.4 Under the Government proposals for 75% business rate retention, councils
will forego revenue support grant and public health grant in return for a
greater share of locally raised business rates income. As such the Council’s
SFA will increase at the expense of receiving direct grant funding.
2.4.5 The MTFS assumes an annual increase in SFA of 1.1% (based on current
forecasts for CPI) over the four year planning period to March 2025. Given
the uncertainty over the timing of the proposed implementation of 75%
business rates, the MTFS assumes that, whenever implemented, the impact
will be broadly neutral.
Changes in Local Funding
Business rates
2.4.6 A reset of business rates was due for 2021/22 but, due to the pandemic, the
Government has delayed this to 2022/23 although this could be delayed
further. Following the resetting of baselines, it is assumed that the current
section 31 grants will cease to be paid with the value of those grants being
re-allocated through the Fair Funding Review.
2.4.7 This MTFS assumes £2m growth in business rates in the District during
2021/22 alongside inflationary increases (based on CPI at 1.1%). The
position assumes 5% losses in collection resulting from the recession and
the ongoing impact of the COVID-19 pandemic.
Council tax
2.4.8 The MTFS assumes council tax base growth at 50% of the Council’s
strategic housing market assessment for 2021/22 (an increase of 700
dwellings). From 2022/23 it is assumed that housing growth will return to
pre-pandemic levels of an increase of 1.2% per annum (1,900 new dwellings
per year).
2.4.9 In line with the Council’s constitution and decision-making processes, any
future increases in Council Tax will be consulted on as part of the annual
budget process with a decision made by Full Council as part of the approval
of the annual budgets.
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Collection Fund
2.4.10 As a result of the COVID-19 pandemic, the Government has proposed that
repayments to meet Collection Fund deficits accrued in 2020/21 will be
phased over a three-year period (2021/22 to 2023/24) to ease immediate
pressures on budgets. Billing and major precepting authorities are usually
required to meet their share of any deficit during the following financial year.
2.4.11 The Government’s intention is for the deficit phasing to apply to all
authorities, set at a fixed period of three years. The phased amount will be
the entire collection fund deficit for 2020/21 as estimated on 15th January
2021 for council tax and in the 2021/22 NNDR1 for business rates. The
scheme will be prescribed in secondary legislation.
2.4.12 The MTFS assumes that the forecast deficit on the Collection Fund as at 31st
March 2021 of £25.4m business rates and £3.5m council tax will phased
over a three year period from 2021/22 to 2023/24 at £9.6m per year
(business rates £8.4m per year and council tax at £1.2m per year)
Other Funding Changes
Public Health grant
2.4.13 The MTFS assumes this grant will be increased by inflation (CPI) during
2021/22.
Adult Social Care Winter Pressures grant
2.4.14 Government provided one-off grant funding in 2018/19 and again in 2019/20
to reflect the continuing increasing demand in adult social care and the rising
costs to local authorities. Government announced that this funding would be
rolled in to better care funding as part of the Local Government Settlement
2020/21.
Adults and children’s social care support grant
2.4.15 Government provided one-off funding in 2019/20 to reflect demand
pressures in this area. As part of the local Government Settlement 2020/21,
government announded that this grant would be rolled in with new funding
under the banner of a social care grant. The MTFS assumes funding
remains in place and increases in line with CPI.
Better care funding and improved better care funding
2.4.16 The Local Government Settlement 2020/21 rolled the previous one-off
funding allocations for Winter Pressures in with better care funding. The
MTFS assumes that total better care funding will continue in 2021/22 and
beyond, increasing annually in line with CPI pending the long awaited adult
social care Green Paper and a longer term solution being found.
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2.5 Budget pressures and increased costs
Inflation
2.5.1 The MTFS includes provision for £11.3m of inflation in 2021/22 increasing to
£11.5m in 2022/23 and 2023/24. This includes provision for increases to the
National Living Wage of £5.3m in 2021/22, £5.5m in 2022/23 and a further
£5.5m in 2023/24. In terms of pay inflation, the MTFS reflects assumed pay
awards of 2.75% in line with the award for 2020/21. The MTFS also includes
provision for inflation where there are contractual commitments but assumes
that the majority of spend in other budgets are cash-limited.
Children’s social care
2.5.2 Significant investment has been made in children’s social care in recent
years in order to support the increase in number of vulnerable children and
young people in the District. The MTFS incorporates the financial impact of
targets already agreed over 2020/21 and 2021/22 in terms of achieving
permanence for children through adoption, placed with parents etc. This has
been modelled to show the impact on the budget for 2021/22 (£1.7m).
Minimal growth is profiled into external residential placements for 2021/22
with an assumed reduction in use of Independent Fostering Agency (IFA)
placements over course of 2021/22.
Home to school transport
2.5.3 The Council faces significant pressure due to the increase in children with
special educational needs & disabilities (‘SEND’) being transported to school
& college. The MTFS includes an additional £0.5m funding in 2021/22 to
meet these additional needs.
Demand pressures adult social care
2.5.4 The MTFS provides for £0.5m of additional funding in 2021/22. This is net of
additional costs relating to inflation arising from National Living Wage
increases on commissioned service contracts (£5.3m) and £0.5m with
regard to contract inflation.
Homelessness
2.5.5 The MTFS includes provision of £1.5m in 2021/22 to reflect the increase in
homelessness applications since the implementation of the Homelessness
Reduction Act in April 2017 in respect of additional property, hotel costs and
support staff. The issue has been exacerbated by the impact of the current
pandemic.
Capital financing
2.5.7 In recognising the longer term implications of funding the capital programme
and ensuring that the programme remains affordable, the Council will
increase the resilience of its treasury management activity by supporting the
Council’s MRP strategy by an additional £1m in 2021/22; £1.5m in both
2022/23 and 2023/24; and £2m in 2024/25.
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Change in use of reserves
2.5.8 The indicative budget gap of £16.2m for 2021/22 assumes the release of
£5.5m of reserves to smooth the budget gap in the year. This is reduced by
£2m to £3.5m in 2022/23.
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Part 3: How the Council will meet the Financial Challenge
3.1 Revenue budget plan
Budget Timetable
3.1.1 The Council has a statutory obligation to set a balanced budget. Section
30(6) of the Local Government Finance Act 1992 provides that the Council
has to set its budget before 11th March in the financial year preceding the
one in respect of which the budget is set.
3.1.2 The Council has a budget timetable to ensure that statutory deadline is met.
Key dates in the timetable include:
Budget engagement, October to November 2020
Budget consultation, December to January 2021
Cabinet recommends Revenue Budget and Capital Programme for
2021/22, 16th February 2021
Budget Council to approve the Revenue Budget and Capital
Programme for 2021/22, 24th February 2021
Budget Guidelines
3.1.3 Detailed guidelines, including Government funding changes and
assumptions, are provided to all relevant staff to ensure that revenue
budgets for individual services are prepared consistently. These guidelines
contain details of the assumptions that are to be made in setting the revenue
budget and also set out broad principles that are to be adhered to.
Revenue budget assumptions
3.1.4 The budget setting process is complex and must be undertaken in a planned
way. It is equally important that assumptions used in the preparation of the
budget are agreed, reasonable and consistently applied.
3.1.5 The budget assumptions are applied corporately to service budgets, with
individual exceptions on a case by case basis for specific contracts. The
budget forecast has been based on a number of assumptions, known levels
of expenditure and anticipated levels of resources.
3.2 Savings options
3.2.1 The budget gap for 2021/22 is £16.2m. This is based on what we know, and
an informed estimate of the areas where there is still uncertainty. Budget
saving proposals will be finalised by directorates by late January 2021 with
the consultation on the budget ending mid-January 2021.
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3.3 Balances, reserves and provision strategy
Reserves policy
3.3.1 The Local Government Act 2003 requires the Chief Finance Officer to report
to Council for consideration immediately prior to setting the budget and
council tax. The report aims to ensure that Council is aware of the opinion of
the Chief Finance Officer regarding the robustness of the budget as
proposed and the adequacy of general balances and reserves. This includes
general balances and amounts held as specific reserves and contingencies.
It is also good practice for the Council to have a policy on the level of its
general fund balance and ensure this is monitored and maintained.
3.3.2 The purpose of the reserve policy is:
To maintain general reserves at a level appropriate to help longer-
term financial stability.
To identify any future events or developments which may cause
financial difficulty, allowing time to mitigate for these.
3.3.3 Reserves are important to local authorities as, unlike central Government,
they cannot borrow money over the medium-term, other than for investment
in assets, and they are required to balance their budgets on an annual basis.
The Council holds reserves for various purposes:
Working balances to help cushion the impact of uneven cash flows.
Contingencies to cushion the impact of unexpected events or
emergencies.
Building-up funds to meet known or predicted requirements – often
referred to as earmarked reserves.
Ring-fenced reserves held on behalf of maintained schools.
The nature and purposes of these reserves means that from year to year
funds will flow in and out as projects progress and grants are received, etc.
General fund balances
3.3.4 General fund balances are amounts set aside to cushion the impact of
unexpected events and emergencies. In order to assess their adequacy, a
systematic approach has been adopted. This approach is based on the
identification of the key financial risks following which an amount of
‘potential’ exposure is calculated based on the impact of the risk and the
possibility of its occurrence. The Council’s general fund balance is currently
£15m and the proposal is to maintain it at this level for the duration of this
MTFS although this is subject to the annual risk assessment as part of the
budget process.
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Earmarked reserves
3.3.5 In addition to general balances, the Council holds a number of earmarked
reserves. These are resources that have been set aside to fund specific
issues that may arise in the future. It is important that the Council makes
best uses of all the resources it has and therefore where it is clear that a
reserve is no longer required then the resources can be released to provide
one-off support to the revenue budget.
3.3.6 The Council’s budget setting process includes an annual review of amounts
held in earmarked reserves. This ensures that resources continue to be set
aside only where there is a clear continuing need to do so.
3.3.7 The table below summarises the Council’s anticipated use of reserves during
2020/21 split between general, earmarked (monies held for a particular
purpose) and ring-fenced reserves (mainly schools). The increase in
reserves is principally due to an increase in grant funding from central
Government in respect of the current COVID-19 pandemic.
Table 9 – Council reserves summary
Provisions
3.3.8 Provisions are amounts set aside by the Council to meet the cost of a future
liability, for which the timing of the payment is uncertain. The amounts
represent the best estimate of that liability where an exact cost is not able to
be determined. In line with the Code of Practice, the provision is charged to
service revenue accounts in the year it is established. When the liability falls
due, the costs are charged directly to the provision. The Council currently
holds two significant provisions:
Insurance - the insurance provision covers a proportion of the total
value of outstanding insurance reserve amounts for which the Council
As at 1st
April 2020
Forecast
movement
in year
Forecast at
31st
March
2021
£'000 £'000 £'000
General Reserves 15,000 15,000
Earmarked Reserves 96,928 10,555 107,483
Ring-fenced Reserve 6,302 (406) 5,896
118,230 10,149 128,379
Forecast at
31st
March
2021
Forecast at
31st
March
2022
Forecast at
31st
March
2023
Forecast at
31st
March
2024
Forecast at
31st
March
2025
£'000 £'000 £'000 £'000 £'000
General Reserves 15,000 15,000 15,000 15,000 15,000
Earmarked Reserves 107,483 88,557 85,213 77,821 77,461
Ring-fenced Reserve 5,896 4,137 4,137 4,137 4,137
128,379 107,694 104,350 96,958 96,598
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estimates that it has a potential liability. The provision as at 31st March
2020 was £6.0m.
Business rates – a provision created for business rates appeals
following the Government’s introduction of the business rates retention
scheme in April 2013. The provision for appeals against the 2010 rating
list is £5.1m. The provision against the 2017 rating list is £6.0m. These
provisions are as at August 2020.
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Part 4: Financial Assurance
4.1 Each year as part of the annual accounts process the Council must
demonstrate that it is a going concern. This means it must show that it is
financially sound in this time of austerity and changing local authority
structures. The Council has an Internal Audit function who continually assess
and review the financial management and control framework to ensure that it
remains fit for purpose. On top of this the Council is scrutinised by Deloitte
LLP, external auditors, who will review and comment on whether the Council
has put in place proper arrangements for securing economy, efficiency and
effectiveness in its use of resources. This is known as the Value for Money
(‘VFM’) conclusion.
Financial resilience
4.2 The Chartered Institute for Public Finance Accountants (‘CIPFA’) published a
paper: ‘Building financial resilience: managing financial stress in local
authorities’ intended to help chief financial officers and their authorities build
financial resilience into all aspects of their planning and operations. It
identifies the warning signs of financial stress, and explains the pillars on
which financial resilience depends.
4.3 CIPFA has outlined the warning signs of financial stress exhibited by local
authorities. The table below shows how the Council is performing against
these warning signs.
4.4 CIPFA has identified four key pillars of financial resilience:
Getting routine financial management right
Benchmarking
Clear plans for delivering savings
Managing reserves
Indicators used in the Index include ‘reserves sustainability measure’, ‘level
of reserves’, ‘change of reserves’ and ‘council tax to net revenue
expenditure’. An explanation of each is provided below.
These measures have indicated that the majority of councils are in a stable
financial position, and are not showing signs of financial failure in spite of
managing severe budget cuts. This is the case for Wakefield Council which
continues to show effective financial management against a challenging
context.
4.5 The Council identifies how it achieves financial resilience via the annual VFM
assessment. This forms part of the annual external audit of the Council’s
accounts. Table 10 below shows the Council’s assessment against the
financial resilience measures in both 2017/18 and 2018/19. An explanation
of each indicator is provided after the table. The 2019/20 assessment will be
available late 2020.
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Table 10 – Financial Resilience Index
Note 1 – ‘Fees and charges to Service Expenditure Ratio’ is deemed to be relatively high risk due to the relatively
low level of fees charged to Wakefield residents compared to Service Expenditure. Work is underway to review
this position.
Note 2 – ‘Growth Above Baseline’ is deemed to be relatively high risk due to the positive level of business rates
growth within the District above the historical baseline position.
Wakefield Council - Financial Resilience Index
2017/18 2018/19 Min Max
Indicator
Reserves sustainability measure 23.42 64.53 2.79 100.00
Level of reserves 38.37% 38.45% 17.65% 72.87%
Change in reserves -11.36% -4.44% -51.85% 43.95%
Interest payable / Net Revenue Requirement 10.29% 4.04% 2.45% 17.90%
Gross external debt (£000) 277,941 294,344 53,774 875,570
Social Care ratio 56.71% 60.81% 45.37% 79.63%
Fees and charges to Service Expenditure Ratio 6.41% 5.43% 5.43% 24.90%
Council Tax requirement / Net Revenue Requirement 54.85% 56.17% 41.59% 63.17%
Growth Above Baseline 11.00% 17.00% 3.00% 17.00%
Unallocated Reserves 6.62% 6.23% 3.72% 12.44%
Earmarked Reserves 31.75% 32.22% 9.70% 64.31%
Change in Unallocated Reserves 50.00% 50.00% -60.50% 58.52%
Change in Earmarked Reserves -18.32% -10.70% -63.30% 66.82%
Change in HRA Reserves n/a n/a -10.31% 293.83%
Children Social Care ratio 22.16% 25.41% 18.06% 41.88%
Adult Social Care ratio 34.55% 35.40% 25.54% 42.21%
Indicators of Financial Stress 2018/19 Higher Risk Lower Risk
Reserves sustainability measure
Level of reserves
Change in reserves
Interest payable / Net Revenue Requirement
Gross external debt (£000)
Social Care ratio
Fees and charges to Service Expenditure Ratio
Council Tax requirement / Net Revenue Requirement
Growth Above Baseline
Unallocated Reserves
Earmarked Reserves
Change in Unallocated Reserves
Change in Earmarked Reserves
Children Social Care ratio
Adult Social Care ratio
2018/19
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CIPFA’s Financial Resilience measures
Primary Measures
1. Reserves Sustainability Measure
Ratio between the current level of reserves and the average change in reserves in
each of the past three years. A negative value (which implies reserves have
increased) or one greater than 100, is recorded as 100.
2. Level of Reserves
Ratio of the current level of reserves (total useable excluding Public Health &
Schools) to the Council’s net revenue expenditure.
3. Change in Reserves
The average % change in reserves (total useable excluding Public Health &
Schools) over the past 3 years.
4. Interest Payable / Net Revenue Expenditure
Ratio of interest payable and net revenue expenditure.
5. Gross External Debt
Compares gross external debt held by the Council.
6. Social Care Ratio
Ratio of total spending on adults and children’s social care to net revenue
expenditure.
7. Fees & Charges to Service Expenditure Ratio
Proportion of fees and charges against the Council’s total service expenditure.
8. Council Tax Requirement / Net Revenue Expenditure
Ratio of council tax to net revenue expenditure
9. Growth Above Baseline
Calculated as the difference between the baseline funding level and retained rates
income over the baseline funding level.
Secondary Measures
1. Unallocated Reserves
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Calculated as the ratio of unallocated reserves to net revenue expenditure.
2. Earmarked Reserves
Calculated as the ratio of earmarked reserves (excluding Public Health & Schools)
to net revenue expenditure.
3. Change in Unallocated Reserves
The average % change in unallocated reserves over the past three years.
4. Change in Earmarked Reserves
The average % change in unallocated reserves over the past three years.
5. Childrens Social Care Ratio
The ratio of spending on childrens social care to net revenue expenditure.
6. Adults Social Care Ratio
The ratio of spending on adults social care to net revenue expenditure
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Return to Contents page
Part 5: Strategies which the MTFS supports
Council vision
5.1 In February 2018, the Council agreed a new overall objective and key
priorities for the Council which reflects the views of residents and other
stakeholders and provides a clear framework for decisions.
To be a caring, ambitious and modern council, creating
healthy places where citizens of all ages thrive, businesses
succeed and visitors enjoy and add to our economy.
5.2 The Council’s vision for the Wakefield District is that people thrive,
businesses succeed and visitors are welcome.
In summary, these are:
Successful businesses
Growing a higher value economy and creating good jobs
Successful people
Reducing inequalities, growing skill levels, enabling a good quality of life
and supporting families
Successful places
Celebrating a unique cultural offer and creating vibrant communities that
are better connected
Successful Council
Ambitious, enterprising, dedicated and efficient in delivering excellent
services
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5.3 The way the Council goes about delivering these priorities is equally
important, and ‘The Wakefield Way’ is a reflection of the principles that
underpin how the Council works. ‘The Wakefield Way’ guides how the
Council provides services, how the Council makes decisions and influences
how the Council improves services.
5.4 The Council has developed a set of key principles that underpin how we
work. These are that we:
Help people help themselves
Are business-minded and socially responsible
Provide a positive customer experience
Tackle poverty
Keep people safe at times of vulnerability
Are forward thinking
Intervene early
Have real impact
Champion good growth
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Part 6: Value for Money and Assurance around Financial Management
6.1 Section 151 of the Local Government Act 1972 requires local authorities to
make arrangements for the proper administration of their financial affairs and
appoint a Chief Financial Officer to have responsibility for those
arrangements. The over-riding duty of the Chief Financial Officer is to fulfil
the statutory responsibilities attached to the position in a manner that
enhances the overall reputation of the Council.
6.2 Pertinent to the current pressures in local government, the Chief Financial
Officer duties have been significantly extended by section 114 of the Local
Government Finance Act 1988 which requires a report to all the Council’s
members to be made, in consultation with the Council’s Monitoring Officer, if
there is, or is likely to be unlawful expenditure or an unbalanced budget.
6.3 The Council has a sound framework for reviewing and challenging financial
performance, has realistic plans in place to make the necessary savings in
the current financial year and is taking the appropriate steps to deliver them.
6.4 The financial management and control framework is subject to a number of
independent assessments, including the Council’s Internal Audit function
which has reviewed and given substantial assurance on the Council’s main
financial processes, the integrity of the accounts and the accuracy of the
main financial systems. The financial management and control framework is
continually being assessed and reviewed to ensure that it remains fit for
purpose. Budget management and monitoring is a continuous process which
operates at a number of levels throughout the Council. Although directors
are ultimately responsible for the delivery of their directorate budget,
operationally these responsibilities are devolved down to budget holders
across the various services.
6.5 The Council’s budget accountability framework clearly articulates roles and
responsibilities and aligns financial accountability within service decision
making. Every budget has a named accountable budget holder, supported
by a finance officer, who is responsible for managing, monitoring and
forecasting income and expenditure against the approved budget.
6.6 The Chief Finance Officer has developed a comprehensive set of Financial
Procedure Rules (‘FPR’) which are part of the Council’s constitution – these
are a key part of the system of financial control and these provide a
framework for managing the Council’s financial affairs. Each FPR is
supported by more detailed guidance and procedures which set out how the
procedure rules will be implemented.
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6.7 There is an annual report to the Council’s Audit and Governance Committee
which provides assurances on the robustness of the financial control
environment.
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Part 7: Strategic & Corporate Asset Management Plan
7.1 The Strategic and Corporate Asset Management Plan (‘SCAMP’) is set in
the wider context on the Council’s strategic priorities and seeks to align and
review the asset base with the Council’s corporate goals and objectives. The
full implementation of the strategy was approved at Cabinet on 10th October
2017. The latest update report on the strategy was presented to Cabinet on
3rd March 2020.
7.2 The SCAMP is an enabler to the Council’s key priorities:
Having assets that are fit for purpose, in locations that support the
delivery of excellent services to the citizens of Wakefield.
Driving additional and more sustainable revenue from the Council’s
existing investment portfolio and creating a new investment portfolio
that generates a legacy of sustainable income.
Where possible, working with key partners across the District to
deliver a “One Wakefield Estate” offer, bringing together a one stop
shop for services.
Ensuring assets align to the Council’s key strategies, economic plan,
and customer experience and support our stakeholder’s expectations.
Contribute to making Wakefield District a place where people thrive,
businesses ‘succeed’ and visitors are welcome.
7.3 The SCAMP provides the framework that will guide the Council’s future
strategic property decisions and ensure there is a consistent way of
managing the Council’s land and assets.
7.4 The Council’s property portfolio is categorised into three components –
operational portfolio, legacy portfolio and investment portfolio.
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Part 8: Treasury Management Strategy
8.1 The Council’s treasury management strategy is intrinsically linked with the
capital strategy and the capital programme. The strategy manages the
Council’s investments, cash flows, banking, money market and capital
market transactions.
8.2 The treasury management budget supports the funding of the Council’s
capital plans. These capital plans provide a guide to the borrowing need,
essentially the longer-term cash flow planning, to ensure that the Council
can meet its capital spending obligations.
8.3 This management of longer-term cash may involve arranging long or short-
term loans, or using longer-term cash flow surpluses. When it is prudent and
economic, any debt previously incurred may be restructured to meet the
Council’s risk or cost objectives.
8.4 In line with the Council’s constitution, Council is required to receive and
approve, as a minimum, three main reports each year;
• Before the start of the financial year, a treasury management budget
report which includes the updated capital programme; the minimum
revenue provision policy statement; how investments and borrowings
are to be organised (including prudential indicators); and an investment
strategy.
• A mid-year treasury management assurance report to update Council
with the progress of the capital position; adherence to the treasury
management strategy and whether any policies require revision.
• At the end of the financial year, a treasury management outturn report
to provide details of actual indicators compared to the estimates within
the strategy
8.5 Further details can be found within the Council’s treasury management
strategy which was approved at Budget Council on 26th February 2020.
8.6 The Treasury Management Report for the year ending 31st March 2020 was
presented to Cabinet on 14th July 2020.
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Part 9: Capital and Investment Strategy
9.1 The capital strategy outlines the Council’s approach to capital investment,
ensuring that it is in line with the Council’s corporate priorities.
The Council’s capital strategy is reviewed on an annual basis to reflect the
changing needs and priorities of the Council including residents, businesses
and places.
9.2 The aim of the capital strategy is to provide a framework within which the
Council’s capital investment plans will be prioritised and delivered. It has
been prepared over three financial years in line with the Council’s MTFS and
will be updated and rolled forward each year.
9.3 The capital strategy is the foundation of proper long-term planning of capital
investment and how it is to be delivered.
9.4 The strategy’s principal objective is to deliver an affordable programme that
is consistent with the Council’s priorities and objectives. This strategy is
intended to be used by all stakeholders to show how the Council prioritises
and makes decisions on capital investment and how this investment
supports the Council’s priorities and ambitions.
The key principles of the capital strategy are:
• To deliver an affordable capital programme over the full life cycle of all
projects.
The capital programme approved at Council on 26th February 2020
included £122m investment in 2020/21 with £78m and £44m in 2021/22
and 2022/23 respectively funded through a mixture of prudential
borrowing £148m; Government grants £83m; other grants and
contributions £15m; and capital receipts £5m. The programme has
subsequently been updated to take account of slippage from 2019/20,
the rephasing of existing schemes and the injection of new projects.
The revised programme was reported to Cabinet in September 2020.
• To deliver a strategy/ capital programme that is consistent with the
Council’s medium-term MTFS.
• To help to achieve the Council’s objectives and that capital investment
decisions are made with reference to Council priorities.
• That decisions on the financing of the capital programme are taken with
consideration to the impact on the revenue budget, the treasury
management strategy and the investment strategy.
• That capital projects follow a rigorous appraisal process considering
evidence of need, cost, risks and outcome assessment.
• That in respect to the financing of the capital programme, the Chief
Finance Officer will ensure that the Council will maximise the freedom
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and flexibility afforded by the removal of ring-fencing from most funding
allocations to facilitate the achievement of the Council’s objectives.
• That the Chief Finance Officer will consider and review the use of
capital receipts, specific and non-specific funding and prudential
borrowing to finance capital schemes to maximise the benefits to the
Council and achieve the Council’s objectives.
• Non ring-fenced capital funding and other non-specific capital
resources that are not required to support existing commitments will
initially be pooled. However, regard will be given and grants will be
pass-ported in full to the transport agenda and social care funding
arising from the better care fund pooled arrangements.
• Capital receipts will not be ring-fenced to specific projects unless the
use of the receipt is governed by legislation or by a specific agreement.
• To develop partnerships with third sector providers.
• To pursue all available external funding where there is direct
compatibility with the Council’s priorities.
Capital Receipts
9.5 A schedule of asset disposals is managed by the Council. Any capital
receipts realised in the financial year may be used to support the in-year
capital programme.
9.6 Statutory guidance on the flexible use of capital receipts also allows the
Council to use in-year receipts to fund qualifying expenditure. This flexibility
will end in 2021/22.
9.7 The 2020/21 revenue forecasts include £1m of capital receipts to finance this
type of expenditure.
9.8 Current forecasts (as reported Cabinet in October 2020) are that £7.6m of
capital receipts will be generated in the 2020/21 financial year. Any unused
capital receipts will fall into the receipts reserve in March 2021. The current
forecast is for the balance of capital receipts in this reserve to be £9.1m by
March 2021. Capital receipts of £14.6m; £12.2m; £8.1m; and £5.0m are
forecast in financial years 2021/22, 2022/23, 2023/24 and 2024/25
respectively.
9.9 For capital expenditure incurred after 1st April 2016, capital receipts will be
set aside to repay debt and to fund Public Finance Initiative (‘PFI’) liabilities
in the year. The value of the Minimum Revenue Provision (‘MRP’) which
would otherwise have been set aside will be reduced by the amounts which
have instead been paid from capital receipts.
9.10 Where capital expenditure is incurred on an investment property, MRP is not
applied where there is a realistic expectation that an asset purchased will be
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sold in the future and the capital receipts from that sale will be set aside to
enable repayment of the borrowing associated with the asset.
9.11 The capital and investment strategy was approved at Budget Council on 26th
February 2020.
Flexible use of capital receipts strategy
9.12 In September 2016 Council approved a flexible use of capital receipts
strategy for 2016/17 and to continue to use capital receipts to fund eligible
revenue spend in 2017/18 and 2018/19. This flexibility was initially being
offered to the sector for the three financial years 2016/17 to 2018/19, but this
has now been extended for a further 3 years as part of the final settlement.
Qualifying expenditure is spend on any project that is designed to generate
ongoing revenue savings in the delivery of public services and/or transform
service delivery to reduce costs and/or transform service delivery in a way
that reduces costs or demand for services in future years for any of the
public sector delivery partners. In line with the extension, continuation of this
strategy in 2019/20 is assumed within the proposed Budget.
9.13 Local authorities are given the power to use capital receipts from the
disposal of property, plant and equipment assets received in the years in
which this flexibility is offered, to spend up to 100% of their fixed asset
receipts (excluding right to buy receipts) on the revenue costs of reform
projects. Local authorities may not use their existing stock of capital receipts
to finance the revenue costs of reform.
9.14 The actual level of use of capital receipts will be determined within the
Council’s overall financial strategies and will be limited to the value of eligible
capital receipts and spend each year. The impact on the prudential
indicators will be reported through the regular treasury management reports.
The table below sets out costs and savings under the strategy.
Table 11 - Flexible use of capital receipts – costs and savings
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2016/17 2017/18 2018/19 2019/20 2020/21 Total
Actual Actual Actual Estimated Estimated
£m £m £m £m £m £m
Severance Costs (including Redundancy & Pension Strain) 3.6 2.0 2.2 1.0 1.0 9.8
Property & Facilities Management Services transformation - 1.1 - - 1.1
Total Costs 3.6 3.1 2.2 1.0 1.0 10.9
Estimate of savings achieved
Staffing savings (over a 5 year period) (19.3) (8.1) (8.8) (5.1) tbc (41.3)
Property & Facilities Management Costs (10 year period) - (10.0) - - - (10.0)
Total Savings (19.3) (18.1) (8.8) (5.1) - (51.3)
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Part 10: Linked Strategies
Corporate procurement strategy
10.1 This procurement strategy outlines the overarching procurement initiatives to
be rolled out across the Council by March 2020. The initiatives will transform
the Councils approach to procurement and include:
• Embedding social value in to the Council’s procurement procedures
Social value is the positive impact an organisation has further to the
activities it carries out. These can be economic, social and
environmental impacts. The Council recognises that Social Value can
significantly help it in meeting its priorities and aspirations for the
District by reducing poverty through supporting good jobs, better
incomes and wellbeing, increased skill levels, higher value economy,
higher productivity levels, a great place and cultural offer.
• A new approach to category management
The Council has changed the way it manages its procurements by
categorising its areas of spend into Successful Businesses, Places and
People. This realignment will ensure the Council has the right level of
resource in place to deliver an efficient and effective service to
residents and businesses.
• Agile procurement
To deliver an agile service the Council will develop new easy to use
procurement toolkits, become early adopters of new IT systems and
have input to the development of the future tender portal which the
Council will use.
10.2 The procurement strategy is one of the underpinning strategies that supports
the Council’s priorities. The updated procurement strategy will be presented
to Cabinet on 13th October 2020.
Technology strategy
10.3 The technology strategy is one of the key enabling strategies supporting the
Council’s priorities. The initiatives within the strategy will help transform the
Council’s approach to technology, supporting the creation of a more forward
thinking Council with the right tools.
10.4 The technology strategy will support the delivery of the customer experience
strategy, and the Council’s desire to improve the digital offer to the public.
The strategy will:
Be driven by customer and business needs
Be design driven using intelligence
Be consistent, not uniform
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Keep information compliant, safe and secure
Help people to help themselves
The technology strategy was approved at Cabinet in April 2019. A further
update was presented to Cabinet on 15th September 2020.
People strategy
10.5 The people strategy encourages the adoption of integrated service delivery,
embedding the ‘One Council’ approach in service delivery, locality based
working, co-location and embracing digitisation.
The strategy sets out six strategic aims, focussed around the employee
journey - employer reputation; recruitment; induction; lifelong learning;
retention; and new beginnings.
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Part 11: Conclusion
11.1 The review of the MTFS has been undertaken against a background of
significant reductions and changes in grant funding and increasing costs due
to service pressures. These factors could jeopardise the Council’s sustainable
financial position unless budget savings continue to be delivered alongside
the delivery of the Council’s corporate priorities.
11.2 The forecast budget position for the Council shows an ongoing challenge,
where our financial resources are currently not enough to meet the budget
requirement to deliver our current service provision. There remains a gap of
£57.2m over the period from 2021/22 to 2024/25.
11.3 The period covered by this MTFS will continue to present the Council with
some of the most significant operational and financial challenges ever
experienced by those leading and managing the delivery of local services.
Managing our money well is now more important than it has ever been.
11.4 The Council will continue to keep the MTFS under review given the high
degree of uncertainty surrounding the potential impact of central Government
policy and Government funding reforms in relation to local government.
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