Council approved the Medium Term Financial Strategy (MTFS) for 2007 – 2010 when the budget for 2007/08 was set in March 2007.  This report is seeking Cabinet approval to Corporate Management Board’s (CMB’s) recommendations for updating the current MTFS for the 2008 – 2011 period.  The report has been drafted by the Director of Resources in consultation with the CMB.

Cabinet will receive a further report on the MTFS for 2008 – 2011 from the CMB at its meeting on 24th February 2008 that will include details of the final local government finance settlement and any other suggested changes.  Cabinet will also consider views expressed by the Strategic Monitoring Committee (SMC) on this report and finalise its recommendations to Council on the financial strategy for 2008 – 2011, budget for 2008/09 and Council Tax for 2008/09 at that meeting.

Cabinet was advised that the report before them sought Cabinet’s approval of the Corporate Management Board’s (CMB) recommendations for updating the current Medium Term Financial Strategy (MTFS) 2008/11.  Cabinet was advised that a further report would be presented to Cabinet on the MTFS from the CMB at its meeting on 21 February, which would include details of the final local government finance settlement and any other possible changes.  Included will also be any recommendations from the Strategic Monitoring Committee (SMC) and the final recommendations to Council on the financial strategy for 2008/11, the budget for 2008/09 and Council tax for 2008/09.

The Cabinet Member (Resources) set out the direction of the budget referring to the financial settlement for Herefordshire as outlined below:

It was added that it was felt that efficiency gains could be achieved in all service areas through better use of resources without significant reductions in the level of service provided.  The Director of Resources stated the areas of Adult Social Care, Waste, Children’s Social Care, Highways and School Transport were referred to as core service areas with the most financial pressure and it was stated that a modest fund would be set up for these key areas.  The Director added that these were CMB’s recommendations to Cabinet covering the next three year period and that work had been carried out with Cabinet in order to put the proposals together and set the scene of key points for the current financial year and forecasting for the next financial year.  It was stated that in the local government financial settlement the final figure for the formula grant was £53.04m.  Cabinet was advised that there had been a redistribution of the financial settlement leaning more towards London and the South East, however in percentage terms Herefordshire had not lost out as significantly as some other similar sized authorities.  The Leader paid tribute to officers and politicians that had supported Herefordshire in lobbying ministers to achieve the settlement given.

With regard to the recent pay awards the policy on inflation uplift had been revised by CMB to reflect the recent above inflation pay awards.  It was noted that non-inflation on non-pay budgets had been retained.  Each directorate budget had been reviewed to ensure that service cuts would not need to be made.  Cabinet was advised that a single one off payment had been made to the Social Care Adults and Health budget.  A review of the inflation factor on fees and charges had been carried out and it was proposed that it remain at 2½%. 

In referring to the base budget the Director stated that modernisation funding had been identified for the future.  It was suggested that additional money set aside for Adult Social Care to help modernise services be ring fenced in the budget for the future.  In referring to modernisation plans CMB recommended that within the draft MTFS 2008/11 that  ...  view the full minutes text for item 18