To consider the draft Medium Term Financial Management Strategy.

The Committee considered the draft Medium Term Financial Strategy, which had been agreed by Cabinet in July as a basis for consultation.

The draft Strategy as presented to Cabinet had been circulated separately to Members of the Committee.

The Director of Resources presented the report.  She explained that the Strategy was intended to integrate financial planning more closely with corporate and service planning so that those plans were developed and priorities set with a clear understanding of the financial context within which the Council was operating.

She commented on each section of the Strategy which included the national policy context, the national financial context, Herefordshire’s policy context, Herefordshire’s financial context, the financial management strategy and arrangements for consultation on and review of the Strategy.

She noted in particular that a second national Comprehensive Spending Review was underway with the outcome due to be reported in 2007.  This would cover the years 2008/09, 2009/10 and 2010/11.  The expectation was that there would be a very tight settlement with public spending being reduced and there would be further, more challenging efficiency targets.  The indications from the Lyons Review on the role and function of local government were that particular attention was being given to the scope for levying discretionary fees and charges as a way of paying for services, further suggesting that the financial settlement would be tight.

The Director’s current view was that the Council may have some headroom in the 2007/08 budget but no growth in the following three years.  The Council’s ambitious improvement programme had to be seen in this context.

She concluded by explaining that the draft Strategy was the subject of ongoing consultation and, as was to be expected, would need to be updated to reflect developments since its publication.  It was intended to report to the Community Forums in October and then again to the Strategic Monitoring Committee before the Strategy was submitted to Cabinet.  There would also be further informal briefings for Members as they wished.

In the ensuing discussion the following principal points were made:

·          In response to a question about action the Council was taking to make the case for fairer funding the Leader of the Council advised that the situation was constantly emphasised to Government but to date there had been little sympathy shown.  In the case of Education, whilst funding per pupil in Herefordshire was low the results were good.  This meant the Government was not inclined to increase funding.  The Council was working with other rural authorities to try to demonstrate the escalating costs of providing services in rural areas.  He was due to see Sir Michael Lyons shortly as part of his review and would have the opportunity to make the case to him.  One particular concern was possible changes to the allocation of the Business Rates.  Currently these were distributed on a national basis and Herefordshire, with a low business base, benefited significantly from the redistribution of these rates. 

He added that in terms of increasing fees and charges for services it had to be borne in mind that rural households were already suffering the burden of increased transport costs.

·          The Director of Resources added that the County was funded at 20% below the average level of funding per head of population.  In every self-assessment return the Council made to Government care was taken to emphasise the poor funding position, supporting the case with statistical evidence.  Locally the position had been set out in the Council’s newspaper, Herefordshire Matters and presentations were to be made to the Community Forums.

·          It was suggested that as not all rural authorities stood to lose from the redistribution of the business rates the Council should seek to make alliances on this point with those northern, urban authorities who would suffer as a result of a change.

·          That the style of the Council’s representations to Government was important.  A quiet, reasoned approach supported by clear statistical evidence would be more likely to succeed than public rhetoric.  In reply the Leader agreed with the importance of all Members supporting the Council’s case in this way.

·          It was suggested that some of the assumptions in the Strategy were optimistic.

·          The planned further involvement of the Committee in the Strategy’s development was welcomed.

·          The Director of Resources noted the importance to the Strategy of the assumptions made about achieving the specified efficiency savings.  In response to a suggestion that the analysis of spending pressures was open to question she added that the Strategy did try to identify the potential risks facing the Council and contingency sums had been established to provide for those foreseen risks.

·          It was noted that the Strategy would need to be updated to reflect Cabinet’s recent decisions to fund the Rotherwas Relief road as a priority.

·          That the Council could not be expected to continue to improve services with fewer and fewer resources nor could it be expected to make endless efficiency savings. 

·          More needed to be done to ensure that the Council’s funding position was clearly communicated to the public.  In particular it was suggested that the implications for non-statutory services, which many people held dear and would protest strongly about if their continuation were to be in doubt, needed to be highlighted.

·          It was noted that it was intended to make presentations to the next round of Community Forums.  However, it was suggested that the Forums currently attracted quite small audiences and a communication strategy needed to incorporate other approaches.

·          It was suggested that the Parish Councils might have a role to play as part of a communication strategy.

RESOLVED:

That    (a)        the need to update the draft Medium Term Financial Management Strategy and the arrangements for further consideration of the Strategy by the Committee be noted;

            (b)            a robust, reasoned approach to making representations to                           securing fairer funding for the County based on clear statistical                   evidence be supported;

                        and

(c)        to recommend that further consideration be given to the Council’s communication strategy at a local level to ensure that the Council’s financial position is effectively communicated to the Public.