Medium Term Financial Strategy (MTFS) 2022/23- 2026/27

Medium term financial planning remains extremely difficult due to external economic factors coupled with the delays to finance reforms. The level of funding beyond 2021 is unknown resulting in greater risks in relation to the localisation of business rates and the local council tax scheme. The unknown impacts alongside the level of risk to finances mean that these forecasts will need to be closely monitored and potentially refreshed more frequently than usual as consequences become clear. Staying the same is not an option. The Council is required to change to deliver its priority outcomes within the limited funding available.

The financial impacts of the pandemic are expected to continue this year and beyond. The Council has set aside funding from reserves to cover cost pressures and lost income and therefore these impacts are neutral early in the MTFS estimates. This will need to be kept under review. Impact on council tax and business rates funding has been included as these are being managed over three years. Impacts are kept under regular review within the revenue budget monitoring framework.

As part of the Spending Review the Chancellor announced a public sector pay freeze in 2021/2022, except for NHS workers and workers earning less than £24,000 per annum. For planning purposes provision is included for the impact of pay awards and estimated impacts of the National Living Wage which are unfunded by government.

Savings proposals will have staffing implications. These will be managed through the Council's Redundancy Policy and Procedure as necessary. At this stage it is proposed that any cost of redundancy payments and the release of pensions (if applicable) as required by the LGPS Regulations will be met from within the overall corporate resource position at outturn each year, should the position allow. This position will be kept under review and updated as part of the Budget proposals to Cabinet.

Significant challenges in Social Care

Adult social care experience pressures year on year in relation to increasing demand for services due to the increase in population of older people and pressures due to fee increases in the commissioned sector in order to meet the fair cost of care criteria. These pressures are expected to continue for the medium to long term. In addition to these recurring pressures Adult Social Care is experiencing new and significant pressures. It is anticipated that there will be a financial impact of Covid in relation to areas such as increased demand on mental health services, increased demand due to delayed health interventions such as operations, increased requests for packages due to family being unable to support relatives, earlier admissions to care as a result of increased frailty combined with the lack of access to community support and workforce pressures.

Cost pressures are also being felt in relation to the discharge to assess model that is currently operating and how this will be funded in the longer term.

With regards children's social care, The End Child Poverty coalition reports the North East as having the second highest rate of child poverty at 37% and this has seen the steepest rise in the last 5 years. All 12 North East local authorities feature in the top 20 local authorities nationally that have seen the sharpest increase in child poverty between 2014/15 and 2019/20.

Around 16% of Gateshead residents live within the most deprived 10% of neighbourhoods in England and many of the families open to Children's Social Care and Early Help live in the most deprived areas of the borough. The research of Bywater, Featherstone and others leaves little doubt of the clear evidence linking the impact of deprivation to risk for children, and subsequently higher levels of demand for statutory social care and early help services.

Locally in Gateshead some significant activity pressures are emerging. Over the course of the pandemic since March 2020 to present there have been substantial increases in referrals and demands and for services. For too many of our families, life with a range of issues such as domestic abuse, poor mental health, the impact of trauma, coupled with significant poverty creates a complex and unequal system which leaves many families ill equipped to provide the safe nurturing environment for their children that they crave, and their children need.

More recently Gateshead Council had circa 433 looked after children (end July 21) costing on average £39,000 per child annually. This compares to 379 children on 31 March 2019. The national and local increase in safeguarding pressures is the result of a complex myriad of factors, including longer term pandemic impacts are still to be recognised. The internal residential estate in Gateshead has grown in recent years, however this has not been able to meet the increased demand seen in the system because of overall numbers of children. As of July 2021, the number of children in residential care reached 42 compared to 33 in March 2019, a 27% increase.

The outsourcing of placements comes at a higher cost, the most expensive of which costing £9,800 per week currently. This is not only occurring due to increased complexities of need for the children in the system but also due to the increased numbers of children requiring placements. Increased activity set out above has resulted in a significant impact on the social care workforce with caseloads per social worker increasing which will also need to be kept under review.

Looking ahead threats

• any unachieved budget savings in the agreed savings programme leading to pressure the following financial year
• continued growth in demand in Adult and Children's Social Care Services and funding reforms are insufficient to address this
• unfunded pay pressures such as public sector pay award and the Governments National Living Wage aspirations, which also impacts on negotiations with care providers and commissioning costs
• the performance of traded and investment income linked to wider economy
• significant uncertainties on the pandemic impact on income from business rates and council tax and fees and charges
• the financial impacts of the UK's vote to leave the European Union (EU) and the current uncertainty which is likely lead to instability in the short to medium-term
• challenges in recruitment and reductions/ shift in work force from working in social care/ linked to competing industries such as retail, hospitality
• addressing the health, employment and poverty inequalities that the pandemic has added to
• increased demand for welfare, mental health services and debt advice
• increased demand for business advice and support

Looking ahead opportunities

• review all Council services to focus resources on the delivery of priority outcomes and shaping the Council to how it needs to be in the future to withstand other pressures and delivery priorities
• embrace and imbed new ways of working arising from the pandemic such as putting the customer first, more efficient working practices staff resilience and adaptability
• opportunity to accelerate climate change targets through reduced building use and travel
• accelerating and building on working with communities in hubs alongside the voluntary sector and other partners
• embracing the move to self-service and online services to provide a quick and streamlined service
• opportunities to rationalise council buildings and assets
• working closer in partnership with key partners such as the voluntary sector, health partners and the Police and Crime Commissioner to help residents to thrive
• following the housing review the ability to drive forward housing delivery and provide a good service to tenants