Medium Term Financial Strategy (MTFS) 2020/21 - 2024/25

The financial outlook for local government and public services as a whole remains challenging. Local government have faced significant funding reductions, and these are highly likely to continue into the future. The government had previously stated its intention to hold a new Spending Review in 2019 covering the period 2020/21 to 2022/23. However, it has been confirmed that the longer term reforms have been delayed at least until 2021/22 due to recent political events including Brexit preparations.

There are acute problems nationally in funding the increasing demands of both adults and children's social care. Adult social care is a vital public service that promotes wellbeing and independence and helps support some of our most vulnerable people. There also continues to be a huge strain on children's social care budgets the impact of which is growing both nationally and locally. Early intervention can help limit the need for children to enter the social care system, lay the groundwork for improved performance at school and even help to ease future pressure on adult social care by reducing the pressure on services for vulnerable adults. Councils are struggling to invest in this vital early help and support, as a result of the severe funding reductions. Nationally the care and support system remains under enormous pressure.

Budget cuts across other areas of the public sector have a negative impact on local government. Councils often act as a safety net when people hit crisis point, and more people are reaching this point due to cuts to other sector budgets alongside welfare reform and the introduction of universal credit. Residents are being passed around the public sector without having issues resolved, while issues that could be prevented or caught early escalate into more complex crisis cases.

Each area faces different challenges regarding service demands, demographics and cost pressures as much depends on levels of deprivation, local demographics, local economy and risk appetite. While all councils are facing challenges, regional and local factors will impact on ability to find solutions such as ability to significantly raise local income.

Lack of clarity over the value and future of social care funding continues to hinder the ability to plan effectively. In the March 2017 Budget, the government said that it would publish a Green Paper on social care during the summer of 2017 to allow a public consultation to be held. It was then stated it would be published before the 2018 Parliamentary summer recess setting out proposals to ensure that the care and support system is sustainable in the long term. More recently the paper has been delayed again. There will also be a review of the current functioning and structure of the Better Care Fund to make sure that it supports the plan.

The UK's date to leave the EU is expected to be 31 October 2019, all assumptions will be revisited regularly and the financial impacts to the Council's MTFS will be reconsidered in light of any changes to the general economy.

Medium term financial planning is taking place against a background of unprecedented levels of change and pressure on local authority budgets and follows significant continued funding cuts for local government. This environment impacts on the ability of the council to respond to the needs of Gateshead residents and the wider community.