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

Revenue outturn 2018/19

The agreed net revenue budget was £203.466m. The final outturn reported to Cabinet on 25 June 2019 stating an overall under spend of £1.139m after proposed movement of reserves. Whilst the outturn position is positive, it should be noted that a number of one off areas of under spend in capital financing costs as well as additional traded and investment income have contributed to this position.

Revenue budget 2019/20

Council agreed the revenue budget in February 2019. This was set at £206.999m and included £13.113m savings. The budget includes a number of risk areas which, if not closely monitored and controlled throughout the year, could add further pressure to the funding gap in future years. These include the delivery of agreed savings and achievement of income targets. It is assumed within future sections that all past savings are fully achieved before entering 2020/21 otherwise the financial gap would increase. As part of the budget accountability framework these will be closely monitored throughout the year and issues owned by the whole organisation.

Future outlook beyond 2019

Medium term financial planning remains extremely difficult due to external economic factors the financial impacts of which are impossible to predict accurately, coupled with the timing of a new finance system that is still in the design process. The level of funding beyond 2020 is unknown due to the changes in the finance system 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.

To achieve a long term, sustainable financial position the medium term strategy and focus for service plan development over the next three to five years will be centred around;

• Maximising Economic Growth - Doing all we can to support economic growth and revenue generation through increased council tax and business rates. Success in this area will enable the council to reinvest resources into activities which protect the most vulnerable.
• Drive Investment in Key Priorities to ensure achievement of outcomes for Gateshead residents within desired timescales.
• Focusing on Longer Term Cost Prevention with a targeted approach, emphasising early intervention to mitigate demand pressures.
• Continuing to Make Cuts and Drive efficiencies through changes to the way the council works, for example, through exploiting new technology and cutting lower priority activities to realign resources towards high priorities.

Economic growth

Local economies are linked to national economic growth. Ongoing negotiations and uncertainty around the UK's withdrawal from the European Union make future growth more difficult to predict than usual. Whatever form of Brexit is agreed, it will likely have a negative impact on predicted economic growth. This impact is skewed across regions, with the North East forecast to experience the biggest downturn.

The council aims to promote a strong and sustainable local economy leading to wellbeing and prosperity for residents, communities and businesses. This will be supported by a planned approach to investment to boost local economic growth such as improving local infrastructure and wider transport links. Success in this area will enable the council to have a stronger medium and long term financial position and allow redirection of resource to activities which protect the most vulnerable.

From a financial perspective the council will look to invest resources to generate economic growth that will result in increased business rates and council tax income to the Council. This will enable the council to become more financially self-sufficient and help close the financial gap. A significant amount of activity is already being delivered by the council and its partners, to promote sustainability and growth across the borough and evidence of this is readily visible through the regeneration of the town centres.

Investing in key priorities

The council aims to strengthen the long-term financial position through investing in key priorities to secure the policy outcomes of the Council in a timely manner in areas such as housing, economy, health, climate change and transport. The council will seek to maximise investment opportunities whilst continuing to seek out and secure other sources of funding such as external grants.

Long term cost prevention

Like many other local authorities a significant challenge facing the council is increasing demands and expectations for services at a time when funding sources are significantly reducing. In order to manage cost pressures over the medium term it is vital that plans are made to manage future demand and either reduce or stop it.

A particular area facing this pressure is in both children's and adult's social care where costs are increasing and vastly outstrip available budgets. This requires a targeted approach with early intervention and prevention strategies and working close collaboration with partners.

Other areas of demand include demands for online services, welfare and hardship support, access to public health services. This will involve implementing digital strategies, increasing capacity and skills within communities, close working with partners and volunteers to align priorities and increasing collective responsibility by encouraging and supporting local people, partner organisations, businesses and local communities to play a more active role in achieving priority outcomes for Gateshead.

Cuts and efficiencies

The scale of the budget challenge means that the council will still face further significant cost reductions through efficiencies and different methods of service provision and cuts in service provision. This will require redirection of budgets to council spending priorities which in turn may result in ceasing existing activities, scaling down activities or services, renegotiation of contracts or Service Level Agreements. Despite already delivering considerable budget savings to date through cuts to services and efficiencies the council will continue to seek to achieve efficiencies through changes to the way the council works, for example, through exploiting new technology, consolidation of buildings and services, reducing complex processes.

The council will also actively look to streamline its processes in order to support effective decision making and make the best use of available capacity. Opportunities for working in collaboration and partnership and different ways of working will be identified and developed where this will support the delivery of the council's outcomes and improve service efficiency and delivery. This will include working collaboratively with key partners to share costs or transfer responsibilities.