Medium Term Financial Strategy (MTFS) 2025/26 - 2029/30

What is the Medium Term Financial Strategy?

The Medium-Term Financial Strategy outlines a projection of the Council's financial future over the next five years (2025/26 to 2029/30). It estimates the additional costs and pressures that the Council is facing due to inflation, demand, and policy changes, alongside the estimated change in funding. The difference is the funding gap which must be closed to achieve a legally balanced budget.

Purpose and priorities

The MTFS is a key part of the Council's Budget and Policy Framework which aims to ensure that all financial resources are directed towards the delivery of Council priorities. The Strategy describes the financial direction of the Council for financial planning purposes and outlines the financial pressures over a five-year period but is reviewed annually to reflect the dynamic nature and continuing uncertainty of local government funding.

The MTFS establishes the estimated level of revenue resources available to the Council over the medium term and estimates the financial consequences of the demand for Council services. It improves financial planning and strategic financial management through providing the financial context within which the Council budget will be set.

The review also allows for consideration of the Council's reserves policy and level of reserves to ensure there is adequate protection against unforeseen events.

The Council's Corporate Plan, The strength of Gateshead is the people of Gateshead,sets out the steps we will take to deliver our agenda for the borough, respond to emerging challenges and ensure the ongoing delivery of good-quality public services. Building on a strategic approach, Making Gateshead a Place Where Everyone Thrives, the plan sets out what the Council will be doing over the next five years to make Gateshead a stronger place for our communities and provides a framework to demonstrate how the Council will work and make decisions in the future which will be policy and priority-led and help resource the impact being made on delivery of the Health and Wellbeing Strategy which includes the following Council pledges:

• put people and families at the heart of everything we do 
• tackle inequality so people have a fair chance
• support our communities to support themselves and each other
• invest in our economy to provide opportunities for employment, innovation and growth
• work together and fight for a better future for Gateshead 

The Council's MTFS sets out the financial context for the Council's resource allocation process and budget setting. The Councils Performance Management Framework supports the aims within the Strategy by aligning performance with the overall approach to the budget to support the financial sustainability for the Council ensuring that resources are deployed on the outcomes for making Gateshead a Place Where Everyone Thrives.

There are huge financial pressures on not just Council resources, but those of partners, local businesses, and residents. The Council will continue to work with partners, other organisations, residents and communities to deliver positive outcomes within a reduced budget envelope.

To remain affordable and deliver sustainable public services, the MTFS has three main objectives: 

• Consider the scale of financial challenges over the medium term to inform appropriate actions and interventions to achieve financial sustainability and a balanced budget year on year.
• Ensure the Council aligns its limited funding to deliver against priorities.
• Prioritise capital schemes based on deliverability of tangible outcomes whilst considering the context of the overall capital and revenue affordability.

Approach and principles

The MTFS is consistent with the priorities the Council is pursuing. The principles underlying the MTFS 2025/26 to 2029/30 are as follows:

• The overall financial strategy will be to ensure that the Council's resources are directed to deliver the Council Corporate Plan and the Thrive agenda framework. Financial sustainability will be achieved and maintained through targeted investment, demand management interventions, reducing costs and more efficient ways of working. The Council's MTFS will be reviewed on at least an annual basis.
• The Council will consider a range of delivery mechanisms and funding sources to support capital investment to deliver thrive priorities, including the use of prudential borrowing, and will ensure that the full costs associated with financing the investment are considered when investment decisions are taken.
• The Council will maintain its general reserve at a minimum of 3% of the net revenue budget to cover any major unforeseen expenditure. The Council will aim to balance its revenue budget over the period of the MTFS without reliance on the use of the general reserve.
• The Council will maintain earmarked reserves for specific purposes which are consistent with achieving its key priorities. The use and level of earmarked reserves will be reviewed at least annually.
• Overall Council spending should be contained within original estimates. If, following monthly revenue monitoring, service budgets are projected to exceed original estimates, then plans should be prepared setting out the actions required to ensure spending at the end of the year does not exceed original estimates. Senior management will be accountable for delivery of the budget in their areas of responsibility.
• The Council recognises the impact of increases in council tax levels and fees and charges in an area of relatively low income and low wealth and will therefore balance the need for increases against the delivery of the thrive framework and Council Priorities.
• The Council will meet its financial obligations and maintain financial sustainability through the setting of a balanced budget and the delivery of outturn within the overall budget each year.