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Medium Term Financial Strategy

2021/22 – 2024/25

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Medium Term Financial Strategy 2021/22 to 2024/25

Introduction

The Medium Term Financial Strategy (‘MTFS’) is a four year plan which sets out the

Council’s commitment to provide services that meet the needs of people locally and

that represent excellent value for money within the overall resources available to it.

The MTFS is refreshed annually with the next update scheduled for October 2021.

This MTFS is what links the Council’s vision and priorities with estimated resources

and shows how the Council’s finances will be structured and managed to support the

delivery of the Council’s ambitions and priorities.

The strategy considers:

International and national economic influences on the Council.

The influence of Central Government policy and strategy.

Local factors which influence policy within the Council.

Delivering key Council policies and priorities.

The strategy brings together the key issues affecting the:

Revenue Budget

Capital Programme

Treasury Management Strategy

Capital and Investment Strategy

With local authorities across the Country facing the challenges of reduced funding

and increasing demand for services, the need for robust financial management has

never been more important. To be truly effective, financial planning needs to balance

the immediate service needs and pressures against the long-term financial resilience

and sustainability of the Council.

A key part of this strategy is therefore to forecast the key budget issues that will need

to be addressed by the Council over the coming financial years by estimating the

level of available funding available and the potential costs, both in terms of revenue

and capital spending.

There remains significant uncertainty around the funding for local government

funding with a delay in the Fair Funding Review from 2021/22 to 2022/23 or even

later, uncertainty around a sustainable funding model for health and social care and

the current coronavirus (COVID-19) pandemic which is eclipsing anything we have

seen in recent decades. In addition the impact on the economy from leaving the

European Union (‘EU’) may also affect local government funding and demand for

services.

In recognition of the impact of the COVID-19 pandemic on the economy the

Government have responded by announcing a range of measures to help

businesses and residents which include furloughing staff, the provision of targeted

business rates reliefs, business grants and loans, deferral of VAT and self-

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assessment payments and a Hardship Fund which is a grant payable to local

authorities to provide council tax relief alongside existing council tax support

schemes.

The Government has also recognised that COVID-19 has had a direct impact on

local authorities in 2020/21. Funding has been provided nationally to compensate

local authorities for additional expenditure incurred and loss of income and other

targeted initiatives including Test and Trace and Infection Control. There is, however,

significant uncertainty about the extent to which Covid related pressures and income

losses will recur in 2021/22 and beyond. It is likely that as a result of the recession

and behaviour changes, some Council income sources will be adversely affected.

The latest funding gap in respect of COVID-19 for the Council is forecast to be

around £15m with anticipation that there will be longer-term financial impacts through

additional demands for services coupled by sustained reductions in income and

funding.

All these issues will have significant financial implications for the Council with

potential impact on the Council’s revenue budget, its revenue reserves and its longer

term financial resilience making it extremely difficult for the Council to plan effectively

and inevitably shortens our financial and service planning horizons.

Neil Warren FCCA

Chief Finance Officer

October 2020

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Contents

Part 1: The Financial Challenge for the Council

1.1 Key objectives of the MTFS

1.2 Financial savings generated by the Council since 2010/11

1.3 Changes to central Government funding since 2010/11

1.4 Beyond March 2021

1.5 Our demographics

1.6 Principles of Wakefield’s MTFS

Part 2: The factors influencing the MTFS

2.1 Overall economic forecasts and influences

2.2 Regional influences

2.3 Resources available

2.4 Budget position for 2021/22 to 2024/25

2.5 Budget pressures and increased costs

Part 3: How the Council will meet the Financial Challenge

3.1 Revenue budget plan

3.2 Savings options

3.3 Balances, Reserves and Provision Strategy

Part 4: Financial Assurance

Part 5: Strategies which the MTFS supports

Part 6: Value for Money and Assurance around Financial Management

Part 7: Strategic & Corporate Asset Management Plan

Part 8: Treasury Management Strategy

Part 9: Capital and Investment Strategy

Part 10: Linked Strategies

Part 11: Conclusion

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Part 1: The Financial Challenge for the Council

1.1 Key objectives of the MTFS

1.1.1 The Medium Term Financial Plan (‘MTFS’) is an overarching document that

ensures the Council’s financial resources are directed towards priorities, that

the risks are effectively managed, and that value for money is achieved. With

other key strategies and plans, it ensures that the Council remains financially

viable and is best placed to deliver on its priorities.

1.1.2 The MTFS forms part of the Council’s planning and performance framework,

and provides the context for the more detailed budgeting process.

1.1.3 The MTFS is refreshed each year to give a rolling three year assessment of

the fiscal environment, after the close of the previous year, and before the

budgeting round commences. It also provides a forecast for a further two

years but given the uncertainty on any reforms to local government financing

this forecast will need to be refreshed as further information becomes

available.

1.1.4 The key objectives of the MTFS are as follows:

To ensure that effective financial planning and management

contributes to the Council achieving its priorities.

To direct resources to the Council’s priorities.

To maximise the income from council tax and business rates to support

the priorities of the Council.

To analyse budget performance to assess the effectiveness of

resource allocation.

To ensure the Council’s financial standing is robust, stable and

sustainable.

1.1.5 The period covered by this MTFS will continue to present to local

government some of the most significant operational and financial

challenges ever experienced by those leading and managing the delivery of

local services. Managing our money well is now more important than it has

ever been.

1.1.6 Whilst there is a growing national awareness of the demand on council

services with reduced funding, there are several fundamental reforms being

proposed but with no detail at this stage, this makes financial planning

difficult. This MTFS sets out the financial envelope for the Council to deliver

its key priorities based on assumptions made from the relevant data

available.

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1.1.7 The ambition for the District is clear – to be a place where people thrive,

businesses succeed and visitors are welcome. Supporting this ambition, the

Council’s priorities are:

Successful businesses – growing a higher value economy and creating good jobs.

Successful people – reducing inequalities, growing skill levels, enabling a good quality of life and supporting families.

Successful places – celebrating a unique cultural offer and creating vibrant communities that are better connected.

Successful Council – ambitious, enterprising, dedicated and efficient in delivering excellent services.

The implication for Wakefield Council alongside demographic and

inflationary cost pressures is an estimated budget gap of £57.2m over the

period 2021/22 to 2024/25.

1.2 Financial savings generated by the Council since 2010/11

1.2.1 Changes in local government funding streams have obscured the true

reduction in the funding available to councils since 2010. However, using the

Government’s own measure of core spending power it can be seen that local

government has undergone a sustained and significant reduction in total

funding.

Furthermore the cuts have not been borne evenly across the country, with

some authorities, notably London borough councils and metropolitan district

councils, bearing a much higher burden of cuts than the national average.

1.2.2 Between 2011/12 and 2020/21 Wakefield Council has made a total of £242m

of savings/additional income. In spite of these challenges the Council

expects to be able to deliver a balanced budget in the current 2020/21

financial year.

The forecast budget gap for the next four years of £57.2m brings this total of

savings/additional income to around £299m over the thirteen year period

since 2011/12.

1.3 Changes to central Government funding since 2010/11 & the impact on

local authorities

1.3.1 Despite the Government’s statement that austerity has ended, funding of

public services remains significantly lower than at the onset of austerity in

2010. In 2020/21, the day-to-day budget for the Department of Health and

Social Care will be £25.3bn (23%) higher in real terms than a decade earlier.

In contrast, spending on Justice, the Home Office and Environment, Food &

Rural Affairs will be £4.6bn (17%) lower than in 2010/11. Government

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spending on non-care local authority related funding is still estimated as

being 16% lower overall than in 2010/11.

1.3.2 It is estimated that if 2010 spending levels had been maintained, the Council

would have an additional £134m to spend each year. The additional grant

funding announced through the 2019 Spending Round (SR 2019) and local

government finance settlement in the autumn of 2019, whilst positive,

continued the Government’s previous stop-gap solution and is not sufficient

to meet rising demand and costs.

Spending Review 2019

1.3.3 The SR 2019 was published in September 2019. Unlike the three year scope

of previous statements, the review only covered the government’s spending

plans for 2020/21. The Chancellor confirmed that the ‘Fair Funding Review’

and 75% business rate retention, previously scheduled for implementation

from April 2020, were to be delayed.

1.3.4 In terms of overall funding, from 2019/20 to 2020/21, day-to-day UK

Government departmental spending grew 4.1% in real terms, a rise of

£13.8bn. Every department had an increase in funding that at least matched

inflation. The Local Government Departmental Expenditure Limit (DEL)

increased by 12.4% (£1.1bn). The bulk of the increase, however, was the

increase in funding for the Social Care grants (£1.0bn) with the remaining

local government DEL increasing in line with inflation (1.8%). The local

government core spending power increased by £2.9bn. The review included;

1.3.5 Health – the Spending Round reaffirmed the Government’s commitments to

increasing NHS funding, with an additional £33.9bn more per year by

2023/24 compared to 2018/19 budgets. It also confirmed an increase to the

Health Education England budget, including an additional £150 million for

Continuing Professional Development, providing a £1,000 central training

budget over three years for each nurse, midwife and allied health

professional, as well as increased funding for wider education and training

budgets.

1.3.6 Social care – the Spending Round included an additional £1bn for adult and

children’s social care. This was in addition to the continuation of the existing

£2.5bn of social care grants (£1.837bn Improved Better Care Fund, £240m

Winter Pressures and £410m of Social Care Support grant). There was

however no announcement in the Review around any publication date for a

Social Care Funding Paper.

1.3.7 Public Heath – the Spending Round included a real terms increase in the

public health grant equivalent £170m nationally.

1.3.8 Community Safety – an extra £750m for policing to begin delivery of the

Government’s commitment to recruit 20,000 additional officers by 2023 (up

to 6,000 officers are to be in place by the end of 2020/21), with additional

funding for probation reforms ‘that will help reduce reoffending and improve

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postcustody supervision’. Some £2.5bn was allocated for an extra 10,000

prison places with an additional £30m to safeguard children from child

sexual exploitation and abuse. And £110m additional funding, plus £65m of

Official Development Assistance, for the asylum system and continuing

£150m funding for the Global Resettlement Programme.

1.3.9 Education and Skills – A £7.1bn increase in funding for schools by 2022/23

(£4.6bn above inflation), compared to 2019/20 funding levels. Ahead of that,

the schools budget would rise by £2.6bn in 2020/21 and £4.8bn in 2021/22,

compared to 2019-20 funding levels. Per pupil funding for all schools rose in

line with inflation (1.8%). The minimum per pupil amount for 2020/21

increased to £3,750 for primary schools and £5,000 for secondary schools,

with the primary schools minimum rising to £4,000 in 2021/22.

There was £700m more funding in 2020/21 compared to 2019/20 funding

levels for local authorities to support children and young people with special

educational needs. The increase in the total DSG for the council was £15.5m

rising from £272.5m to £287.0m with a High Needs block allocation of

£36.1m in 2020/21.

There was £400m of additional funding in 2020/21 for Further Education

which included £190m to increase core funding for 16-19 year-olds and

£210m in targeted interventions such as high-cost programmes, English and

Maths resits, T Levels, the Advanced Maths Premium and workforce

investments. There was also an increase in early years spending of £66m to

increase the hourly rate paid to childcare providers through the existing free

hours offers. This equated to an additional £58 per child based on current

pupil numbers, an additional allocation to the Early Years’ Block of £0.4m for

Wakefield.

The Spending Round also included £7m to expand job centre advisor

support in schools for young people with special educational needs and

extending eligibility for Access to Work to internships for disabled people.

1.3.10 Regeneration – There was £241m made be available from the Towns Fund

in 2020/21 to support the regeneration of high streets, town centres and local

economies.

1.3.11 Housing – the Spending Round also indicated some £422m of funding to

help reduce homelessness and rough sleeping, including an additional £54m

in 2020/21, a real-terms increase of 13% compared to 2019/20. An

additional £40m of funding for Discretionary Housing Payments to tackle

affordability pressures in the private rented sector was also announced.

1.3.12 Transport – also included in the Spending Round was £200m of increased

funding for bus services, ‘making best use of technology and promoting

decarbonisation’, plus continued support for the development of major

transport projects, ‘including pushing on with work on the Leeds to

Manchester route of Northern Powerhouse Rail’

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2020/21 Local Government Finance Settlement

1.3.13 The 2020/21 Settlement was significantly delayed due to the December

general election and was eventually announced on Friday 20th December

2019. The announcement was followed by a 4-week consultation period,

which ended on the 17th January 2020 with the Final Settlement presented in

February 2020. It is usual for the Provisional Settlement to be accompanied

by an Indicative Settlement for the following year but the last Spending

Round (see above) which sets Department Expenditure Limits, only

extended for one year to 2020/21. Councils therefore have no information

about funding beyond March 2021.

1.3.14 The Settlement was effectively an extension to the four-year settlement that

covered the 2016/17 to 2019/20 financial years. With the delay in both the

Fair Funding Review and reform of business rates, combined with a one-

year spending review, the 2020/21 settlement was only ever going to be a

‘roll-over settlement’. The operation of the funding schemes and the values

within it have broadly been rolled-over either in cash terms from 2019/20 or

increased in line with the level of inflation.

1.3.15 December’s Settlement was positive overall for local government and

effectively confirmed what was previously announced in the Spending Round

in September. The key headlines for Wakefield were;

Settlement Funding Assessment – confirmation that SFAs would

increase by inflation. For Wakefield, an increase of £1.4m (1.6%) to

£86.4m.

Council tax – continue a referendum cap of up to 2% - a 1.99%

increase generated £2.8m of additional funding for Wakefield in

2020/21.

ASC Precept – flexibility to add a further 2% rise to council tax to fund

rising Adult Social Care costs. A 2% increase generated £2.9m of

additional funding for Wakefield in 2020/21.

Parish & Town Councils – Government has again deferred its

decision to impose a referendum limit on Town and Parish Councils.

Negative Revenue Support Grant – due to pressure from district and

county authorities, Government decided to eliminate negative RSG

amounts. Whilst this didn’t directly affect Wakefield there was an

indirect impact as it essentially diverts scarce funding away from

where it is most needed.

New Homes Bonus (NHB) – NHB was confirmed to continue into

2021/22 with baseline growth remaining at 0.4%. The funding for

Wakefield in 2020/21 was £9.3m which is an increase of £0.5m

compared to the previous financial year.

Independent Living Fund (ILF) – the former ILF Recipient Grant would

continue to be paid to local authorities in 2020/21 and will be

maintained at the 2019/20 value with the same approach to individual

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local authority allocations. The allocation for Wakefield in 2020/21

was £0.8m

Social care grant – the Settlement confirmed the increased funding

which was announced in the Spending Round. For Wakefield, the

allocation was £10.1m which represented an increase of £7.3m over

the 2019/20 funding.

1.4 Beyond March 2021

1.4.1 Whilst the 2020/21 Local Government Finance Settlement was broadly

positive for local government, the underlying financial environment remains

extremely challenging. There remains considerable financial uncertainty

beyond March 2021 which inevitably creates risks and shortens financial and

service planning horizons.

1.4.2 As a result of the COVID-19 pandemic, the Council has incurred significant

additional expenditure whilst at the same time seeing reductions in the level

of resources available through a combination of lower forecast income levels

for local taxation and a reduction in the level of income receivable from

sales, fees and charges.These are substantial and will, in the main, be offset

in 2020/21 through specific government funding provided to alleviate budget

pressures caused by the pandemic. There remains, however, uncertainty

about the extent to which these pressures will recur in 2021/22 and in future

years. The loss of income received by the Council due to the collection of

council tax and business rates will not, however, impact on the revenue

budget until 2021/22.

1.4.3 In addition to the above, there are a number of key financial risks and

uncertainties beyond March 2021, including:

The implementation of business rates retention, the timing of any

implementation and transitional arrangements and what additional

responsibilities and or reductions in specific funding would

accompany the implementation.

The implementation of the Government’s Fair Funding Review –

Government has confirmed that the review will continue, however the

impact of the review is not clear as is the timing of implementation

and the impact of any transitional arrangements.

Future council tax referendum limits and any continuing flexibility to

levy an Adult Social Care precept.

The potential impact of Brexit on the national economy and potential

impact on public sector finances.

The impact of housing growth and population growth generally across

the District on infrastructure and the demand for public services

across all partners.

Any potential financial impact arising from devolution.

The future of the ‘New Homes Bonus’ grant funding.

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1.5 Our demographics

1.5.1 The Wakefield District currently has a population of 345,038 people, with that

number estimated to rise to around 358,200 by 2023. The increase from the

previous year (4,250 more people) is the largest in at least the last 25 years.

The main component of this change is a continuing increase in net internal

migration – more people moving to Wakefield from elsewhere in the UK than

leaving, primarily due to housing growth locally. It is also estimated that the

working-age population in the District will continue to grow, mainly driven by

increases to State Pension Age and immigration. Around 19% of the

population (65,200) is aged 65 or over and this percentage is set to grow in

future years. 7% of Wakefield’s population does not describe themselves as

‘White British’, with 9% of the District’s current population born outside the

UK. Around 5,000 pupils at school in Wakefield have a first language that is

not English. This is 11% of all primary pupils and 7% of secondary pupils.

1.5.2 Employment continues to be high with 78.2% of all Wakefield adults in

employment. Rates have risen in line with national trends, and increases

have been similar for men and women. There has also been a growth in full-

time employment and a reduction in part-time employment. There are an

estimated 9,460 VAT registered businesses in Wakefield, around 88% of

these businesses employ less than 10 staff.

1.5.3 The health sector remains the largest employer in Wakefield, but the

District’s industry profile is also characterised by high levels of employment

in the logistics and distribution sector, and this sector continues to grow.

There is also more employment in public administration than is typical in the

Leeds City Region.

1.5.4 Around 14% of people in employment within the District are however working

in low wage elementary occupations, compared to 11% across the region as

a whole. While this trend hasn’t changed significantly over time, there have

been increases in the proportions of men and women employed in the higher

occupation groups – directors, managers, professionals and associate

professionals, etc.

1.5.5 Whilst unemployment continues to be low – low wages remain an issue.

Average full time wages for Wakefield residents are currently £518.10 per

week (£26,900 per annum), £69 per week below the UK average and the

lowest in the sub region.

1.5.6 There are around 19,000 workless households within the District, primarily

linked to ill health issues. This is a growth of around 4,000 since 2018/19

year.

1.5.7 Research by Sheffield Hallam University also estimates that the impact of

welfare changes since 2010 will reduce working age benefit payments to

Wakefield residents by £166m per annum by 2021 from their 2010 level.

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This figure equates to 2.63% of Wakefield’s GDP, around one year’s

average annual growth figure for GDP in the District over the last decade.

1.5.8 Deprivation in the District continues to be a long term issue and challenge. In

October 2019 the UK government released an updated index of multiple

deprivation analysis for England (IMD 2019). This index ranked Wakefield as

the 54th most deprived district in England, out of 317. In 2015 Wakefield was

ranked 65th (from 326 – the reduced number from 2015 is due to local

government reorganisation and other councils across the country merging).

Wakefield was also ranked as the 7th most deprived district in the Yorkshire

and Humber region, down from the 8th most-deprived in 2015.

1.5.9 Wakefield’s IMD deprivation scoring was most shaped by high levels of

education and skills deprivation and crime deprivation. The education and

skills ranking has deteriorated slightly compared to IMD 2015 and Wakefield

is ranked as the 20th most deprived local authority in England for this type of

deprivation. Measures used in this area include Key Stage performance;

school absence; post-16 and higher education participation. The adult skills

component is measured using no, or low, qualification levels and poor

English language skills. Crime deprivation appears to have risen significantly

since IMD 2015. This includes rates of recorded theft, burglary and criminal

damage.

1.5.10 The District’s relative income deprivation ranking has changed very little

compared to 2010, and employment deprivation has improved slightly.

Health and disability deprivation has also improved relative to elsewhere in

England but still remains poor. Barriers to housing deprivation are ranked as

being relatively low in the District, reflecting good geographic access to

public services; relatively low levels of homelessness and overcrowding; and

relatively good levels of affordability. Levels of living environment deprivation

are also low, and continue to improve. This type of deprivation reflects poor

housing conditions, levels of air pollution, and road traffic accidents.

1.5.11 IMD 2019 ranks 34% percent of the District’s neighbourhoods as being in the

top-20% most deprived in England. It was 31% in 2015 and 29% in 2010.

There are 54,200 people living in neighbourhoods among the top-10% most

deprived in England. In 2015 the number was 47,400 people and 40,500 in

2010.

Children’s Services

1.5.12 Wakefield’s population is projected to further increase and as such it is

projected that the number of children and young people living in Wakefield

will continue to increase over the next few years. The population of young

children aged 0-17 in Wakefield is 72,893 and it is expected to increase by

over 5% by 2025. This increase in population will likely result in an increase

in the number of children with special educational and other very complex

needs which would impact particularly on the placements budgets for

children in care, home to school transport as well as the high needs block of

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the dedicated schools grant. An increase in population of young children also

places greater demand on the provision of school places across the District

for which the Council has a statutory duty. The Council produces a schools

organisation plan which is reviewed on an annual basis and includes both

present and predicted pupil numbers at each school across the District as

well as information about birth rates and school capacity. The plan considers

the impact of legislation, funding changes and new/proposed housing

developments in order that the local authority can meet its statutory duties to

provide sufficient school places.

1.5.13 The Children’s Services directorate has been on a significant and rapid

improvement journey since the Ofsted inspection of children’s safeguarding

services in June 2018 which resulted in an overall judgement of ‘inadequate’.

In December 2018 the Council received confirmation that no alternative

delivery model was required and, in January 2020, it was confirmed that the

independent Commissioner, appointed to oversee further improvement, is no

longer required due to the progress made within Wakefield.

1.5.14 Following additional investment in previous years, the Council has

implemented a strategic three year plan for Children and Young People that

focuses on the rapid improvement of the current service to ensure the

appropriate safeguarding of children. This is the precursor for a longer term

vision of earlier intervention and support for vulnerable children and families.

The additional investment has strengthened front line social work teams and

has provided a focus on early help services to achieve the longer term goal

of prevention and decrease in demand.

1.5.15 The number of children in care population as of December 2019 was 634

children and young people. The number of children looked after in Wakefield

has risen significantly over the last three years. This has, in part, been due to

a large number of children coming into care that were previously on child

protection plans. The children in care rate per 10,000 in Wakefield is 87.

Whilst this is higher than the England and regional average it is lower than

some of our statistical neighbours.

1.5.16 In line with the national picture there has been a substantial increase in the

number of children & young people in Wakefield with an Education, Health &

Care (EHC) plan (2,152 as at 1st Jan 2020 compared with 1,785 in January

2018). This has led to the directorate facing significant pressure due to the

ongoing increase in the number of children requiring support and transport to

school and college.

1.5.17 There has been an increase in the skills payments to the Council’s foster

carers to support the drive to increase sufficiency and placement choice for

children and young people in care within the District. There has been

additional investment provided to enhance front line early help capacity with

the intention of reducing demand on high cost children’s social care services.

The additional capacity has strengthened the prevention focus on the

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service, build stronger links with partner agencies and increased the ‘step

down’ capacity of the service in order to reduce the requirement for more

costly interventions.

Adult services

1.5.18 The national context around Adult social care continues to be one of

demographic increases, increased life expectancy, increased complexity of

need, support for people to remain living independently and the aim to work

towards integration of health and social care services.

1.5.19 In the Wakefield District the adult population is estimated to be around

269,000. Around 19% of the population (65,200) is aged 65 or over and this

percentage is set to grow in future years. The population aged 75+ is

projected to increase by over 40% by 2030 to almost 40,000. This will have a

large impact on the types of needs the population exhibits.

1.5.20 Life expectancy in Wakefield is lower than the England average. Male life

expectancy has remained steady at 78 years for the last three periods, the

average across England as a whole is 79.6 years. Males born in the most

deprived areas of Wakefield are expected to live around 8.5 years less than

those in the least deprived areas, however this gap is reducing. Female life

expectancy has fallen recently to 81.8 years. This compares to the national

life expectancy for females of 83.1 years. There is a large inequality gap (9.1

years) between those most and least deprived.

1.5.21 Dementia is a condition that primarily affects people aged 65 and over, and

in August 2019 there were 2,547 people aged 65+ with a recorded diagnosis

of dementia. Rates of emergency admissions to hospital where there was a

mention of dementia are higher than the England average.

1.5.22 In the Wakefield District there are an estimated 37,000 carers which means

that over 10% of the District’s population have caring responsibilities. A large

amount of care is provided unpaid by family members and others. Over 600

people aged under 16 are providing unpaid care and one-in-five people aged

50 to 64 provide some unpaid care.

1.5.23 Similar to other local authorities in England, Wakefield has seen an increase

in the number of households living in temporary accommodation. The

numbers had been increasing slightly but then rose markedly when the

Homelessness Reduction Action 2017 came into force. At the end of

September 2019 there were 198 households in temporary accommodation.

1.5.24 National estimates suggest that around 5,000 people aged between 18 and

64 living within Wakefield have a serious physical disability, with a further

16,500 having a moderate physical disability. Local data for adult social care

users identifies that just over 4,000 people receive physical, mental, sensory

or learning disability support from Wakefield Council.

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1.6 Principles of Wakefield’s MTFS

1.6.1 The principles which provide the basis for the Medium Term Financial

Strategy for 2021/22 to 2024/25 include the following:

The Council will estimate both the level of funding that can be made

available for the delivery of services and the gap between income and

expenditure for which income generation, savings options and further

efficiencies will have to be implemented.

The Council’s resources will be directed to achieving the overall

objective and key priorities as agreed by the Council.

An assumption that central Government funding will increase in line

with inflation.

Collecting as much council tax, business rates and other monies

rightfully owed so the Council can ensure that it has the resources

needed to deliver service priorities.

The Council will continue to improve value for money - managing

people and our money more efficiently, streamlining processes and

systems, getting better value from commissioning and procurement,

whilst seeking to minimise the impact of budget savings on priority

services.

Opportunities for working in collaboration and partnership and working

differently will be identified and developed where this supports the

overall objective and key priorities as agreed by the Council. This may

include different service delivery models and sourcing and securing

external funding.

The Council will maintain unallocated revenue reserves at a level to

mitigate risks, the level of unallocated reserves will be reviewed

annually as part of setting the revenue budget and council tax each

year. It will also 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.

The Council will seek in the first instance to balance its revenue budget

over the period of the MTFS without reliance on the use of unallocated

reserves and contain overall Council spending within original estimates.

In summary the forecast budget position for the Council shows an

ongoing challenge, where financial resources are currently not enough

to meet the budget requirement to deliver current service provision. The

period covered by this MTFS will continue to present the Council with

some of the most significant operational and financial challenges ever

experienced by those leading and managing the delivery of local

services.

Return to Contents page

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Part 2: The factors influencing the MTFS

2.1 Overall economic forecasts and influences

2.1.1 The one-year Spending Review 2019 made the significant funding changes

that affected the 2020/21 settlement. These were:

£1bn additional funding for social care;

2% adult social care precept, which could generate a further £500m;

Reduction in the maximum increase in core Band D council tax from

2.99% to 1.99%; and

Settlement Funding Assessment (SFA) increases (1.6%, £237m) in line

with the multiplier (equivalent to £1.4m for Wakefield)

2.1.2 This was the first increase in SFA in over a decade. Over the five years to

2020/21, the cut in SFA has been 30% in cash terms, with the increase in

2020/21 changing the direction of travel but not replacing the significant cuts

in local government funding.

2.1.3 The Chancellor has launched the 2020 Comprehensive Spending Review

(CSR), which is due to report in October 2020 and will set out the

Government’s revenue spending plans for 2021/22 to 2023/24 (and capital

plans to 2024/25). No spending envelope has been set by the Chancellor in

advance of the spending review because of the ‘unprecedented uncertainty’

caused by COVID-19-19. He has, however, ‘confirmed that departmental

spending (both capital and resource) will grow in real terms across the CSR

period’.

2.1.4 This suggests that there will be no return to austerity but the redirection of

resources within the public sector means that there will still be cuts in lower

priority services. The Chancellor refers to the ‘tough choices in other areas

of spending’ and that ‘departments have been asked to identify opportunities

to reprioritise and deliver savings’. Local government will certainly not be

excluded from these cuts, although funding increases, alongside reform, are

expected in adult social care.

2.1.5 Government has also announced that the Fair Funding Review, the business

rates baseline reset and 75% business rates retention has been delayed by

suspending implementation in 2021/22. Changes were expected to be

implemented in 2022/23 however there is a very real risk that they will be

delayed for a further year because:

it will be impossible to reset business rate baselines and equalise

council tax if the future levels of taxation have not stabilised by

2021;

major changes are likely for both social care and public health

which are unlikely to be ready by 2021; and

authorities will still be reeling from the major financial upheaval

following the current pandemic.

Page 18 of 55

2.2 Regional influences

Devolution

2.2.1 Devolution is one of the most fundamental changes to the way decisions are

made for local areas and how public services are funded. The transfer of

power and funding from national to local government will ensure decisions

are made closer to the local people, communities and businesses and

provide greater freedoms and flexibilities for councils to work more

effectively to improve public services for their area. The result will be more

effective, better targeted public services, greater growth and stronger

partnerships between public, private and community leaders in local areas.

The West Yorkshire ‘minded-to’ Devolution Deal was announced as part of

the Budget on 11th March 2020. Subject to statutory processes, this will lead

ultimately to the adoption of a mayoral combined authority model with

additional functions, and will require an Order of the Secretary of State.

Consent to the draft Order will be in November 2020.

The Deal will devolve a range of powers and responsibilities to West

Yorkshire Combined Authority, supporting the region to drive economic

growth and prosperity within its communities and across the north. In

addition, it will unlock significant long-term funding and give the region

greater freedom to decide how best to meet local needs and create new

opportunity for the people who live and work here.

The initial gainshare funding for the financial year 2020/21 will be available

prior to the first Mayoral election in May 2021 but subject to: the establishing

legislation being in place; and a revised Assurance Framework being

approved.

The Deal includes a number of flagship funding arrangements including

£38m for 30 years into the West Yorkshire Investment Fund, £317m from the

Transforming Cities Fund and control over the £63m annual Adult Education

budget.

Leeds City Region Strategic Economic Plan (‘SEP’)

2.2.2 Wakefield Council (and the Wakefield District) is a key stakeholder and

influencer within the Leeds City Region (LCR). The LCR SEP vision is “to be

a globally recognised economy where good growth delivers high levels of

prosperity, jobs and quality of life for everyone”.

In achieving this, the City Region will:

Deliver upwards of 35,000 additional jobs and an additional £3.7

billion of annual economic output by 2036.

Become a positive, above average contributor to the UK economy.

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Seek to exceed the national average on high level skills.

Make good progress on headline indicators of growth and

productivity, employment, earnings, skills and environmental

sustainability.

2.3 Resources available

2.3.1 Wakefield Council services are funded through a mix of revenue streams

including central government funding and local taxation. The funding

package to cover the costs of providing services for 2020/21 is reflected in

the chart below. Local taxation now contributes 40% towards the gross cost

of council services.

Chart 1 - Breakdown of 2020/21 Council Funding

* Government grants includes Housing Benefit Subsidy payments of £88m, Public Health

Grant £24m and New Homes Bonus £9M

Business rates

2.3.2 Business rates are set by the government and based upon a rateable value

of non-domestic properties. The rateable value is determined by a

government agency called The Valuation Office Agency (‘VOA’). Annually

Government set a business rates multiplier which when applied to the

rateable value determines the amount of rates business are liable to pay.

Business rate retention

2.3.3 Prior to 1st April 2013, councils had no financial interest in the collection of

business rates, acting purely as a collection agent for the Government. The

Business Rates Retention Scheme (‘BRRS’) was introduced in April 2013 to

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provide councils with stronger financial incentives to support property

development and boost the economy in their local areas. This introduced an

element of risk and reward not previously seen in a key source of council

funding. It means that councils bear a proportion of the real-terms change in

business rates revenues in their areas: gaining when revenues grow in real

terms, losing when they fall. That proportion was initially set at 50% across

England, resulting in the Council retaining 49%, West Yorkshire Fire &

Rescue Authority 1% with government retaining the other 50%.

2.3.4 The Wakefield District has a long traditional of attracting business

investment in the area as reflected in the chart below which highlights the

growth in the total rateable value in the District.

Chart 2 - Movement in Rateable Value in Wakefield

2.3.5 Business investment continues to grow in the District with a number of sites

currently being developed. In developing the MTFS the Council has been

able to factor in this growth at approximately £14m growth in rateable values

over the next 4 years from 2021/22 and 2024/25.

Business rate retention - further development

2.3.6 On 5th October 2015 the then Chancellor of the Exchequer, George

Osborne, set out plans in his ‘devolution revolution’ to take Business Rate

Retention even further with the aim of councils retaining 100% of business

rates by the end of that parliament. This plan, however, was put on hold,

when the bill required to implement the plan fell in Parliament as a result of

calling the June 2017 General Election.

2.3.7 Government have continued to push for further business rate retention within

the existing legislative framework and are currently progressing plans for a

75% scheme with the original aim to be introduced by April 2020, though this

has now slipped. In order to better understand the issues of further rate

retention the Government has been piloting 100% retention of real-terms

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changes in business rates revenues in parts of England since April 2017 with

additional areas piloting 75% from April 2019 until March 2020.

2.3.8 Wakefield in conjunction with other councils in the region applied and were

successful in piloting 100% business rate retention in 2018/19 as part of the

LCR business rates pilot, and 75% rate retention in 2019/20 as part of a

wider pilot with North and West Yorkshire Councils. The latter resulted in the

Council retaining 74% and West Yorkshire Fire & Rescue Authority 1%.

Through both pilots the Council and other members of the pilots have been

able to share a greater proportion of growth in business rates income in the

region.

2.3.9 The 75% rate retention pool with North and West Yorkshire Councils was

dissolved by central government as part of the 2020/21 Local Government

Settlement along with other regions piloting 75% retention. The Council

applied for and was granted permission to form a pool with North and West

Yorkshire Councils (but excluding Selby District Council) for 2020/21 based

upon the normal 50% rate retention principles. The formation of the pool will

help to retain what would otherwise have been levy payments payable to

central government.

Business rates income

2.3.10 The level of rates businesses are liable to pay is dependent upon a number

of factors including the rateable value, business rate multiplier, set annually

by government, reliefs businesses may be entitled to, and any transitional

relief following a national business rate revaluation. The estimated business

rates collectable by the Council in 2020/21 are highlighted in Table 1 below.

2.3.11 The introduction of the system has not been without complication. Each

business has the right to appeal the valuation of its premises and the

grounds for many of these are such that the liability extends back before the

new system was introduced. Each council has been required to raise a

provision against which these potential costs can be charged against, which

has served to reduce income. The risk for all councils is whether the

provision raised is sufficient to cover refunds as they materialise. Business

Rateable Values were revalued from April 2017, resulting in further volatility

in the system.

The Council sets aside some of this funding to provide for the future impact

of appeals against rateable values. As at 1st April 2020 the value of the

provision for appeals was £11.1m and is thought to be sufficient to meet the

risk of potential future refunds and it is not anticipated that the Council will

need to set aside further sums during 2020/21 or beyond.

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Table 1 - Estimated Business Rate income 2020/21

Based upon the councils NNDR1 return submitted to central government pre-Covid

pandemic implications

Mandatory & discretionary business rate reliefs

2.3.12 A number of reliefs are available to businesses that reduce the amount of

business rates that they have to pay; some are mandatory and set by statute

and others are at the discretion of billing authorities. The Council estimates

that it is likely to award £24.4m of mandatory reliefs and £3.2m of

discretionary reliefs in 2020/21. Through the discretionary relief scheme the

Council is supporting local charities with headquarters in the Wakefield

District by topping up the 80% mandatory relief by a further 20%, meaning

none of these charities will be required to pay business rates. In addition

non- profit making bodies and community amateur sports clubs can also

benefit from 100% relief through the discretionary scheme. It should be

noted that following the Government’s announcement that it would increase

retail rate relief from 50% to 100% and expand it to include the leisure and

hospitality sectors, there will be a loss of business rates income to the

Council in 2020/21 (£21.1m) although this will be compensated by

Government through a section 31 grant.

2020/21

Estimated

£m

Rateable Value of all Businesses in Wakefield

District327.7

National Business Rate Multiplier for 2020/21 -

pence per pound of rateable value0.499

Gross Business Rate Liability 163.5

Estimated Growth In Business Rates 2.1

Mandatory Reliefs

Small Business Rate Relief (SBRR) (11.2)

Charity relief & other minor reliefs (8.0)

Unoccupied property relief (5.2)

Discretionary Reliefs

Charitable occupation 20% top up (0.6)

Non-profit making bodies & community amateur

sports clubs 100%(0.4)

Specific time limited Government initiatives (2.2)

Other adjustments (2.6)

Net Business Rates Due 135.3

Under Business Rate Retention 50% Pool

Wakefield retain 49% of rates due66.3

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Business rate retention & resetting of baselines

2.3.13 In setting up the business rate retention scheme at the outset in April 2013

the Government calculated a business rate baseline, being the amount of

business rates it expects councils to collect, which has been inflated in line

with the increase in business rates multiplier.

2.3.14 The business rates baseline for Wakefield in 2020/21 and estimated retained

business rates after setting aside amounts for bad debt provisions are

reflected in the following table.

Table 2 - Growth in income above Business Rate baseline 2020/21

2.3.15 The Government is still committed in implementing the Fair Funding Review

and reforms to the Business Rate Retention Scheme although these have

been delayed from 2021/22. This will involve the recalculation of business

rate baselines and the loss of the growth achieved to date against the 50%

retention baselines. This could mean a loss of growth of £8.8m.

2.3.16 In planning for the introduction of 75% rate retention, resetting of baselines

and the wider impact of the Government’s Fair Funding Review, the Council

have assumed a net neutral impact on the basis that no detail has yet

emerged to indicate the likely impact on the Council and, regardless of the

outcome, the Government will have to provide some level of transitional

funding or restriction to move councils across to their new level of funding

over a period of time.

Appeals against rateable values

2.3.17 As a consequence of the Government introducing the business rate retention

scheme in April 2013, the Council, whilst being rewarded for the growth in

businesses in the District, is now open to the negative impact of the cost of

businesses appealing against the rateable value set by the VOA.

2.3.18 A large number of appeals remain outstanding from the 2010 business rate

revaluation. The Council has no involvement in the appeals process, which

is administered by the VOA.

2.3.19 The Council is required to set aside what it estimates could be the potential

refund to local business from successful appeals. The provision for appeals

2020/21

Estimated

£m

Business Rates Baseline 57.5

Income estimated due in year 66.3

Income (growth) above baseline 8.8

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against the 2010 rating list at 1st August 2020 was £5.1m of which

Wakefield’s share on a 49% basis would be £2.5m, see Table 3 below.

Table 3 - Outstanding appeals against 2010 Rating List

2.3.20 The business rate revaluation in 2017 created further uncertainty around the

impact of appeals against rateable values as at the same time Government

introduced a new system of ‘Check, Challenge and Appeal’. Under this

system, businesses or their property agents could check the basis of a

valuation and challenge that assessment before actually proceeding to

appeal should they still not be satisfied with the rateable value. Very little

information has so far been provided by the VOA to highlight the impact of

‘Check, Challenge and Appeal’ on the original rating assessments. In the

absence of VOA data the Council has provided for potential refunds

following successful challenges or appeals on the basis of a percentage of

income. The provision for appeals against the 2017 list at 1st August 2020

was £6.0m, of which Wakefield’s share on a 49% basis would be £2.9m.

Operation of the Collection Fund

2.3.21 The difference between budgeted business rates income and actual in-year

income is managed through the Collection Fund and impacts in the following

financial year. The MTFS reflects the financial consequences of the current

COVID-19 pandemic on local businesses with a forecast increase in empty

property relief, business insolvencies and increases in provisions for bad

debts as in-year collection rates suffer. Business rates collection within the

MTFS is currently forecast to be 95% in 2021/22 and 99% thereafter,

reflecting the correction to business rates to normal levels following the

impact of the pandemic.

Section 31 Grant Compensation

2.3.22 Government sets the multipliers for each financial year for England

according to formulae set by legislation. Previously, the multipliers increased

in line with the RPI in September of the preceding year however in 2014/15

and 2015/16 the Government capped the increase in the multiplier at 2% to

provide business rate payers with additional support, and this has had a

knock on effect in subsequent years which authorities are being

compensated for this through a section 31 grant. In the autumn 2017

Budget, Government announced that the multipliers would increase in line

with the CPI in September of the preceding year from 2018-19. This change

was compensated for through a section 31 grant.

Number Rateable Value £m

All Appeals 440 157.8

Number of individual sites 171 39.2

Potential refunds following successful appeal £5.1m

Wakefield Share at 49% £2.5m

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2.3.23 In addition to section 31 grant to compensate local authorities for capping,

the increase to multipliers in 2014/15 and 2015/16 and the move from RPI to

CPI as a basis for setting the multiplier in 2018/19; local authorities also

receive section 31 grants to compensate them for lost income as a result of

implementing government policy through the discretionary business rate

relief scheme. For 2020/21, this includes additional grant of £21.1m to

compensate for the expanded COVID-19 related retail relief.

Council tax

2.3.24 Council tax is one of the main sources of income for councils to meet the

costs of running local services. It is a tax on domestic property which was

introduced in 1993 by the Local Government Finance Act 1992, replacing the

short lived community charge, which in turn replaced the domestic rates.

Each property is assigned one of eight bands A to H, based on property

value, and the tax is set as a fixed amount for each band.

2.3.25 The level of income available to councils through charging council tax is

dependent upon a number of factors including the tax base (number of

dwellings expressed as band D equivalents), the level of discounts and

reliefs claimed by residents, the council tax level set annually by councils

and income set aside to cover potential bad debts.

2.3.26 In addition to the charges levied by the Council on residents in the District,

the major preceptors of West Yorkshire Police & Crime Commissioner and

West Yorkshire Fire & Rescue Authority levy charges on residents across

the District. In certain parishes within the District, local town and parish

councils also levy charges.

Council tax base

2.3.27 The council tax base is estimated annually around the time the Council sets

its budget and is based upon the number of liable properties in the District

net of reliefs and discounts and adjusted for an assumed collection rate. The

council tax base is expressed in band D equivalents to allow consistency

and comparison between authorities, see Table 4 below.

2.3.28 In recent years the Council has experienced substantial housebuilding within

the District, resulting in significant growth within the tax base. In setting this

MTFS the Council has reviewed future forecast house building and trends in

reliefs and discounts, projecting the net growth forward into future years.

Increases in the tax base creates additional income for the authority.

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Table 4 - Council Tax Base Calculation 2020/21

2.3.29 The movement in the tax base in recent years and forecast for the next few

years are reflected in Chart 3, below.

Chart 3 - Movement in Wakefield’s Council Tax base & forecast to 2024/25

2.3.30 Prior to 2013, residents struggling to pay their council tax bills could apply for

council tax benefit with the Council being reimbursed by Government for the

cost of benefit awards. The Government scrapped the council tax benefit

system in April 2013, replacing it with council tax support schemes which

rather than award a benefit to offset council tax liability, reduce an

applicant’s council tax bill by means of a discount. The introduction of the

new discount in 2013 resulted in a large reduction in the council tax base as

reflected in the chart. The Council was partially compensated for the impact

on the council tax base through a grant rolled in to the Council settlement

Council Tax Band A B C D E F G H Total

Number of dwellings in Rating List at

1 Dec 201979,401 29,696 22,955 14,997 7,945 2,436 1,138 83 158,651

Equivalent discounts & exemptions (23,541) (4,405) (2,457) (1,039) (486) (138) (64) (42) (32,172)

Equivalent number of dwellings after

discounts & exemptions55,860 25,291 20,498 13,958 7,459 2,298 1,074 41 126,479

Appropriate proportion applicable to

dwellings in band 6/9 7/9 8/9 9/9 11/9 13/9 15/9 18/9

Number of Band D Equivalents 37,240 19,671 18,220 13,958 9,117 3,319 1,790 82 103,397

Estimated Tax Base Growth 1,349

Sub-total 104,746

Estimated Collection Rate 98.5%

Estimated Tax Base 2019/20 103,175

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funding assessment. The Financial Health report to Cabinet in September

2020 recommended to Council that the Local Council Tax Support Scheme

for 2021/22 remains unchanged from the 2020/21 scheme. There are

currently around 29,500 residents receiving council tax support in the District

and approximately 19,000 of these are of working age. Alongside these

there are around 900 claims awaiting assessment. Pension-age residents

have their own scheme with rules being set by Government. The scheme for

those of working age was forecast to cost £10.3m based on a caseload of

15,700. However additional costs have been incurred due to a recent sharp

increase in the caseload due to the COVID-19 pandemic. It is estimated that

the caseload will start to reduce as the Government’s Coronavirus Job

Retention Scheme comes to an end. Current claims of 20,000 will reduce to

around 17,000 by March.

Council tax rate

2.3.31 As part of the budget setting process the Council annually reviews the

council tax rate to be applied to bills. Government controls the maximum

level a council can increase its council tax rate through setting a referendum

limit. Any council wishing to set a rate about that level is required to hold a

referendum and seek approval from its residents. For a number of years the

referendum limit had been set at 2%, although for 2019/20 Government

increased the limit to 3%. The referendum limit is set annually by

Government who, as part of the Spending Round 2019, reverted the limit

back to a 2% level for 2020/21.

2.3.32 In 2017 Government recognised the financial pressures affecting local

authorities providing adult social care responsibilities. The Government’s

response was to pass on the burden of meeting some of the pressure to

local tax payers rather than fund directly through central grant funding to

councils. The Government directive allowed councils to charge an additional

amount on council tax bills as an adult social care precept, restricting annual

increases to a maximum of 3% and a total of 6% across years 2017/18 to

2019/20 on top of the general increase in council tax. The Council introduced

a precept at rates of 2% in 2017/18, 3% in 2018/19 and 1% in 2019/20.

Government announced within the Spending Round 2019 that they would

allow councils to charge a 2% adult social care precept in 2020/21. The

MTFS reflects no further precepts up to March 2025.

Historic council tax levels are reflected in the tables below:

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Table 5 - Movement in Wakefield Council Tax levels (expressed in band D equivalents and

excluding major preceptors & Parish / Town Councils)

Chart 4 - Graphical representation of movement in Council Tax Rate (expressed in band D

equivalents) compared to 2010/11 rate had this been increased by inflation over the period

2.3.33 As evidenced in Chart 4, above, the freezing of council tax in 2011/12 and

2012/13, means the council tax rate is about on par with the rate it could

have expected in 2020/21, had it been increased in line with inflation despite

Year

General

Council Tax

Rate

Adult Social

Care PreceptTotal

£ £ £

2005/06 921.02 921.02

2006/07 953.26 953.26

2007/08 986.62 986.62

2008/09 1,035.49 1,035.49

2009/10 1,074.79 1,074.79

2010/11 1,100.59 1,100.59

2011/12 1,100.59 1,100.59

2012/13 1,100.59 1,100.59

2013/14 1,116.55 1,116.55

2014/15 1,138.77 1,138.77

2015/16 1,161.43 1,161.43

2016/17 1,207.77 1,207.77

2017/18 1,208.58 59.46 1,268.04

2018/19 1,246.49 84.82 1,331.31

2019/20 1,286.29 98.14 1,384.43

2020/21 1,313.84 125.83 1,439.67

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the much larger increases in recent years which also include the adult social

care precept.

2.3.34 Wakefield remains the second lowest of the West Yorkshire local authorities

in terms of the band D council tax level. It is worth noting that if Wakefield’s

band D council tax was set in line with the highest of the West Yorkshire

Districts it would generate an additional £13.4m each year to support service

provision.

Table 6 - Council Tax rates in West Yorkshire (expressed in band D equivalents)

Collection rates & provisions for bad debts

2.3.35 In estimating the level of income that councils can expect from council tax

payers in its area, an assessment is carried out as to the likelihood of non-

payment of council tax liability. Wakefield Council, in setting its budget for

2020/21, assumed an overall long term collection rate of 98.5%. Actual in

year collections will be lower than 98.5% but the long term rate reflects the

fact that outstanding amounts will continue to be pursued in future periods.

In setting a 98.5% collection rate the Council is estimating that at some point

in the future, when all courses of action have been exhausted to recover

amounts outstanding, there could be 1.5% of council tax liability to be written

off as irrecoverable. The Council has reviewed its collection rate as a result

of issues created by the COVID-19 pandemic and lowered its estimated

collection rate for 2021/22 to 98% before returning to normal levels the year

after.

2.3.36 As at 31st March 2020, council tax outstanding balances amounted to

£22.6m for which there has been a provision set aside of £13.9m for future

debt write-offs. The overall value of the balances outstanding and provisions

made are shared between the Council, West Yorkshire Police & Crime

Commissioner and West Yorkshire Fire & Rescue Authority in proportion to

their precept.

The table below reflects the balances attributable to each:

£

Kirklees 1,569.80

Calderdale 1,548.36

Leeds 1,449.00

Wakefield 1,439.67

Bradford 1,427.86

Page 30 of 55

Table 7 - Council Tax Arrears & Provisions for Bad Debts at 31st March 2020

The Council continues to monitor the outstanding sums and revises its

estimates of non-collection accordingly. The collection rates in 2021/22 are

currently forecast to be lower than those budgeted for in 2020/21 due to the

impact of the pandemic. The rates are expected to improve in 2021/22 with a

return to normal levels by 2022/23. The MTFS assumes a collection rate of

98% in 2021/22; and 98.5% in 2022/23 and thereafter.

New Homes Bonus

2.3.37 The New Homes Bonus (‘NHB’) was introduced in 2011 and was funded by

top-slicing existing revenue support grant funding. It was introduced as an

incentive scheme to encourage housing growth across the country with local

authorities receiving grant funding equivalent to the average council tax for

each net additional property each year. The 2015 spending review made a

number of changes to the scheme, including receiving the grant over a four

year period (previously it was six years) and the imposition of a national

growth baseline before the grant is paid. The MTFS assumes a pressure of

£1.08m in 2021/22 due to the gradual phasing out of NHB and payments in

future years impacted by a stall in house building resulting from the current

pandemic (£0.3m in 2022/23 and £0.7m in 2023/24).

2.4 Budget position for 2021/22 to 2024/25

2.4.1 Table 8, below, presents a summary of the Council’s MTFS through to

March 2025. The table sets out the estimated changes in core funding

(Government grant, retained business rates etc.) as well as the forecast

changes in key areas of spend through to 2024/25.

2.4.2 The budget gap over the four years from 2021/22 to 2024/25 amounts to

£57.2m (£16.2m in 2021/22; £20.2m in 2022/23; £15.9m in 2023/24 and

£4.9m in 2024/25).

TotalWakefield

Council

WY Police &

Crime

Commissioner

WY Fire &

Rescue

Authority

£m £m £m £m

Council Tax Amounts Outstanding 22.6 19.2 2.5 0.9

Provision for Bad Debts (13.9) (11.8) (1.6) (0.5)

Assumed Further Collectable Amount 8.7 7.4 0.9 0.4

Proportion of Total

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Table 8 - Estimated funding changes & cost pressures

2021/22 2022/23 2023/24 2024/25 2021/22 2022/23 2023/24 2024/25

£m £m £m £m £m £m £m £m

1) Funding changes

A) Business rates/SFA

Revenue support grant (0.16) (0.16) 0.16 0.00 0.00

Phase 2020/21 collection fund deficit 8.47 8.47 8.47 8.47 0.00 0.00 (8.47)

2019/20 collection fund balance (4.19) (4.19) 4.19 0.00 0.00

Funding above the baseline 2.34 (2.06) (3.06) (4.06) 2.34 (4.40) (1.00) (1.00)

Top-up/tariff & baseline funding (0.79) (1.79) (2.79) (3.79) (0.79) (1.00) (1.00) (1.00)

Sub-total - business rates 5.67 4.62 2.62 (7.85) 5.67 (1.05) (2.00) (10.47)

B) Council tax

Phase 2020/21 collection fund deficit 1.18 1.18 1.18 1.18 0.00 0.00 (1.18)

Housing growth (0.12) (2.22) (4.32) (6.42) (0.12) (2.10) (2.10) (2.10)

Changes to council tax base 1.25 1.25 1.25 1.25 1.25 0.00 0.00 0.00

Provision for bad debts 0.73 0.73 0.73 0.73 0.73 0.00 0.00 0.00

Sub-total - council tax 3.04 0.94 (1.16) (4.44) 3.04 (2.10) (2.10) (3.28)

C) Grant funding

Assumption re: ASC additional funding (2.90) (2.90) (2.90) (2.90) (2.90) 0.00 0.00 0.00

New homes bonus 1.08 1.38 2.08 2.08 1.08 0.30 0.70 0.00

Other specific grant funding (0.57) (1.17) (1.77) (2.37) (0.57) (0.60) (0.60) (0.60)

Sub-total - grant funding (2.39) (2.69) (2.59) (3.19) (2.39) (0.30) 0.10 (0.60)

Sub-total - funding changes 6.32 2.87 (1.13) (15.48) 6.32 (3.45) (4.00) (14.35)

2) Cost pressures

A) Inflation

General inflation 5.30 10.60 15.90 21.20 5.30 5.30 5.30 5.30

National living wage 5.30 10.80 16.30 16.30 5.30 5.50 5.50 0.00

Waste PFI contract 0.70 1.40 2.10 2.80 0.70 0.70 0.70 0.70

Sub-total - grant funding 11.30 22.80 34.30 40.30 11.30 11.50 11.50 6.00

B) Service pressures

Adults and Public Health 0.56 1.17 2.04 3.30 0.56 0.61 0.87 1.26

Children's Services 3.31 4.67 5.33 6.08 3.31 1.36 0.66 0.75

Regeneration & Economic Growth 5.12 6.03 6.24 6.24 5.12 0.91 0.21 0.00

Communities, Environment and Climate Change 3.19 3.47 3.47 5.39 3.19 0.28 0.00 1.92

Chief Executive Unit 3.32 3.63 3.88 4.13 3.32 0.31 0.25 0.25

Council-wide budgets 2.61 4.11 5.61 7.61 2.61 1.50 1.50 2.00

Sub-total - service pressures 18.11 23.06 26.56 32.74 18.11 4.95 3.50 6.18

Sub-total - cost pressures 29.41 45.86 60.86 73.04 29.41 16.45 15.00 12.18

3) Headline budget gap 35.73 48.73 59.73 57.56 35.73 13.00 11.00 (2.17)

To be met by:

A) Earmarked reserves

Business rates reserves (7.03) (7.03) (7.03) (7.03) 0.00 0.00 7.03

Collection fund reserve (5.22) (5.22) 5.22 0.00 0.00

Regen earmarked reserves (1.76) (1.76) (0.36) (0.36) (1.76) 0.00 1.40 0.00

Release of reserves to smooth budget gap (5.50) (3.50) (5.50) 2.00 3.50 0.00

Sub-total - earmarked reserves (19.51) (12.29) (7.39) (0.36) (19.51) 7.22 4.90 7.03

16.22 36.44 52.34 57.20 16.22 20.22 15.90 4.86

Change from 2020/21 baseline Year on year change

4) Budget Gap after use of earmarked reserves

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Settlement Funding Assessment

2.4.3 The Settlement Funding Assessment (‘SFA’) is the total of the revenue

support grant from the government and business rates baseline funding.

Since 2011/12 the Council has seen significant reductions in its SFA as a

result of government austerity measures and had anticipated that this would

likely continue in to the future. In recognition of pressures facing local

authority funding the Government’s Spending Round 2019 announced a real

terms increase in SFA of 1.8% above 2019/20 levels, equivalent to £1.531m

for Wakefield.

2.4.4 Under the Government proposals for 75% business rate retention, councils

will forego revenue support grant and public health grant in return for a

greater share of locally raised business rates income. As such the Council’s

SFA will increase at the expense of receiving direct grant funding.

2.4.5 The MTFS assumes an annual increase in SFA of 1.1% (based on current

forecasts for CPI) over the four year planning period to March 2025. Given

the uncertainty over the timing of the proposed implementation of 75%

business rates, the MTFS assumes that, whenever implemented, the impact

will be broadly neutral.

Changes in Local Funding

Business rates

2.4.6 A reset of business rates was due for 2021/22 but, due to the pandemic, the

Government has delayed this to 2022/23 although this could be delayed

further. Following the resetting of baselines, it is assumed that the current

section 31 grants will cease to be paid with the value of those grants being

re-allocated through the Fair Funding Review.

2.4.7 This MTFS assumes £2m growth in business rates in the District during

2021/22 alongside inflationary increases (based on CPI at 1.1%). The

position assumes 5% losses in collection resulting from the recession and

the ongoing impact of the COVID-19 pandemic.

Council tax

2.4.8 The MTFS assumes council tax base growth at 50% of the Council’s

strategic housing market assessment for 2021/22 (an increase of 700

dwellings). From 2022/23 it is assumed that housing growth will return to

pre-pandemic levels of an increase of 1.2% per annum (1,900 new dwellings

per year).

2.4.9 In line with the Council’s constitution and decision-making processes, any

future increases in Council Tax will be consulted on as part of the annual

budget process with a decision made by Full Council as part of the approval

of the annual budgets.

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Collection Fund

2.4.10 As a result of the COVID-19 pandemic, the Government has proposed that

repayments to meet Collection Fund deficits accrued in 2020/21 will be

phased over a three-year period (2021/22 to 2023/24) to ease immediate

pressures on budgets. Billing and major precepting authorities are usually

required to meet their share of any deficit during the following financial year.

2.4.11 The Government’s intention is for the deficit phasing to apply to all

authorities, set at a fixed period of three years. The phased amount will be

the entire collection fund deficit for 2020/21 as estimated on 15th January

2021 for council tax and in the 2021/22 NNDR1 for business rates. The

scheme will be prescribed in secondary legislation.

2.4.12 The MTFS assumes that the forecast deficit on the Collection Fund as at 31st

March 2021 of £25.4m business rates and £3.5m council tax will phased

over a three year period from 2021/22 to 2023/24 at £9.6m per year

(business rates £8.4m per year and council tax at £1.2m per year)

Other Funding Changes

Public Health grant

2.4.13 The MTFS assumes this grant will be increased by inflation (CPI) during

2021/22.

Adult Social Care Winter Pressures grant

2.4.14 Government provided one-off grant funding in 2018/19 and again in 2019/20

to reflect the continuing increasing demand in adult social care and the rising

costs to local authorities. Government announced that this funding would be

rolled in to better care funding as part of the Local Government Settlement

2020/21.

Adults and children’s social care support grant

2.4.15 Government provided one-off funding in 2019/20 to reflect demand

pressures in this area. As part of the local Government Settlement 2020/21,

government announded that this grant would be rolled in with new funding

under the banner of a social care grant. The MTFS assumes funding

remains in place and increases in line with CPI.

Better care funding and improved better care funding

2.4.16 The Local Government Settlement 2020/21 rolled the previous one-off

funding allocations for Winter Pressures in with better care funding. The

MTFS assumes that total better care funding will continue in 2021/22 and

beyond, increasing annually in line with CPI pending the long awaited adult

social care Green Paper and a longer term solution being found.

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2.5 Budget pressures and increased costs

Inflation

2.5.1 The MTFS includes provision for £11.3m of inflation in 2021/22 increasing to

£11.5m in 2022/23 and 2023/24. This includes provision for increases to the

National Living Wage of £5.3m in 2021/22, £5.5m in 2022/23 and a further

£5.5m in 2023/24. In terms of pay inflation, the MTFS reflects assumed pay

awards of 2.75% in line with the award for 2020/21. The MTFS also includes

provision for inflation where there are contractual commitments but assumes

that the majority of spend in other budgets are cash-limited.

Children’s social care

2.5.2 Significant investment has been made in children’s social care in recent

years in order to support the increase in number of vulnerable children and

young people in the District. The MTFS incorporates the financial impact of

targets already agreed over 2020/21 and 2021/22 in terms of achieving

permanence for children through adoption, placed with parents etc. This has

been modelled to show the impact on the budget for 2021/22 (£1.7m).

Minimal growth is profiled into external residential placements for 2021/22

with an assumed reduction in use of Independent Fostering Agency (IFA)

placements over course of 2021/22.

Home to school transport

2.5.3 The Council faces significant pressure due to the increase in children with

special educational needs & disabilities (‘SEND’) being transported to school

& college. The MTFS includes an additional £0.5m funding in 2021/22 to

meet these additional needs.

Demand pressures adult social care

2.5.4 The MTFS provides for £0.5m of additional funding in 2021/22. This is net of

additional costs relating to inflation arising from National Living Wage

increases on commissioned service contracts (£5.3m) and £0.5m with

regard to contract inflation.

Homelessness

2.5.5 The MTFS includes provision of £1.5m in 2021/22 to reflect the increase in

homelessness applications since the implementation of the Homelessness

Reduction Act in April 2017 in respect of additional property, hotel costs and

support staff. The issue has been exacerbated by the impact of the current

pandemic.

Capital financing

2.5.7 In recognising the longer term implications of funding the capital programme

and ensuring that the programme remains affordable, the Council will

increase the resilience of its treasury management activity by supporting the

Council’s MRP strategy by an additional £1m in 2021/22; £1.5m in both

2022/23 and 2023/24; and £2m in 2024/25.

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Change in use of reserves

2.5.8 The indicative budget gap of £16.2m for 2021/22 assumes the release of

£5.5m of reserves to smooth the budget gap in the year. This is reduced by

£2m to £3.5m in 2022/23.

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Part 3: How the Council will meet the Financial Challenge

3.1 Revenue budget plan

Budget Timetable

3.1.1 The Council has a statutory obligation to set a balanced budget. Section

30(6) of the Local Government Finance Act 1992 provides that the Council

has to set its budget before 11th March in the financial year preceding the

one in respect of which the budget is set.

3.1.2 The Council has a budget timetable to ensure that statutory deadline is met.

Key dates in the timetable include:

Budget engagement, October to November 2020

Budget consultation, December to January 2021

Cabinet recommends Revenue Budget and Capital Programme for

2021/22, 16th February 2021

Budget Council to approve the Revenue Budget and Capital

Programme for 2021/22, 24th February 2021

Budget Guidelines

3.1.3 Detailed guidelines, including Government funding changes and

assumptions, are provided to all relevant staff to ensure that revenue

budgets for individual services are prepared consistently. These guidelines

contain details of the assumptions that are to be made in setting the revenue

budget and also set out broad principles that are to be adhered to.

Revenue budget assumptions

3.1.4 The budget setting process is complex and must be undertaken in a planned

way. It is equally important that assumptions used in the preparation of the

budget are agreed, reasonable and consistently applied.

3.1.5 The budget assumptions are applied corporately to service budgets, with

individual exceptions on a case by case basis for specific contracts. The

budget forecast has been based on a number of assumptions, known levels

of expenditure and anticipated levels of resources.

3.2 Savings options

3.2.1 The budget gap for 2021/22 is £16.2m. This is based on what we know, and

an informed estimate of the areas where there is still uncertainty. Budget

saving proposals will be finalised by directorates by late January 2021 with

the consultation on the budget ending mid-January 2021.

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3.3 Balances, reserves and provision strategy

Reserves policy

3.3.1 The Local Government Act 2003 requires the Chief Finance Officer to report

to Council for consideration immediately prior to setting the budget and

council tax. The report aims to ensure that Council is aware of the opinion of

the Chief Finance Officer regarding the robustness of the budget as

proposed and the adequacy of general balances and reserves. This includes

general balances and amounts held as specific reserves and contingencies.

It is also good practice for the Council to have a policy on the level of its

general fund balance and ensure this is monitored and maintained.

3.3.2 The purpose of the reserve policy is:

To maintain general reserves at a level appropriate to help longer-

term financial stability.

To identify any future events or developments which may cause

financial difficulty, allowing time to mitigate for these.

3.3.3 Reserves are important to local authorities as, unlike central Government,

they cannot borrow money over the medium-term, other than for investment

in assets, and they are required to balance their budgets on an annual basis.

The Council holds reserves for various purposes:

Working balances to help cushion the impact of uneven cash flows.

Contingencies to cushion the impact of unexpected events or

emergencies.

Building-up funds to meet known or predicted requirements – often

referred to as earmarked reserves.

Ring-fenced reserves held on behalf of maintained schools.

The nature and purposes of these reserves means that from year to year

funds will flow in and out as projects progress and grants are received, etc.

General fund balances

3.3.4 General fund balances are amounts set aside to cushion the impact of

unexpected events and emergencies. In order to assess their adequacy, a

systematic approach has been adopted. This approach is based on the

identification of the key financial risks following which an amount of

‘potential’ exposure is calculated based on the impact of the risk and the

possibility of its occurrence. The Council’s general fund balance is currently

£15m and the proposal is to maintain it at this level for the duration of this

MTFS although this is subject to the annual risk assessment as part of the

budget process.

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Earmarked reserves

3.3.5 In addition to general balances, the Council holds a number of earmarked

reserves. These are resources that have been set aside to fund specific

issues that may arise in the future. It is important that the Council makes

best uses of all the resources it has and therefore where it is clear that a

reserve is no longer required then the resources can be released to provide

one-off support to the revenue budget.

3.3.6 The Council’s budget setting process includes an annual review of amounts

held in earmarked reserves. This ensures that resources continue to be set

aside only where there is a clear continuing need to do so.

3.3.7 The table below summarises the Council’s anticipated use of reserves during

2020/21 split between general, earmarked (monies held for a particular

purpose) and ring-fenced reserves (mainly schools). The increase in

reserves is principally due to an increase in grant funding from central

Government in respect of the current COVID-19 pandemic.

Table 9 – Council reserves summary

Provisions

3.3.8 Provisions are amounts set aside by the Council to meet the cost of a future

liability, for which the timing of the payment is uncertain. The amounts

represent the best estimate of that liability where an exact cost is not able to

be determined. In line with the Code of Practice, the provision is charged to

service revenue accounts in the year it is established. When the liability falls

due, the costs are charged directly to the provision. The Council currently

holds two significant provisions:

Insurance - the insurance provision covers a proportion of the total

value of outstanding insurance reserve amounts for which the Council

As at 1st

April 2020

Forecast

movement

in year

Forecast at

31st

March

2021

£'000 £'000 £'000

General Reserves 15,000 15,000

Earmarked Reserves 96,928 10,555 107,483

Ring-fenced Reserve 6,302 (406) 5,896

118,230 10,149 128,379

Forecast at

31st

March

2021

Forecast at

31st

March

2022

Forecast at

31st

March

2023

Forecast at

31st

March

2024

Forecast at

31st

March

2025

£'000 £'000 £'000 £'000 £'000

General Reserves 15,000 15,000 15,000 15,000 15,000

Earmarked Reserves 107,483 88,557 85,213 77,821 77,461

Ring-fenced Reserve 5,896 4,137 4,137 4,137 4,137

128,379 107,694 104,350 96,958 96,598

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estimates that it has a potential liability. The provision as at 31st March

2020 was £6.0m.

Business rates – a provision created for business rates appeals

following the Government’s introduction of the business rates retention

scheme in April 2013. The provision for appeals against the 2010 rating

list is £5.1m. The provision against the 2017 rating list is £6.0m. These

provisions are as at August 2020.

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Part 4: Financial Assurance

4.1 Each year as part of the annual accounts process the Council must

demonstrate that it is a going concern. This means it must show that it is

financially sound in this time of austerity and changing local authority

structures. The Council has an Internal Audit function who continually assess

and review the financial management and control framework to ensure that it

remains fit for purpose. On top of this the Council is scrutinised by Deloitte

LLP, external auditors, who will review and comment on whether the Council

has put in place proper arrangements for securing economy, efficiency and

effectiveness in its use of resources. This is known as the Value for Money

(‘VFM’) conclusion.

Financial resilience

4.2 The Chartered Institute for Public Finance Accountants (‘CIPFA’) published a

paper: ‘Building financial resilience: managing financial stress in local

authorities’ intended to help chief financial officers and their authorities build

financial resilience into all aspects of their planning and operations. It

identifies the warning signs of financial stress, and explains the pillars on

which financial resilience depends.

4.3 CIPFA has outlined the warning signs of financial stress exhibited by local

authorities. The table below shows how the Council is performing against

these warning signs.

4.4 CIPFA has identified four key pillars of financial resilience:

Getting routine financial management right

Benchmarking

Clear plans for delivering savings

Managing reserves

Indicators used in the Index include ‘reserves sustainability measure’, ‘level

of reserves’, ‘change of reserves’ and ‘council tax to net revenue

expenditure’. An explanation of each is provided below.

These measures have indicated that the majority of councils are in a stable

financial position, and are not showing signs of financial failure in spite of

managing severe budget cuts. This is the case for Wakefield Council which

continues to show effective financial management against a challenging

context.

4.5 The Council identifies how it achieves financial resilience via the annual VFM

assessment. This forms part of the annual external audit of the Council’s

accounts. Table 10 below shows the Council’s assessment against the

financial resilience measures in both 2017/18 and 2018/19. An explanation

of each indicator is provided after the table. The 2019/20 assessment will be

available late 2020.

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Table 10 – Financial Resilience Index

Note 1 – ‘Fees and charges to Service Expenditure Ratio’ is deemed to be relatively high risk due to the relatively

low level of fees charged to Wakefield residents compared to Service Expenditure. Work is underway to review

this position.

Note 2 – ‘Growth Above Baseline’ is deemed to be relatively high risk due to the positive level of business rates

growth within the District above the historical baseline position.

Wakefield Council - Financial Resilience Index

2017/18 2018/19 Min Max

Indicator

Reserves sustainability measure 23.42 64.53 2.79 100.00

Level of reserves 38.37% 38.45% 17.65% 72.87%

Change in reserves -11.36% -4.44% -51.85% 43.95%

Interest payable / Net Revenue Requirement 10.29% 4.04% 2.45% 17.90%

Gross external debt (£000) 277,941 294,344 53,774 875,570

Social Care ratio 56.71% 60.81% 45.37% 79.63%

Fees and charges to Service Expenditure Ratio 6.41% 5.43% 5.43% 24.90%

Council Tax requirement / Net Revenue Requirement 54.85% 56.17% 41.59% 63.17%

Growth Above Baseline 11.00% 17.00% 3.00% 17.00%

Unallocated Reserves 6.62% 6.23% 3.72% 12.44%

Earmarked Reserves 31.75% 32.22% 9.70% 64.31%

Change in Unallocated Reserves 50.00% 50.00% -60.50% 58.52%

Change in Earmarked Reserves -18.32% -10.70% -63.30% 66.82%

Change in HRA Reserves n/a n/a -10.31% 293.83%

Children Social Care ratio 22.16% 25.41% 18.06% 41.88%

Adult Social Care ratio 34.55% 35.40% 25.54% 42.21%

Indicators of Financial Stress 2018/19 Higher Risk Lower Risk

Reserves sustainability measure

Level of reserves

Change in reserves

Interest payable / Net Revenue Requirement

Gross external debt (£000)

Social Care ratio

Fees and charges to Service Expenditure Ratio

Council Tax requirement / Net Revenue Requirement

Growth Above Baseline

Unallocated Reserves

Earmarked Reserves

Change in Unallocated Reserves

Change in Earmarked Reserves

Children Social Care ratio

Adult Social Care ratio

2018/19

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CIPFA’s Financial Resilience measures

Primary Measures

1. Reserves Sustainability Measure

Ratio between the current level of reserves and the average change in reserves in

each of the past three years. A negative value (which implies reserves have

increased) or one greater than 100, is recorded as 100.

2. Level of Reserves

Ratio of the current level of reserves (total useable excluding Public Health &

Schools) to the Council’s net revenue expenditure.

3. Change in Reserves

The average % change in reserves (total useable excluding Public Health &

Schools) over the past 3 years.

4. Interest Payable / Net Revenue Expenditure

Ratio of interest payable and net revenue expenditure.

5. Gross External Debt

Compares gross external debt held by the Council.

6. Social Care Ratio

Ratio of total spending on adults and children’s social care to net revenue

expenditure.

7. Fees & Charges to Service Expenditure Ratio

Proportion of fees and charges against the Council’s total service expenditure.

8. Council Tax Requirement / Net Revenue Expenditure

Ratio of council tax to net revenue expenditure

9. Growth Above Baseline

Calculated as the difference between the baseline funding level and retained rates

income over the baseline funding level.

Secondary Measures

1. Unallocated Reserves

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Calculated as the ratio of unallocated reserves to net revenue expenditure.

2. Earmarked Reserves

Calculated as the ratio of earmarked reserves (excluding Public Health & Schools)

to net revenue expenditure.

3. Change in Unallocated Reserves

The average % change in unallocated reserves over the past three years.

4. Change in Earmarked Reserves

The average % change in unallocated reserves over the past three years.

5. Childrens Social Care Ratio

The ratio of spending on childrens social care to net revenue expenditure.

6. Adults Social Care Ratio

The ratio of spending on adults social care to net revenue expenditure

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Return to Contents page

Part 5: Strategies which the MTFS supports

Council vision

5.1 In February 2018, the Council agreed a new overall objective and key

priorities for the Council which reflects the views of residents and other

stakeholders and provides a clear framework for decisions.

To be a caring, ambitious and modern council, creating

healthy places where citizens of all ages thrive, businesses

succeed and visitors enjoy and add to our economy.

5.2 The Council’s vision for the Wakefield District is that people thrive,

businesses succeed and visitors are welcome.

In summary, these are:

Successful businesses

Growing a higher value economy and creating good jobs

Successful people

Reducing inequalities, growing skill levels, enabling a good quality of life

and supporting families

Successful places

Celebrating a unique cultural offer and creating vibrant communities that

are better connected

Successful Council

Ambitious, enterprising, dedicated and efficient in delivering excellent

services

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5.3 The way the Council goes about delivering these priorities is equally

important, and ‘The Wakefield Way’ is a reflection of the principles that

underpin how the Council works. ‘The Wakefield Way’ guides how the

Council provides services, how the Council makes decisions and influences

how the Council improves services.

5.4 The Council has developed a set of key principles that underpin how we

work. These are that we:

Help people help themselves

Are business-minded and socially responsible

Provide a positive customer experience

Tackle poverty

Keep people safe at times of vulnerability

Are forward thinking

Intervene early

Have real impact

Champion good growth

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Part 6: Value for Money and Assurance around Financial Management

6.1 Section 151 of the Local Government Act 1972 requires local authorities to

make arrangements for the proper administration of their financial affairs and

appoint a Chief Financial Officer to have responsibility for those

arrangements. The over-riding duty of the Chief Financial Officer is to fulfil

the statutory responsibilities attached to the position in a manner that

enhances the overall reputation of the Council.

6.2 Pertinent to the current pressures in local government, the Chief Financial

Officer duties have been significantly extended by section 114 of the Local

Government Finance Act 1988 which requires a report to all the Council’s

members to be made, in consultation with the Council’s Monitoring Officer, if

there is, or is likely to be unlawful expenditure or an unbalanced budget.

6.3 The Council has a sound framework for reviewing and challenging financial

performance, has realistic plans in place to make the necessary savings in

the current financial year and is taking the appropriate steps to deliver them.

6.4 The financial management and control framework is subject to a number of

independent assessments, including the Council’s Internal Audit function

which has reviewed and given substantial assurance on the Council’s main

financial processes, the integrity of the accounts and the accuracy of the

main financial systems. The financial management and control framework is

continually being assessed and reviewed to ensure that it remains fit for

purpose. Budget management and monitoring is a continuous process which

operates at a number of levels throughout the Council. Although directors

are ultimately responsible for the delivery of their directorate budget,

operationally these responsibilities are devolved down to budget holders

across the various services.

6.5 The Council’s budget accountability framework clearly articulates roles and

responsibilities and aligns financial accountability within service decision

making. Every budget has a named accountable budget holder, supported

by a finance officer, who is responsible for managing, monitoring and

forecasting income and expenditure against the approved budget.

6.6 The Chief Finance Officer has developed a comprehensive set of Financial

Procedure Rules (‘FPR’) which are part of the Council’s constitution – these

are a key part of the system of financial control and these provide a

framework for managing the Council’s financial affairs. Each FPR is

supported by more detailed guidance and procedures which set out how the

procedure rules will be implemented.

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6.7 There is an annual report to the Council’s Audit and Governance Committee

which provides assurances on the robustness of the financial control

environment.

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Part 7: Strategic & Corporate Asset Management Plan

7.1 The Strategic and Corporate Asset Management Plan (‘SCAMP’) is set in

the wider context on the Council’s strategic priorities and seeks to align and

review the asset base with the Council’s corporate goals and objectives. The

full implementation of the strategy was approved at Cabinet on 10th October

2017. The latest update report on the strategy was presented to Cabinet on

3rd March 2020.

7.2 The SCAMP is an enabler to the Council’s key priorities:

Having assets that are fit for purpose, in locations that support the

delivery of excellent services to the citizens of Wakefield.

Driving additional and more sustainable revenue from the Council’s

existing investment portfolio and creating a new investment portfolio

that generates a legacy of sustainable income.

Where possible, working with key partners across the District to

deliver a “One Wakefield Estate” offer, bringing together a one stop

shop for services.

Ensuring assets align to the Council’s key strategies, economic plan,

and customer experience and support our stakeholder’s expectations.

Contribute to making Wakefield District a place where people thrive,

businesses ‘succeed’ and visitors are welcome.

7.3 The SCAMP provides the framework that will guide the Council’s future

strategic property decisions and ensure there is a consistent way of

managing the Council’s land and assets.

7.4 The Council’s property portfolio is categorised into three components –

operational portfolio, legacy portfolio and investment portfolio.

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Part 8: Treasury Management Strategy

8.1 The Council’s treasury management strategy is intrinsically linked with the

capital strategy and the capital programme. The strategy manages the

Council’s investments, cash flows, banking, money market and capital

market transactions.

8.2 The treasury management budget supports the funding of the Council’s

capital plans. These capital plans provide a guide to the borrowing need,

essentially the longer-term cash flow planning, to ensure that the Council

can meet its capital spending obligations.

8.3 This management of longer-term cash may involve arranging long or short-

term loans, or using longer-term cash flow surpluses. When it is prudent and

economic, any debt previously incurred may be restructured to meet the

Council’s risk or cost objectives.

8.4 In line with the Council’s constitution, Council is required to receive and

approve, as a minimum, three main reports each year;

• Before the start of the financial year, a treasury management budget

report which includes the updated capital programme; the minimum

revenue provision policy statement; how investments and borrowings

are to be organised (including prudential indicators); and an investment

strategy.

• A mid-year treasury management assurance report to update Council

with the progress of the capital position; adherence to the treasury

management strategy and whether any policies require revision.

• At the end of the financial year, a treasury management outturn report

to provide details of actual indicators compared to the estimates within

the strategy

8.5 Further details can be found within the Council’s treasury management

strategy which was approved at Budget Council on 26th February 2020.

8.6 The Treasury Management Report for the year ending 31st March 2020 was

presented to Cabinet on 14th July 2020.

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Part 9: Capital and Investment Strategy

9.1 The capital strategy outlines the Council’s approach to capital investment,

ensuring that it is in line with the Council’s corporate priorities.

The Council’s capital strategy is reviewed on an annual basis to reflect the

changing needs and priorities of the Council including residents, businesses

and places.

9.2 The aim of the capital strategy is to provide a framework within which the

Council’s capital investment plans will be prioritised and delivered. It has

been prepared over three financial years in line with the Council’s MTFS and

will be updated and rolled forward each year.

9.3 The capital strategy is the foundation of proper long-term planning of capital

investment and how it is to be delivered.

9.4 The strategy’s principal objective is to deliver an affordable programme that

is consistent with the Council’s priorities and objectives. This strategy is

intended to be used by all stakeholders to show how the Council prioritises

and makes decisions on capital investment and how this investment

supports the Council’s priorities and ambitions.

The key principles of the capital strategy are:

• To deliver an affordable capital programme over the full life cycle of all

projects.

The capital programme approved at Council on 26th February 2020

included £122m investment in 2020/21 with £78m and £44m in 2021/22

and 2022/23 respectively funded through a mixture of prudential

borrowing £148m; Government grants £83m; other grants and

contributions £15m; and capital receipts £5m. The programme has

subsequently been updated to take account of slippage from 2019/20,

the rephasing of existing schemes and the injection of new projects.

The revised programme was reported to Cabinet in September 2020.

• To deliver a strategy/ capital programme that is consistent with the

Council’s medium-term MTFS.

• To help to achieve the Council’s objectives and that capital investment

decisions are made with reference to Council priorities.

• That decisions on the financing of the capital programme are taken with

consideration to the impact on the revenue budget, the treasury

management strategy and the investment strategy.

• That capital projects follow a rigorous appraisal process considering

evidence of need, cost, risks and outcome assessment.

• That in respect to the financing of the capital programme, the Chief

Finance Officer will ensure that the Council will maximise the freedom

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and flexibility afforded by the removal of ring-fencing from most funding

allocations to facilitate the achievement of the Council’s objectives.

• That the Chief Finance Officer will consider and review the use of

capital receipts, specific and non-specific funding and prudential

borrowing to finance capital schemes to maximise the benefits to the

Council and achieve the Council’s objectives.

• Non ring-fenced capital funding and other non-specific capital

resources that are not required to support existing commitments will

initially be pooled. However, regard will be given and grants will be

pass-ported in full to the transport agenda and social care funding

arising from the better care fund pooled arrangements.

• Capital receipts will not be ring-fenced to specific projects unless the

use of the receipt is governed by legislation or by a specific agreement.

• To develop partnerships with third sector providers.

• To pursue all available external funding where there is direct

compatibility with the Council’s priorities.

Capital Receipts

9.5 A schedule of asset disposals is managed by the Council. Any capital

receipts realised in the financial year may be used to support the in-year

capital programme.

9.6 Statutory guidance on the flexible use of capital receipts also allows the

Council to use in-year receipts to fund qualifying expenditure. This flexibility

will end in 2021/22.

9.7 The 2020/21 revenue forecasts include £1m of capital receipts to finance this

type of expenditure.

9.8 Current forecasts (as reported Cabinet in October 2020) are that £7.6m of

capital receipts will be generated in the 2020/21 financial year. Any unused

capital receipts will fall into the receipts reserve in March 2021. The current

forecast is for the balance of capital receipts in this reserve to be £9.1m by

March 2021. Capital receipts of £14.6m; £12.2m; £8.1m; and £5.0m are

forecast in financial years 2021/22, 2022/23, 2023/24 and 2024/25

respectively.

9.9 For capital expenditure incurred after 1st April 2016, capital receipts will be

set aside to repay debt and to fund Public Finance Initiative (‘PFI’) liabilities

in the year. The value of the Minimum Revenue Provision (‘MRP’) which

would otherwise have been set aside will be reduced by the amounts which

have instead been paid from capital receipts.

9.10 Where capital expenditure is incurred on an investment property, MRP is not

applied where there is a realistic expectation that an asset purchased will be

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sold in the future and the capital receipts from that sale will be set aside to

enable repayment of the borrowing associated with the asset.

9.11 The capital and investment strategy was approved at Budget Council on 26th

February 2020.

Flexible use of capital receipts strategy

9.12 In September 2016 Council approved a flexible use of capital receipts

strategy for 2016/17 and to continue to use capital receipts to fund eligible

revenue spend in 2017/18 and 2018/19. This flexibility was initially being

offered to the sector for the three financial years 2016/17 to 2018/19, but this

has now been extended for a further 3 years as part of the final settlement.

Qualifying expenditure is spend on any project that is designed to generate

ongoing revenue savings in the delivery of public services and/or transform

service delivery to reduce costs and/or transform service delivery in a way

that reduces costs or demand for services in future years for any of the

public sector delivery partners. In line with the extension, continuation of this

strategy in 2019/20 is assumed within the proposed Budget.

9.13 Local authorities are given the power to use capital receipts from the

disposal of property, plant and equipment assets received in the years in

which this flexibility is offered, to spend up to 100% of their fixed asset

receipts (excluding right to buy receipts) on the revenue costs of reform

projects. Local authorities may not use their existing stock of capital receipts

to finance the revenue costs of reform.

9.14 The actual level of use of capital receipts will be determined within the

Council’s overall financial strategies and will be limited to the value of eligible

capital receipts and spend each year. The impact on the prudential

indicators will be reported through the regular treasury management reports.

The table below sets out costs and savings under the strategy.

Table 11 - Flexible use of capital receipts – costs and savings

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2016/17 2017/18 2018/19 2019/20 2020/21 Total

Actual Actual Actual Estimated Estimated

£m £m £m £m £m £m

Severance Costs (including Redundancy & Pension Strain) 3.6 2.0 2.2 1.0 1.0 9.8

Property & Facilities Management Services transformation - 1.1 - - 1.1

Total Costs 3.6 3.1 2.2 1.0 1.0 10.9

Estimate of savings achieved

Staffing savings (over a 5 year period) (19.3) (8.1) (8.8) (5.1) tbc (41.3)

Property & Facilities Management Costs (10 year period) - (10.0) - - - (10.0)

Total Savings (19.3) (18.1) (8.8) (5.1) - (51.3)

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Part 10: Linked Strategies

Corporate procurement strategy

10.1 This procurement strategy outlines the overarching procurement initiatives to

be rolled out across the Council by March 2020. The initiatives will transform

the Councils approach to procurement and include:

• Embedding social value in to the Council’s procurement procedures

Social value is the positive impact an organisation has further to the

activities it carries out. These can be economic, social and

environmental impacts. The Council recognises that Social Value can

significantly help it in meeting its priorities and aspirations for the

District by reducing poverty through supporting good jobs, better

incomes and wellbeing, increased skill levels, higher value economy,

higher productivity levels, a great place and cultural offer.

• A new approach to category management

The Council has changed the way it manages its procurements by

categorising its areas of spend into Successful Businesses, Places and

People. This realignment will ensure the Council has the right level of

resource in place to deliver an efficient and effective service to

residents and businesses.

• Agile procurement

To deliver an agile service the Council will develop new easy to use

procurement toolkits, become early adopters of new IT systems and

have input to the development of the future tender portal which the

Council will use.

10.2 The procurement strategy is one of the underpinning strategies that supports

the Council’s priorities. The updated procurement strategy will be presented

to Cabinet on 13th October 2020.

Technology strategy

10.3 The technology strategy is one of the key enabling strategies supporting the

Council’s priorities. The initiatives within the strategy will help transform the

Council’s approach to technology, supporting the creation of a more forward

thinking Council with the right tools.

10.4 The technology strategy will support the delivery of the customer experience

strategy, and the Council’s desire to improve the digital offer to the public.

The strategy will:

Be driven by customer and business needs

Be design driven using intelligence

Be consistent, not uniform

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Keep information compliant, safe and secure

Help people to help themselves

The technology strategy was approved at Cabinet in April 2019. A further

update was presented to Cabinet on 15th September 2020.

People strategy

10.5 The people strategy encourages the adoption of integrated service delivery,

embedding the ‘One Council’ approach in service delivery, locality based

working, co-location and embracing digitisation.

The strategy sets out six strategic aims, focussed around the employee

journey - employer reputation; recruitment; induction; lifelong learning;

retention; and new beginnings.

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Part 11: Conclusion

11.1 The review of the MTFS has been undertaken against a background of

significant reductions and changes in grant funding and increasing costs due

to service pressures. These factors could jeopardise the Council’s sustainable

financial position unless budget savings continue to be delivered alongside

the delivery of the Council’s corporate priorities.

11.2 The forecast budget position for the Council shows an ongoing challenge,

where our financial resources are currently not enough to meet the budget

requirement to deliver our current service provision. There remains a gap of

£57.2m over the period from 2021/22 to 2024/25.

11.3 The period covered by this MTFS will continue to present the Council with

some of the most significant operational and financial challenges ever

experienced by those leading and managing the delivery of local services.

Managing our money well is now more important than it has ever been.

11.4 The Council will continue to keep the MTFS under review given the high

degree of uncertainty surrounding the potential impact of central Government

policy and Government funding reforms in relation to local government.

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