Medium Term Financial Strategy 2023-24
8. Financial and business strategy
8. Financial and business strategy
- 8.1. The following outlines in more detail the key themes of the financial and business strategy that should be prioritised over the short to medium term to reduce the forecast deficit. Each of the themes should not be seen in isolation and where applicable should support other themes in the overall delivery:
8.2. Strategic asset management
- The Council owns a significant portfolio of assets across the borough and it must ensure that it is utilising its significant asset base in the most efficient way and managed via the asset management plan. Taking into account the return that the Council generates from its assets and recognising which assets should be disposed of to generate either capital receipts or reduce inefficiencies.
- 8.3. Regular review of all the Council's asset holdings in line with the asset management plan and the councils priorities with a view to adding value to strategic assets. The key aim is to identify the most efficient way to utilise the Council's assets and maximise the benefit that the Council receives from them. For example the work on the building rationalisation project will see changes to the use of the buildings and disposal of the Greyfriars. Delivery of this theme is informed by the Asset Management Strategy and will also cover opportunities to grow the asset base and demonstrate linkages with external funding opportunities and grants. Further work on this will be prioritised to address in year reductions against the budgeted income from some of the property assets.
8.4. Economic and housing growth
- Income from homes and businesses within the borough continues to provide an essential source of income to fund the provision of local services. This will be even more essential from future reforms of local government funding. A key aim must be to maximise income from housing and business rates through enabling growth and retaining existing baselines. The Council already has mechanisms in place to support the priority to maximise housing growth, both within its own stock through the Housing Revenue Account and the wider delivery of homes through its companies, Equinox Enterprises Ltd and Equinox Property Holdings. Optimising the Council tax base will maximise Council Tax income. This could be through growth in property numbers, increased collection, and regular review of discounts as well as through proactive work to ensure that all eligible council tax properties are identified.
- 8.5. Property investment and commercialisation - This theme is closely linked to the strategic Asset management priority, but also seeks to identify other external opportunities for investment in properties to achieve either an income stream or improved returns on investment. These would not necessarily be for investment purposes alone but seeks to regenerate areas which may require up front regeneration funding interventions, with a wider opportunity and growth potential. Opportunities could be indirect through treasury management property investments or direct delivery by the Council or through an appropriate vehicle. These could support, for example, regeneration within the Borough to deliver growth and linkages to the economic growth theme as detailed above. Any direct investment would be subject to a business case, considering all risks and the full revenue implications (including borrowing costs). Currently these opportunities are identified as part of the current asset management plan or proposals taken forward by the appropriate decision making process.
8.6. Technological investment
- Improvements to the delivery of services through the use of technology. The digital strategy contains three strategic aims - Digital Services, Digital Communities and Digital Workforce which are supported by the objectives:
- A. To make our service provision more efficient via automation, reducing duplication of effort and reducing manual intervention.
- B. To increase the quality of our service, by increasing speed, reliability, and consistency.
- C. Increase data sharing across services
- D. Create a single view of residents, land, and property
- E. To promote Great Yarmouth as a great place to live, work, do business and visit.
- F. To improve the accessibility and availability of our services.
- G. To provide up to date always available information online for our customers
- H. To have a workforce that has the right information, equipment, systems, training, and confidence to do their job in a digital workplace.
- 8.7. This is an area that needs to be accelerated to deliver efficiencies and tangible savings from investments in technology. Since the pandemic there has been a change in the some of the ways of working for example, working in an agile way will facilitate the rationalisation of office accommodation to deliver savings, possible through the use of on line meetings use of teams. This is a very small element of digital improvement and there are greater opportunities available from investment in technology that will maintain and improve service provision to customers at the same time as delivering savings, this is therefore an area of focus for the MTFS in terms mitigating future funding gaps.
- 8.8. Partnerships
- Creating efficiencies through collaborative working with others. Identifying opportunities must continue at a local level with partners and other organisations, ensuring that realistic and deliverable benefits are achieved including opportunities for shared services with others. In addition, strengthening approaches to working with communities and partners in the voluntary sector to:
- drive better outcomes for local residents
- reduce avoidable demand on council services
- secure investment to drive new partnerships with partners and communities to deliver corporate ambitions
- make better use of council assets and resources to offer greater social value to local communities and to develop a partnership approach with public sector partners to working with communities across the borough
8.9. Great Yarmouth Borough Council operating model
- Ensuring the Council provides services in the most effective and efficient way, ensuring value for money and the ability to challenge where necessary. The following along with the MTFS are key to this:
- Organisational Development Strategy
- Digital Strategy
- Procurement and contract management.
8.10. Savings and additional income
- Each year savings and income proposals are considered as part of the budget process, these are presented for approval alongside the budget. Outside of the budget process these opportunities should continue to be identified. The full detailed proposals for 2024/25 are currently under consideration by a cross party Member working group with a view to these being brought forward ahead of the budget report to allow implementation ahead of April 2024. This work will be finalised in the coming months ahead of consideration by Cabinet and Scrutiny as part of the budget reports.
8.11. Sustainability Strategy
- As part of the council's sustainability agenda, this should be seen as a priority to support the delivery of a balanced budget. For example, through more efficient use of assets and resources that is aligned to the longer-term sustainability ambitions.
8.12. Use of reserves and invest to save
- Use of reserves to balance the budget only provides a short-term solution as the funds can only be used once. Reserves can however be used to smooth the impact of reductions and fluctuations in funding over the short to medium term and to allow for planning and implementing projects and work streams that will deliver a longer-term financial benefit through reduced costs or additional income. As part of the reserves section of the document it has been flagged that there will be a requirement to use reserves to mitigate the impact to the general fund in the short term to produce a balanced budget due to the increased inflationary pressures and uncertainties around local government funding.
- 8.13. Proposals for the use of reserves to fund upfront costs can also be considered for business cases that will seek to deliver savings and /or additional income in the longer term.
- 8.14. There are a number of workstreams and priorities that are currently underway that are at different stages which could have a positive impact on the overall financial position. In the medium to longer term these have the potential to generate revenue streams to the Council, through increased business rates growth and rental opportunities, in addition to asset disposals that through the generation of capital receipts would enable a revised approach to the financing of the capital programme to minimise future increases to MRP for the financing of the capital programme. These include the Operations and Maintenance facility and the potential for rental streams through future site occupancy, land asset disposals for future housing provision in addition to taking the opportunity review council tax discounts that have been identified nationally for review including second homes. The timescales of these to deliver a financial benefit to the council will not be until 2024/25 at the earliest, with some not due until 2025/26 or later.
- 8.15. Whilst these provide longer term opportunities, there needs to be further proposals for savings and additional income in the short term to mitigate the forecast funding gaps.
- 8.16. The continued unknowns on the future local government funding and the current economic uncertainty present a significant challenge to the sector as a whole when faced with financial planning for the medium to long term. There is still work to be completed over the coming months as the detail for the 2024/25 budgets are pulled together, this includes the following:
- Budget challenge - to include review of current spend commitments and vacant posts
- Collation of savings and income proposals
- Fees and charges 2024/25
- Capital bids 2024/25
- Critical reserves review to identify available reserve for one off use and re-allocation above those identified already at Section 6.
- 8.17. The following provides a high level summary of the forecast funding gap allowing for target savings/additional income and potential future opportunities:
High level summary of forecast funding gap for savings/additional income £000 2023/24 2024/25 2025/26 2026/27 Forecast Grap 1,445 2,514 3,282 4,100 Savings / Income to be identified 24/25 n/a (2,000) (2,000) (2,000) Savings / income to be identified 25/26 n/a n/a (1,000) (1,000) Savings / income to be identified 26/27 n/a n/a n/a (1,000) Cumulative Gap before use of reserves 514 282 100 Use of earmarked / general reserves 514 796 896
The updated position above is prior to the detailed work on the budget for 2024/25 being completed, which is currently in progress to be presented to Members in January/February. Work is continuing with services to identify further options to reduce the forecast gap in the short to medium term.