13 – Medium Term Financial Plan

Medium Term Financial Plan – 2018/19

In accordance with the Council’s Financial Regulations, this Medium Term Financial Plan sets out the financial projections, considerations, pressures and issues for the Council over the next five years. Each year the Plan will be updated, taking into consideration any new issues emerging and the continual alignment of funding with priorities determined by Council through its Corporate Strategy and Business Plan. The forecasts are linked with the Council’s Treasury Management Policy.

The objectives of the Plan are:
• To enable the Council to allocate resources to achieve its priorities
• To enable the Council to understand its key financial pressures and likely long term implications
of its decisions
• To identify future financial impacts of both policy decisions and external factors so that risks can
be managed
• To control precept rises and identify external funding.
• Support the delivery of value for money services
• To ensure good use is made of assets
• To maintain the General Reserve at or above the desired level.
• To provide for future financial demands
• To facilitate good financial management

The Medium Term financial position will be dominated by the priorities in Council’s Corporate Strategy which in turn takes account of the Newmarket Vision and the emerging Neighbourhood Plan, and public engagement. As development takes place in accordance with the emerging West Suffolk Local Plan, the Council Tax base will increase steadily which will in effect provide for increased Precept without increasing the charge unacceptably on individual homes.

Localism and austerity have been placing more emphasis on local communities helping themselves and raising more physical and financial resources locally. The Localism Act 2011, has given a wider role and increased powers to local councils, a number of which will require additional local funding. Government grant reductions for the principal authority will undoubtedly result in local service reductions which the Town Council may feel obliged to take up. The effects of the new Government in June 2017 and the EU referendum the previous year, on local government are as yet uncertain.

The Town Council’s Risk Assessment Process identifies risks associated with:
• Any inaccuracies in the forecast
• Difficulty in predicting costs for new projects
• Difficulty in predicting amount of additional income
• Low and uncertain investment income

The following guidelines are at the Core of the Plan:
• Maximise external funding opportunities in all areas
• Maximise the benefits of partnership working
• Review income opportunities
• Join with others when possible for procurement
• Maximise efficiencies to keep costs down

A central tenet of this plan is the introduction of annual contributions to a Rolling Capital programme. This will allow a flexible fund to be used on both internal capital items such as IT equipment or outside provisions such as play equipment or High Street regeneration. An indication of how it may build up, (with no call on it in early years) is shown in the table below. It is suggested that annual contributions commence from 2019/2020.

A council’s budget consists of two distinct elements, namely:
a. A Revenue element, incorporating the necessary funds to run the ongoing services to which the council is committed, and
b. A Capital element which must be sufficient to provide the level of resources necessary to maintain, and where necessary enhance, the council’s Capital Asset stock.

The first element is, by definition, relatively constant, being affected only by inflation and agreed changes in the level of service provision. It is likely however that this element will see significant increases in the future as principal authorities devolve services to Local Councils.

Capital budgeting, by contrast, can be subject to large movements in requirements as projects are identified and approved. Additionally, if projects are individually identified and budgeted for in a particular year, this can lead to protracted discussions as to which projects to include and which to leave out. The inherent fluctuations in Precept are regrettable, and to be avoided if at all possible.

Smoothing the effects of Capital
An increasingly common process for eliminating these Precept movements is for Local Councils to take a much longer view of their capital requirements, say over a five year rolling cycle.

This is achieved by budgeting on a Rolling Capital Fund basis. The medium-term requirement is equalised over the same medium term and included annually in the Precept calculation. No individual projects are actually included in the initial annual estimates, only the Rolling Fund requirement. On a continuous basis council then considers, approves and/or rejects individual projects as they are identified, justified and costed. The approval and timing of such projects can then be made based on priorities at the time of consideration, and also the availability of funds from the (known) source of capital funds flowing from the precept.

It follows from this concept that projects are only included in the council’s budget once approved and, since the source of funds is identified and agreed at the time of project approval, the use of such (previously earmarked) funds, together with any external funding that may be available, is also reflected as a credit budget and thus any effect on the council’s General Reserve (i.e. the Annual Surplus/Deficit) is entirely eliminated.

The likely increase for 2018/19 will be about predicted inflation, despite needing to redress the inadequate budget provision for the current year, to build up after a number of one of “realignment costs” and to commence funding the Corporate Strategy. An objective has been to contain precept rises

The following assumptions within inflation limits wherever possible have been made in preparing this Forecast:
• Fixed costs over which the Council have little control such as office costs are increased in line with inflation (currently very low) or actual predicted cost.
• Demand for grants from community organisations are likely to increase, as other funding reduces and needs increase. Partnership working is an important part of the Council’s strategy.
• The Precept Support grant has been discontinued by FHDC, which has resulted in an increase In precept in future years.
• DCLG will not cap precept rises for 2018/19, although they did consult over capping for the current year and it cannot be ruled out for the future.
• There is little prospect of support grant directly from Government or a share in increased business rates for the Town coming to the Town Council although NALC are currently lobbying hard for this to happen.
• Local funding opportunities will continue at a similar level, but we will continue to strive for grants and sponsorship.
• Staffing cost increases will be constrained but in line with national pay awards, likely to be 1% for the next 2 years, however there is pressure to ease this. Recognition of workload, level
of responsibility and local market pressures have been taken into account prior to the 2018/19 budget being set.
• A further provision has been made for 2018/19 to complete the Neighbourhood Plan, net of anticipated grant funding. It is important to develop a spending plan for this project.
• FHDC has not yet agreed a CIL policy but it is hoped that some benefit will be derived by the Town Council in due course. The share due to the Town Council would increase from 15% to 25% if it adopted a Neighbourhood Plan. No income has been included as it is far from certain.
• Increases in expenditure will inevitably necessitate appropriate increases in the General. Reserve and a minimum level is included. There is currently a surplus in this reserve, £5k of
which is earmarked to start off the Rolling Capital Reserve.
• There will be additional income from the Venues, as their use is developed and promoted and that some of this could be used for staff overtime payments or casual staff as needed for
events. The likely increased income has not been quantified.
• There is a need for the Council to borrow to part fund long term projects. It is believed there is adequate flexibility in provisions to accommodate such eventuality as well as scope for above inflation precept increases.
• The next Town Guide will remain self-funding.
• Support for “Legends of the Turf” and a heritage trail will come from the Rolling Capital fund.(RCF)
• Support for a Town Museum will come from community grants or RCF.
• Provision is made for funding a PCSO from October 2018.
• The Council’s contribution for Town Centre regeneration will come from the £13.2k EMR & RCF.
• Funding for additional open space would come from CIL or s106 contributions with commuted sums for maintenance.
• There will be an unquantified saving from electronic agendas and papers.
• Venues development and improvement will come from RCF.
• Refurbishment of the Jubilee clock will come from the existing EMR.
• New bus shelters would come from RCF.

To be Approved by Council 24th September 2018

EXPENDITURE		BUDGET	BUDGET	BUDGET	BUDGET	BUDGET
F&P Insurance	12,041	12,000	12,180	12,485	12,797	13,117
F&P Legal Expenses	7,752	8,000	8,120	8,323	8,531	8,744
F&P Grants	5,320	8,000	8,120	8,323	8,531	8,744
F&P PCSO	0	32,000	34,000	34,850	35,721	36,614
F&P – PWLB Loan Repayments	33,995	0	0	0	0	0
F&P – Other Expenditure	86,208	45,875	46,562	47,726	48,919	50,142
F&P EXPENDITURE	145,316	105,875	108,982	111,707	114,499	117,362
LS PWLB Loan Repayments	33,995	68,000	88,919	91,142	93,421	95,756
LS Memorial Hall R&M	10,075	11,000	11,000	11,275	11,557	11,846
LS Memorial Hall Costs	29,806	27,450	27,999	28,699	29,416	30,152
LS Arts and Entertainment	23,493	22,450	26,532	27,195	27,875	28,572
LS Memorial Gardens	24,073	64,500	44,195	45,300	46,432	47,593
LS Cultural Exchange	3,500	3,500	3,500	3,588	3,677	3,769
LS Severals Facilities	16,158	11,950	12,129	12,432	12,743	13,062
LS EXPENDITURE	141,100	208,850	214,274	219,631	225,122	230,750
HR –  EXPENDITURE	134,885	165,465	167,800	171,995	176,295	180,702
D&P – EXPENDITURE	6,038	8,000	2,000	2,050	2,101	2,154
CS Outside Services SLA	58,138	67,515	68,500	70,213	71,968	73,767
CS Town Planting	11,993	10,050	10,050	10,301	10,559	10,823
CS – Cemetery R&M	19,742	9,000	9,135	9,363	9,597	9,837
CS Gravedigging	11,110	13,000	13,195	13,525	13,863	14,210
CS Cemetery SLA	8,880	8,880	9,031	9,257	9,488	9,725
CS Streetlighting	10,000	10,000	10,000	10,250	10,506	10,769
CS Christmas Lights	28,034	18,000	19,000	19,475	19,962	20,461
CS Other Expenditure	40,913	61,498	52,867	54,189	55,543	56,932
CS EXPENDITURE	188,810	197,943	191,778	196,572	201,487	206,524
TOTAL EXPENDITURE	616,149	686,133	684,834	701,955	719,504	737,491
INCOME
F&P-Precept	534,650	550,174	564,779	579,684	595,138	611,014
F&P – Other Income	1,636	250	254	260	267	274
F&P INCOME	536,286	550,424	565,033	579,944	595,405	611,288
LS Hall Hire Income	43,140	41,000	41,820	42,866	43,937	45,036
LS Severals Hire	8,293	8,000	8,120	8,323	8,531	8,744
LS Other Income	15,575	12,055	12,222	12,528	12,841	13,162
LS INCOME	67,008	61,055	62,162	63,716	65,309	66,942
HR INCOME				0	0	0
D&P INCOME				0	0	0
CS Cemetery Income	57,909	58,250	59,124	60,602	62,117	63,670
CS Other Income	34,847	16,395	17,540	17,979	18,428	18,889
CS INCOME	92,756	74,645	76,664	78,581	80,545	82,559
TOTAL INCOME	696,050	686,124	703,859	722,241	741,259	760,788
Income / Expenditure	79,901	-9	19,025	20,286	21,755	23,297
Change in Precept	16,024	15,524	14,605	14,905	15,454	15,876
	-0.58	2.90	2.65	2.64	2.67	2.67
Minimum General Reserve	85,813	102,920	102,725	105,293	107,926	110,624
Rolling Capital and EMRs	309,760	162,557	181,582	201,868	223,623	246,920
Total Equity	395,573	265,477	284,307	307,161	331,549	357,544