5 Year Medium Term Financial Plan 2024-25 to 2028-29
North Lanarkshire Council · 8 June 2023
Back to Policy and Strategy Committee — 8 June 2023 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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North Lanarkshire Council Report Policy and Strategy Committee Does this report require to be approved? ☒ Yes ☐ No Ref EK/KS/VR Date 08/06/23 5 Year Medium Term Financial Plan 2024/25 to 2028/29 From Elaine Kemp, Chief Officer (Finance) E-mail kempe@northlan.gov.uk Telephone 07939 280601 Executive Summary This report provides an interim update on the five-year financial forecast. It outlines the challenges faced by the Council in maintaining medium term financial stability, whilst achieving the strategic priorities of the Council. Taking the approved 2023/24 budget as the new baseline, this plan updates financial planning assumptions focussing on those factors which have the greatest potential to impact the Council’s forecast financial position in the medium term. This includes future revenue grant funding, pay and non-pay inflation. A range of risk-based scenarios have been considered, resulting in envisaged, pessimistic and optimistic positions, as set out in Appendices 1 to 3. Whilst the envisaged scenario remains the most appropriate for planning purposes, it is important to note the budget gap range, reflecting other potential scenarios the Council may face. Table 1 below includes the optimistic and pessimistic scenarios and demonstrates the volatility and the extent of the fluctuation possible over the period of this plan. The summary forecast Council envisaged position, indicates a budget gap of £108.138 million over the planning period and £63.878 million for the three-year budget period, 2024/25 to 2026/27. Reflecting the other planning scenarios, the budget gap is estimated to range between £54.426 million and £231.261 million over the five-year period, and £32.582 million and £135.763 million over three years. Financial Year Budget Gap Optimistic (£000) Budget Gap Envisaged (£000) Budget Gap Pessimistic (£000) 2024/25 20,537 30,458 54,263 2025/26 3,995 14,660 38,154 2026/27 8,050 18,760 43,346 2027/28 12,292 23,320 48,458 2028/29 9,552 20,940 47,040 Total 54,426 108,138 231,261 3 Year Gap 32,582 63,878 135,763 General Fund Table 1
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Background 1.1. Longer term planning is integral to the Council’s Financial Strategy and the strategic approach to budgeting. The key principles and framework of the approved Revenue Resources Budget Strategy underpin the financial plan and facilitate a robust and strategic approach to financial planning. Effective decision making relies on robust financial planning and the Medium Term Financial Plan (MTFP) assists in ensuring resources are aligned to the key priorities outlined in The Plan for North Lanarkshire and that the Programme of Work is affordable and sustainable. Elected Members require robust information to support decision making to ensure medium term financial sustainability for the Council. The MTFP reflects the financial risks that may impact on the Council’s ability to continue to provide high quality services focussing on the strategic priorities, whilst balancing the budget. 1.2. This plan continues to consider a range of scenarios and highlights the associated forecast budget position. Taking the 2023/24 approved budget position as the new baseline, updates to financial planning assumptions, mainly in relation to future funding and increased cost pressures arising from pay and non-pay inflation, are reflected in this plan. A range of risk-based outcomes are modelled highlighting optimistic, envisaged and pessimistic scenarios. In previous years, the two main variables with the greatest potential to impact financial plans and the Council’s ability to set a balanced budget have been the level of funding provided by the Scottish Government and pay inflation. However, with more recent material adverse impacts of non-pay inflation and rising energy costs, this plan continues to recognise the risks and volatility, to forecast the potential financial implications. Therefore, whilst the envisaged scenario remains In line with the principles of the Revenue Resources Budget Strategy, the Council will work towards finding solutions to address the potential budget gap and ensure its statutory obligation to set balanced budgets are met. As outlined at 2.29 part of the solution may include a £4.500 million saving arising from a review of the PPP affordability model, which will reduce the 2024/25 gap to £25.958m, and the five year gap to £103.638 million (£59.378 million over the three year budget period), prior to any consideration of Council Tax increases, additional savings actions or other potential solutions to manage the budget gaps. Recommendations It is recommended that the Policy Strategy Committee: (1) Acknowledges the updated Medium Term Financial Plan 2024/25 to 2028/29. (2) Acknowledges that this plan will be subject to ongoing review with an update reported to the Policy and Strategy Committee in September 2023. (3) Recognises, as per paragraph 2.31, engagement with elected members is required to ensure options to address the budget gap in each financial year are identified, to enable the Council to set a balanced budget. (4) Approves the PPP affordability review saving identified at paragraph 2.29. The Plan for North Lanarkshire Priority All priorities Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning
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the most appropriate for planning purposes, it is important to note the budget gap range, reflecting the other potential scenarios the Council may face. The envisaged, pessimistic and optimistic scenarios are shown in Appendices 1, 2 and 3, respectively, demonstrating the volatility and the extent of the fluctuation possible over the period of this plan. 1.3. The Scottish Government published its Resource Spending Review in May 2022, which set out high level parameters for future Scottish budgets up to 2026/27. This identified a flat lining of resource funding for Local Government at 2022/23 levels, over the next three financial years, with a small increase forecast in 2026/27. However, the 2023/24 Scottish Budget provided some additional resources for local government on top of funding for additional responsibilities and policy commitments. This plan continues to assume a flat lining of funding resource, as indicated in Scottish Government’s Resource Spending Review 2022. It is, however, anticipated that an updated Resources Spending Review will be published in May 2023. 1.4. In addition, the Scottish Government’s commitment to establishing a National Care Service has resulted in further financial uncertainty in respect of Adult Social Care services and local government as a whole. Continuing the approach taken in 2023/24, it has been agreed through collaborative working that financial pressures facing adult social care services provided to the IJB will be managed by the IJB through use of reserves or implementation of savings where necessary. Therefore, the Council’s MTFP continues to exclude any potential future financial impacts of providing Adult Social Care Services in the overall Council financial planning position. Members should, however, note that finance teams across both the Council and IJB will continue to work closely to monitor this position. 1.5 It is considered that a five year medium term plan remains reasonable and appropriate for financial planning purposes. 1. Report 2.1 The previous MTFP approved by this Committee in September 2022 indicated a three year gap for the period 2024/25 to 2026/27 of £53.800 million (2024/25, £20.620 million, 2025/26 £16.300 million and 2026/27 £16.880 million). This plan is updated for the approved 2023/24 budget decisions along with other relevant key changes, recognising the impact these may have on the demand for services, resources, and other cost pressures. 2.2 Appendices 1 to 3 provide summaries for three planning scenarios across the five year planning period, highlighting the anticipated budget gap for the three year budget period 2024/25 to 2026/27. Whilst three planning scenarios have been presented reflecting sensitivities and volatility in forecasting, the remainder of this report primarily focuses on assumptions in relation to the envisaged scenario. These are contained within sections 3 and 4 below, with a summary of the movements since the previous plan provided at Appendix 4. Forecast Resources 2.3 The largest element of the Scottish Budget is the Scottish Block Grant provided by the UK Government through the Barnett formula. The UK Spending Review is the process by which the UK Government sets out its plans for public spending. This provides vital information for the Scottish Government’s planning assumptions and budget. The UK Autumn Statement 2022 was published in November 2022 when inflation had recached its highest level since 1981, the statement announced £1.5bn of additional funding for
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the Scottish Budget. However, the Spring Statement in March 2023 provided an update on the economy, OBR forecasts and progress since the Autumn budget, highlighting an overall expected fall in inflation over the medium term. The next spending review is anticipated in the Autumn. Therefore, it should be noted that there is the potential for adjustments to both UK and Scottish Government budgets, potentially impacting this plan. 2.4 As outlined in 1.3 above, whilst the Scottish Government’s Resources Spending Review indicates flat cash settlements for Local Government for 2024/25 and 2025/26, with a minor increase in 2026/27, there is insufficient detail to give clarity and certainty over funding at individual Council level and whether this funding will come with additional spending commitments. In addition, other variables and uncertainties may impact on this position including the Scottish Government’s commitment to support priority areas such as health, care, education and children, with the potential to impact on funding levels for Local Government. Aggregate External Finance (AEF) 2.5 The Council’s revenue funding consists largely of government funding, Aggregate External Finance (AEF), which equates to approximately 81% of the total funding, and is made up of General Revenue Grant, Specific Grant and Non Domestic Rates Income, based on the Scottish Government’s assessment of overall spending needs. 2.6 As previously noted, estimating future years’ funding with any degree of certainty is challenging, and a slight variation on funding level can have a significant impact on the Council’s forecast financial position (1% equates to c. £8.000 million). 2.7 All three scenarios have been re-baselined to reflect the 2023/24 AEF as reported in the approved 2023/24 budget. The envisaged scenario assumes no movement in the re-baselined 2023/24 core grant for the duration of this plan i.e. flat cash, as indicated in the Scottish Government’s Resource Spending Review. The optimistic and pessimistic scenarios have been flexed to 1% increase/decrease respectively. Council Tax 2.8 Income from Council Tax accounts for around 17% of the Council’s revenue resources with the estimated income based on a combination of Band D equivalent value, householder base and the expected rate of collection. 2.9 In setting the 2023/24 budget, the Council approved a 5% increase increasing a Band D charge to £1,320.78. 2.10 This plan continues to reflect increased Council Tax income from growth in the number of households. However, it should be noted the Community Investment Fund is made up of funding from ring-fencing future growth in Council Tax income from regeneration activities and the Council’s ambition, along with 1% of future increases in Council Tax charges. Therefore, this plan continues to reflect the commitment to increase Council Tax by 1% to support the Community Investment Programme. This provides £9.110 million of additional resources over the five year planning period and £5.310 million over the 3 year budget period. Further increases in Council Tax rates will be a decision for Elected Members and will be considered as part of the budget setting process. Sales, Fees and Charges
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2.11 One of the key principles of the Revenue Resources Budget Strategy is that future charging models for services will be informed by benchmarking and the principles of full cost recovery where appropriate. To assist with moving towards full cost recovery and in recognition of inflationary impacts affecting costs for services, the plan assumes additional income generation for discretionary sales, fees and charges of £0.500 million in 2024/25, uplifted by 3% each subsequent year. The optimistic and pessimistic scenarios assume a slightly adjusted base for 2024/25 of £0.750 million in 2024/25 and £0.250 million, respectively. 2.12 As previously advised a Sales, Fees and Charges policy is under development to assist in setting appropriate charges for services provided. This policy will be informed by a review by Services to analyse discretionary fees and charges and the extent to which full cost recovery is being achieved. The output of this review will be reported to the next meeting of this Committee, together with a recommended policy in respect of future fee uplifts and will inform income generation forecasts to be reflected in future iterations of this plan. Use of Reserves / Resources 2.13 The Revenue Resources Budget Strategy allows for prudent and controlled use of balances, with the Change Management Fund supporting the one-off costs of approved budget savings. In recent years, and in line with the Reserves Policy, Council has utilised one-off resources to support multi-year budgeting as well as allowing time to develop and implement savings over time, or to resource one-off service enhancements. This plan recognises the reversal of the 2023/24 one-off use of reserves of £10.700 million in 2024/25, which was approved to manage the forecast energy burden, due to the real uncertainty in respect of the recurring cost to the Council. Further details in respect of this are provided in 2.17 and 2.24 below. Forecast Expenditure Requirements Employee Cost Pressures 2.14 Employee costs remain the largest single element of the General Fund budget, accounting for around 54% of General Fund budgeted expenditure in 2023/24. Cost pressures linked to the workforce are therefore material and a key variable which has the potential to impact significantly on the forecast plan. Information relating to recent and ongoing pay awards, as well forecast future employee cost pressures is outlined below. 2.14.1 Pay Award – Single Status The 2022/23 pay award for non-teaching staff increased the baseline budget from 2023/24 and therefore the cost of future years’ pay. The negotiations on the 2023/24 pay award are ongoing. At this stage, the Scottish Government has committed to provide local authorities with £155.000 million in recurring funding to support the pay award for 2023/24. This plan currently assumes that the Council’s previous provision for pay awards will be sufficient to meet the cost of the 2023/24 award. However, this will be kept under review as the negotiations progress. Should there be a shortfall in funding this will be considered in the next update to the plan. 2.14.2 Pay Award – Teachers
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The negotiation for the 2022/23 teachers’ pay resulted in a 28 month deal, to the 31 July 2024, with the pay year moving to an academic year thereafter. The pay agreement is fully funded through a combination of Council resources and additional Scottish Government funding. The impact of adjusting the baseline to reflect this settlement has increased the forecast cost of pay awards in future years. However, as a result of the change to an academic year, there is a one- off reduction in the cost to the Council in financial year 2024/25, as the cost for the period 1 April to 31 July 2024 is already met from the previous award and funding package. 2.14.3 Pay Award – Future Years Summary For the period of this plan, future pay awards are based on the Scottish Fiscal Commission’s forecast average earnings increases, as at December 2022. This is deemed to reflect the element of pay expected to be funded by the Council. Reflecting these forecasts uplifts and the impact of re-baselining, a total of £11.500 million pay award provision is estimated for 2024/25. Total provision over the next 3 years is anticipated to be £38.300 million. The optimistic scenario assumes pay awards will cost the Council 0.5% less than the envisaged scenario, whilst the pessimistic scenario assumes a 2.5% increase on the envisaged assumption, thus providing a range for potential pay award of £9.200 million to £23.000 million in 2024/25 or between £30.300 million and £79.700 million over the next 3 years. Pay award assumptions will remain under review as negotiations continue, and financial outlooks will be updated, as appropriate. Non Pay Inflationary Pressures 2.15 Historically a non-pay inflationary uplift has generally only been provided where it was deemed material and contractual in nature, based on forecast relevant inflationary indices. This continues to be the case in this update to the MTFP. However, it was previously acknowledged that the challenging financial economic climate, with high inflation and significant increases in energy costs, would result in Services being unable to manage within budgets for which no inflationary uplift was provided. Therefore, additional budgetary provision of £8.127 million has been provided to Services to reflect inflationary pressures anticipated during 2023/24, along with the £5.885 million in-year contract inflationary provision. 2.16 As a result of the above, this five year forecast is based on a higher baseline position, with the projections for this planning period based on most recent forecasts by the OBR and Bank of England (BoE), which show inflation levels falling significantly over the five years. Therefore, this plan provides for contract inflationary pressures of £1.390 million in 2024/25 and £11.200 million in total over the period of the plan. 2.17 As previously reported the significant rise in energy costs has resulted in increased cost pressures for the Council. Committee will recall a further provision of £10.700 million was provided for 2023/24 in the previous MTFP. However, the budget report to the Council on 23 February recognised the real uncertainty in respect of the recurring cost to the Council. Therefore, it was agreed to use one-off balances to manage this position in 2023/24, but there was an assumption a recurring budgetary provision would be required from 2024/25 onwards. Following further analysis of costs and consumption it is deemed reasonable to assume this additional burden is indeed recurring. In addition, projections indicate there are further upward pressures on energy budgets into 2024/25 and beyond. This plan, therefore, provides for additional costs of £2.300
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million in 2024/25. The budgetary requirements for future years will be kept under review with an update provided in future MTFP updates. 2.18 Other inflationary pressures in respect of non-domestic rates increases from 2024/25 onwards have also been reflected totalling £1.670 million across the five years. Other Cost Pressures 2.19 Other cost pressures totalling £8.370 million over the five years are also provided for in this plan. This predominantly relates to previously reported burdens within Education, Children & Families, which are subject to ongoing review. Also included are anticipated increased costs of the Council Tax Reduction Scheme. Other Commitments 2.20 There is provision for loan debt costs in relation to the Community Investment Programme, including City Deal, which equates to £2.490 million in year 1 of the plan and £14.850 million across the planning period. 2.21 In addition, this plan recognises that the updated forecast loan charge costs when compared with existing budgetary provision, indicates there is a requirement to increase the budget commencing in 2024/25, mainly as a result of previously approved non-recurring loan debt re-profiling savings and increased interest rate costs. However, the plan also recognises the uncertainty in forecasting precisely when the budget will be required due to a number of factors, including the spend profile of the capital programme. Therefore, the plan smooths the overall increased budgetary requirement over a longer period. As a result, there may be a requirement to draw on unallocated balances in the event that there is insufficient budget in any one year of the plan. An earmarked reserve will be established for this purpose as part of the 2023/24 year-end closedown. Thus, an additional recurring £1.000 million has been provided for in 2024/25 and a total of £8.700 million over the planning period. Updated Medium Term Financial Forecast Approved Savings / Advance Action 2.22 In line with the Revenue Resources Budget Strategy and the commitment to consider a three year rolling revenue budget, 3 years of base budget adjustments were approved by Council on the 23 February 2023. These savings result in minor savings of £0.472 million for 2024/25 and £0.210 million for 2025/26. 2.23 This plan assumes all other previously approved savings will be fully achieved. Committee should note that updates in this regard will be provided to future meetings and amendments to the Financial Plan will be made accordingly. Strategic Use of Balances 2.24 Members will recall the approved budget set in February 2023 agreed savings of £7.614 million, with £0.639 million to be achieved in 2023/24, and £3.575 million and £3.400 million to be delivered in 2024/25 and 2025/26 respectively. The timing and delivery of the savings required one-off use of balances of £10.375 million across 2023/24 and 2024/25, which is recognised in this plan.
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2.25 The Council’s unallocated balances will continue to be closely monitored and may be made available to support and manage unresolved budget gaps in this five-year planning period, in line with the Council’s Reserves Policy. The call on these balances is unknown at this time and will be given due consideration as part of the ongoing budget process. Summary – Medium Term Financial Forecasts 2.26 The envisaged scenario indicates a budget gap of £108.138 million over the five year planning period and £63.878 million for the three year budget period 2024/25 to 2026/27. Further details are contained within Appendix 1. Appendices 2 and 3, summarise the forecast pessimistic and optimistic scenarios indicating the gap could range between £54.426 million and £231.261 million, over the five years. 2.27 Appendix 4 provides a high level summary of the movements between this plan and the previous plan reported to Committee in September 2022. Proposed Additional Advance Action 2.28 The Accounting for Service Concessions report to the Council on 23 February 2023 sought agreement to change the accounting methodology in respect of existing service concessions (PPP arrangements), which resulted in a budget saving of £4.000 million. However, as indicated in the report, this change in accounting methodology does not represent a saving over the life of the asset. The total charges to the general fund revenue over the asset lives remain unchanged, which means the Council will have to ensure there is adequate budgetary provision in the future to meet all costs. Thus, requiring consideration as part of the Council’s future financial plans. Hence the report advised that detailed modelling was required to forecast future costs and funding to assess the affordability and sustainability of the saving. 2.29 The review of the PPP financial model has been undertaken to demonstrate affordability and sustainability. The updated model also reflects the future changes previously highlighted in respect of implementing the new accounting standard, IFRS16, which the Council currently plans to adopt in 2024/2025. The review confirms the robustness of the model and the funding in place to meet the future financial obligations of these establishments. As anticipated, there is a short to medium term financial benefit arising from implementing IFRS16. Therefore, it is reasonable to assume a saving of £4.500 million for the five years of this plan. Thereafter, additional budgetary provision will have to be incorporated into future MTFPs or through additional one-off earmarked reserve provision, to reflect the fact that both the £4.000 million previously approved saving and the further £4.500 million proposed are not recurring. 2.30 The £4.500 million saving described above would reduce the 2024/25 gap to £25.958m, and the five year gap to £103.638 million, prior to any consideration of Council Tax increases, additional savings actions or other potential solutions to manage the budget gaps. 2.31 In line with the principles of the Revenue Resources Budget Strategy, Council officers will work with Elected Members to ensure options for potential solutions are presented to enable the Council to address the budget gap in each financial year and to meet its legal obligation to set a balanced budget. The newly formed Financial Planning Advisory Group, with cross party membership, will give full consideration to this position. Members decisions will also be informed by the results of engagement with Community Boards.
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Risks and Uncertainties 2.32 Whilst the assumptions applied to income and expenditure projections in this financial plan are based on the best information available at the time of writing, they are inherently uncertain. The key factors which are likely to impact upon the Council’s assumptions and future financial plans have been discussed throughout the report, including the significant uncertainty in relation to the Council’s funding settlement, volatility in assumed inflationary uplifts including those in relation to pay awards. There are also a number of political factors which may impact on planning assumptions, including potential changes at UK and Scottish Government levels as a result of elections, the Scottish Government’s commitment to a National Care Service and the financial consequences of this on Local Government, along with climate change commitments. 2.33 Other current notable risks previously reported include; 2.33.1 Ash tree dieback linked to a disease which could cause significant damage to the UK’s ash population. As has been previously reported to Committee, there may be a significant financial cost to managing the diseased species, including identifying ash trees, assessing their condition and where necessary removal of trees and a programme of replanting. The Council has engaged a contractor to build a proposed action plan to manage the position, which will include an estimate of the financial implications. It is anticipated that an update will be reported to the Environment and Climate Change Committee in August. 2.33.2 Committee should also be aware that the Scottish Government has delayed the review of Capital Accounting arrangements and statutory mitigations in respect of such. Statutory interventions override the CIPFA Code of Practice for Local Authority Accounting, and the Scottish Government has decided to review them to make sure they remain fit for purpose. The independent review will build upon the work taken forward by Directors of Finance in March 2022 but will also consider the statutory framework for capital accounting. There is growing concern among Directors of Finance that the aim is to remove the statutory mitigations, leaving councils exposed to the financial consequences on revenue budgets and ultimately potentially impacting on capital investment programmes or create volatility which would have implications for Council Taxpayers. Should any such changes be proposed, indications are that these will be applied going forward with transition arrangements put in place. The review will now commence in September 2023 for conclusion in April 2025. This should give much needed certainty for local authorities, as we manage the already significant challenging forecast budget gaps. Community Empowerment (Scotland) Act 2015 2.34 This Act requires councils to embed community participation in the design and delivery of public services, and to build community capacity to give people the skills and confidence required to be involved, while recognising the particular needs of communities facing multiple social and economic challenges. In line with previous financial years the Council will engage in a budget consultation exercise. The outcome of the consultation will inform members’ decisions around the solutions to ensure the Council meets its statutory requirement to set a balanced budget.
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3. Measures of success Measures of success will include: 3.1 Development of solutions aligned to the Council’s strategic objectives outlined in the Plan for North Lanarkshire. 3.2 Setting of a balanced budget for 2024/25 and subsequent years. 3.3 Successful and timeous implementation of approved solutions. 4. Supporting documents Appendix 1 Envisaged Scenario Appendix 2 Pessimistic Scenario Appendix 3 Optimistic Scenario Appendix 4 Summary of Movements Elaine Kemp Chief Officer (Finance)
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5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐
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5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed?
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Envisaged Scenario Appendix 1 2024/25 2025/26 2026/27 2027/28 2028/29 £000 £000 £000 £000 £000 Anticipated Cost Pressures 20,560 14,270 18,220 22,550 20,140 Pay Award 11,500 12,000 14,800 18,200 15,700 Contract Inflation 1,390 1,150 2,250 3,160 3,250 Energy Costs 2,300 0 0 0 0 NDR Costs 260 330 360 360 360 Other Cost Pressures 5,110 790 810 830 830 Other Commitments 3,490 4,590 4,790 5,290 5,390 Community Investment Fund inc. City Deal 2,490 2,790 2,990 3,290 3,290 Loan charges reprofiling 1,000 1,800 1,800 2,000 2,100 Total Cost Pressures 24,050 18,860 23,010 27,840 25,530 Less: Resource Forecasts (6,880) 3,990 4,251 4,520 4,590 AEF adjustments - Core 0 0 0 0 0 Reversal of Use of Reserves/Resources in previous year (10,700) 0 0 0 0 1% Council Tax Increase; CIF 1,720 1,770 1,820 1,870 1,930 Net Council Tax Growth 1,600 1,700 1,900 2,100 2,100 Income Generation - Sales, Fees & Charges 500 520 530 550 560 Budget Gap before advanced action 30,930 14,870 18,759 23,320 20,941 Approved Advance Action (472) (210) 0 0 0 Approved Savings 0 0 0 0 0 Approved Base Budget Adjustments (472) (210) 0 0 0 2023/24 Approved Savings now applied (3,575) (3,400) 0 0 0 Use of Reserves for 2023/24 approved savings (3,400) 0 0 0 0 Reversal of use of reserves for 23/24 saving 6,975 3,400 0 0 0 Budget Gap after approved advanced action 30,458 14,660 18,759 23,320 20,941 3 year total (24/25 to 26/27) 63,878 Proposed Advanced Action (4,500) 0 0 0 0 Review of PPP Affordability (4,500) 0 0 0 0 Revised Budget Gap after proposed advanced action 25,958 14,660 18,759 23,320 20,941 3 year total (24/25 to 26/27) 59,378
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Pessimistic Scenario Appendix 2 2024/25 2025/26 2026/27 2027/28 2028/29 £000 £000 £000 £000 £000 Anticipated Cost Pressures 35,830 29,550 34,640 39,650 38,230 Pay Award 23,000 26,400 30,300 35,100 33,600 Pension Costs 3,900 0 0 0 0 Contract Inflation 2,050 1,840 2,970 3,130 3,210 Energy Costs 2,300 0 0 0 0 NDR Costs 400 450 490 510 510 Other Cost Pressures 4,180 860 880 910 910 Other Commitments 3,880 4,780 4,980 5,380 5,480 Community Investment Fund inc. City Deal 2,880 2,980 3,180 3,380 3,380 Loan charges 1,000 1,800 1,800 2,000 2,100 Total Cost Pressures 39,710 34,330 39,620 45,030 43,710 Less: Resource Forecasts (15,025) (4,035) (3,726) (3,427) (3,329) AEF adjustments - Core (7,865) (7,704) (7,626) (7,558) (7,480) Reversal of Use of Reserves/Resources in previous year (10,700) 0 0 0 0 1% Council Tax Increase; CIF 1,690 1,710 1,730 1,750 1,770 Net Council Tax Growth inc. rebaselining adj in year 1 1,600 1,700 1,900 2,100 2,100 Income Generation - Sales, Fees & Charges 250 260 270 280 280 Budget Gap before advanced action 54,735 38,365 43,346 48,457 47,040 Approved Advance Action (472) (210) 0 0 0 Approved Savings 0 0 0 0 0 Approved Base Budget Adjustments (472) (210) 0 0 0 2023/24 Approved Savings now applied (3,575) (3,400) 0 0 0 Use of Reserves for 2023/24 approved savings (3,400) 0 0 0 0 Reversal of use of reserves for 23/24 saving 6,975 3,400 0 0 0 Budget Gap after approved advanced action 54,263 38,155 43,346 48,457 47,040 3 year total (24/25 to 26/27) 135,763 Proposed Advanced Action (4,500) 0 0 0 0 Review of PPP Affordability (4,500) 0 0 0 0 Revised Budget Gap after proposed advanced action 49,763 38,155 43,346 48,457 47,040 3 year total (24/25 to 26/27) 131,263
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Optimistic Scenario Appendix 3 2024/25 2025/26 2026/27 2027/28 2028/29 £000 £000 £000 £000 £000 Anticipated Cost Pressures 17,890 11,060 14,910 19,060 16,420 Pay Award 9,200 9,200 11,900 15,100 12,400 Contract Inflation 720 470 1,550 2,430 2,490 Energy Costs 1,300 0 0 0 0 NDR Costs 0 0 0 0 0 Other Cost Pressures 6,670 1,390 1,460 1,530 1,530 Other Commitments 4,390 5,490 5,890 6,390 6,490 Community Investment Fund inc. City Deal 3,390 3,690 4,090 4,390 4,390 Loan charges 1,000 1,800 1,800 2,000 2,100 Total Cost Pressures 22,280 16,550 20,800 25,450 22,910 Less: Resource Forecasts 1,271 12,345 12,750 13,158 13,358 AEF adjustments - Core 7,861 8,026 8,100 8,189 8,267 Reversal of Use of Reserves/Resources in previous year (10,700) 0 0 0 0 1% Council Tax Increase; CIF 1,760 1,850 1,950 2,050 2,150 Net Council Tax Growth inc. rebaselining adj in year 1 1,600 1,700 1,900 2,100 2,100 Income Generation - Sales, Fees & Charges 750 770 800 820 840 Budget Gap before advanced action 21,009 4,205 8,050 12,292 9,552 Approved Advance Action (472) (210) 0 0 0 Approved Savings 0 0 0 0 0 Approved Base Budget Adjustments (472) (210) 0 0 0 2023/24 Approved Savings now applied (3,575) (3,400) 0 0 0 Use of Reserves for 2023/24 approved savings (3,400) 0 0 0 0 Reversal of use of reserves for 23/24 saving 6,975 3,400 0 0 0 Budget Gap after approved advanced action 20,537 3,995 8,050 12,292 9,552 3 year total (24/25 to 26/27) 32,582 Proposed Advanced Action (4,500) 0 0 0 0 Review of PPP Affordability (4,500) 0 0 0 0 Revised Budget Gap after proposed advanced action 16,037 3,995 8,050 12,292 9,552 3 year total (24/25 to 26/27) 28,082
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Appendix 4 Summary Movements from Previous MTFP 2024/25 £000 2025/26 £000 2026/27 £000 Total £000 Gap per approved MTFP September 2022 20,620 16,300 16,880 53,800 Action Approved Base Budget Adjustments (472) (210) 0 (682) Use of Balances (reversal) 10,700 0 0 10,700 10,228 (210) 0 10,018 Revised Gap February 2023 30,848 16,090 16,880 63,818 Updated assumptions April 2023 Cost Pressures Pay Award (800) (600) 1,900 500 Contract Inflation (1,260) (1,660) (850) (3,770) Energy 1,940 (380) (420) 1,140 Other Cost Pressures (650) 0 0 (650) Other Commitments 1,000 1,800 1,800 4,600 Resources Estimated Council Tax Income (120) (70) (20) (210) Income Generation - Sales, Fees & Charges (500) (520) (530) (1,550) Revised MTFP Gap 30,458 14,660 18,760 63,878 Proposed Advance Action Review of PPP Affordability (4,500) 0 0 (4,500) Revised Gap after proposed advanced actions 25,958 14,660 18,760 59,378