Medium-Term Financial Plan Tabled Additional Information
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.
Page 1
Scenario Planning Best practice requires councils to consider a range of scenarios when forecasting future budget variables. The reason for this is to recognise the volatility that is inherent in any future estimates of income and expenditure. The graphs below highlight the positions shown in previous iterations of the Medium Term Financial Plan (MTFP) when compared with the budget gap faced by the council when setting its annual budget. Graph 1 demonstrates that the actual budget position faced by the council at the time of budget setting tends to track closely to the envisaged scenario set out in the most recent MTFP. This can be seen as a measure of the accuracy of the council’s short term planning estimates which tend to show no material movement from the forecast envisaged scenario. Therefore, when looking at the projections for the coming financial year, elected members should focus on the envisaged scenario as set out in the MTFP. Graph 2 highlights the volatility in future years’ budget estimates which has been particularly prevalent in recent years given the uncertain economic and financial environment. Using the current financial year (2023/24) as an example in Graph 2 below shows that the actual budget gap has tended to track more closely to the longer range forecast pessimistic scenario. So, whilst the MTFP report advises that 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. This is particularly important when giving consideration to the later years of the Plan which are likely, based on recent experience, to track more closely to the pessimistic scenario.
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Graph 1: 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2020/21 2021/22 2022/23 2023/24 Forecast and Actual Budget Gaps Envisaged Pessimistic Optimistic £000's FinancialYear Met by: Council Tax Savings Base Budget Adjustments Use of Reserves ActualBudget Gap
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Graph 2: -20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Y5 Y4 Y3 Y2 Y1 Actual 2023/24 Budget Gap Progression through MTFPs to Actual Envisaged Pessimistic Optimistic Actual Budget Gap Plan Year £000's Met by: Council Tax Savings Base Budget Adjustments Use of Reserves