Key Focus over the last months remains our budget for 2024-25 and a new MTFS for the 4 years 2024-2028.
I won’t need to remind people (but will!) that the Medium Term Financial Strategy left to us by the last administration forecast a budget deficit of £4,501,000 for 2024-25 and a forecast deficit for the 4 years 2023-27 of over £18m. It was not the job the incoming administration wanted to fix the mess left to us, but it is the card we were dealt.
And in December, we brought to Cabinet a “first draft” budget for 2024-25 showing a £638,000 deficit for the year, and a 4 year MTFS deficit of £4,609,000.
This hugely improved forecast is due to the hard work of the Chief Executive, S151, Finance Team, Officers and all staff in looking at our costs, management structure and staffing to give us a significant saving from the “transformation” of the Council to reduce our staffing costs while trying to protect from line services. We owe them huge thanks. Councillors have really paid their part too, understanding that although there are some difficult decisions to be made they are necessary, but rightly working as hard as possible to defend those services we see most important.
Following that first draft, the Provisional Local Government Finance Settlement was announced by the Department for Levelling Up, Housing & Communities (DLUHC) on 18 December 2023. Although not generous or welcomed by all Councils, it was better for Folkestone and Hythe than we had expected (plan for the worst, hope for the best!) and has further improved our forecast budget for 2024-25.
After a lot of work by Ola and the Finance Team over Christmas on the implications of that Finance settlement, I’m now really hopeful that we will be able to vote for a balanced budget – one that does not rely on drawing from our General Reserve – for 2024/25 in February. From a forecast deficit of £4.501m to zero in one year will have been an extraordinary turn-around, and one better than I had thought likely six months ago.
Also, the newest version of the MTFS forecast shows a cumulative funding gap of £2.78m over the four year lifetime of this MTFS – some £15m better than the version left to us by the administration. There is no deficit forecast in the 1st year, and a sub £100k deficit in the second year (which we’ll seek to address before we set the 2025-26 budget!).
And there is further good news in the end of Q3 finance monitoring, showing that is this financial year, we’re currently predicting a deficit reduction of £458k on the budget. The budget for this year of the last administration relied on drawing £1,786,000 from our General Reserves. We are now forecasting that will be a draw instead of £1,328,000 – a really significant improvement in our position (still clearly a deficit, but a much reduced one). Again – this has only been achieved in year with a steely determination from the whole team to save money against budget where possible, and to do more with less.
From a position where this Council was going to be in serious financial difficulty in three years to one where we have a genuinely balanced budget, and can now seek to regroup and go forward. That’s a huge step.