The purpose of this report is to present Cabinet with the draft Medium Term Financial Strategy 2018-19 to 2021-22, which sets out the spending priorities of the Council, key investment objectives and budget areas targeted for necessary savings. The strategy includes a financial forecast for 2018-22 and a detailed draft revenue budget for 2018-19.

The Section 151 Officer presented a report, the purpose of which was to present Cabinet with the draft Medium Term Financial Strategy 2018-19 to 2021-22.

He referred to the background of the report, and pointed out to Cabinet that the process for the Budget this year had followed the same principle of last year.

The report commenced with a Budget Narrative and then outlined the current situation and the financial context of the Council’s MTFS. He reminded Members that the Welsh Government had announced its draft Budget for 2018-19 on 3 October last, with the most significant headline of this, being that there would be an additional £230m in 2018-19 and £220m in 2019-20 for the Welsh NHS. The Cabinet Secretary had highlighted the risk to the Welsh Government of the UK Government’s £3.5 billion of unallocated cuts for 2019-20, which could result in a further cut of up to £173m to the Welsh budget dependent upon where the unallocated cuts fall.

The Section 151 Officer then advised that Councils received their provisional settlements from Welsh Government on 10 October. The headline figure is a reduction of £19 million, or 0.5%, across Wales and, for Bridgend, a reduction of 0.6% in Aggregate External Finance (AEF), or £1.16 million. However when adjustments are made for new responsibilities in respect of homelessness prevention (£236,000 for Bridgend), the true impact for Bridgend is estimated to be a like-for-like reduction of £1.396 million or -0.73%. Welsh Government has reported that the settlement also includes an additional £42 million across Wales in recognition of social services pressures and £62 million in respect of school funding, but these amounts, which are not ring-fenced or notified at individual authority level, are already included in the figures above. The settlement also includes £1.8 million floor funding to ensure that no authority has to manage with a reduction of more than 1% to its Revenue Support Grant next year.

The provisional settlement compares favourably to the -3.2% “most likely” assumption that is contained within the Council’s original MTFS for 2018-19 and is better even than the “best” case scenario assumption of -1.5%.

He then highlighted that unlike previous years, Welsh Government had provided an indication of funding levels for 2019-20, being a further budget reduction in 2019-20 of 1.5%.

Paragraph 4.8 then referred to specific grants, and the Section 151 Officer stated that though the full picture on these was as of yet unclear, there would be a deficit compared to previous years.

The report then identified that there was highly likely that there would be a Council Tax increase of 4.2% for 2018-19, with an assumed annual increase 0f 4.5% for the period of 2019-2022.

Paragraphs 4.12 to 4.14 of the report then gave information in table format of the Current Year 2017-18 financial performance as at September 2017. This showed that as of this date, there was a net spend of £2.495m, comprising £710,000 net over spend on Directorates and £3.208m net under spend on corporate budgets.  ...  view the full minutes text for item 108