Financial Strategy 2022

Effective financial management in the public sector is built on planning for the long term to deliver strategic outcomes. Increasingly however, with the scale of the financial challenge facing the public sector, building financial resilience is seen as a key element of effective financial management. Councils and other public bodies therefore must be able to deliver significant annual savings and manage financial uncertainty whilst still delivering the good quality services that our local communities need and value. 

As a Council we have a number of tools and levers at our disposal, to support effective financial management and to help build financial resilience. 

Tools and levers

• Community Plan/Local Outcomes Improvement Plan (LOIP)
• Corporate Plan
• Financial Strategy
• Thematic strategies:
  • Digital Strategy
  • Transformation and Change Strategy
  • Economic Wellbeing Plan
  • Workforce Management
  • Investment Blueprint
  • Climate Change Strategy
  • Corporate Asset Management Strategy
  • Other strategies
• Medium Term Financial Plan
• Revenue Budget
• Capital Budget
• Reserves Strategy
• Housing Revenue Account
• Service Business Management and Improvement Plans (BMIPs)
• Team Plans

The purpose of our Transformation and Change Strategy is to deliver better services for our communities whilst contributing towards making the Council more financially sustainable. 

Transformation alone will not address the structural deficit; budget cuts and service reductions will still be required. Some transformation activity will reduce overspends, mitigate costs or enable a shift of expenditure to new and emerging priorities. It is anticipated, therefore that a combination of measures and approaches will enable a reduction in the structural deficit, helping to deliver a balanced budget and reducing the need to draw on Reserves. 

Transforming how we meet the needs of communities, will take time and investment. Even with "invest to save" initiatives, their will likely be initial funding required before any cost- efficiencies are realised. In the short term therefore, there will be heavier reliance on budget cuts to help the Council achieve a more sustainable financial position. 

Our Digital Strategy will set out the Council's ambition for digital innovation and inclusion. We will also use it to support the streamlining and automation of many of our systems and processes, potentially providing savings and efficiencies or allowing resources to be directed to meeting increasing need in other areas. 

The Corporate Asset Management Strategy will support more effective and cost-efficient use of our physical assets. We will always seek to make best use of our assets. Specifically, in relation to our property estate, we will collaborate with our public partners to reduce the overall public estate and we will dispose of assets which no longer best support the delivery of our strategic objectives. In doing so we can create opportunities for savings in terms of running costs and/or generate income by way of a Capital receipt. All of which will help contribute to longer term financial sustainability. 

The Workforce Management Strategy must ensure that our most valuable resources are directed where they are needed most, in line with our strategic priorities and objectives. As we reshape service provision there will be inevitable changes within the workforce; requiring additional resource in some areas and reduction in others. 

The Investment Blueprint provides for a more transparent and flexible approach to investment decision-making to deliver the long-term vision of the Council. The wider capital investment planning framework allows us to identify priorities, risks, challenges and opportunities with a coherent and consistent mechanism for assessing investment initiatives, enabling better 
informed, risk-based decision-making. The Financial Strategy will contribute towards a sustainable capital budget and the development and implementation of a sustainable funded rolling 6- Year Delivery Programme, aligned to our strategic priorities. 

The Revenue Budget and Reserves Strategy will "smooth" future budget reductions, and as far as possible, minimise the impact on stakeholders. The planned use of Reserves will also provide time to allow for an orderly transition. 

The Council's Revenue Budget and Reserves Strategy support both its financial management and underpin its financial resilience and ability to deal with unplanned or unexpected events. Council officers will advise members in the management of these resources at a level sufficient to maintain the Council's financial resilience.

Specifically, as far as Reserves, Expenditure and Income are concerned, the Council will:

• Reserves - maintain and build up Reserves to smooth the level of budget cuts required in the first few years of the new Council. 
• Expenditure - manage down expenditure in the current year and identify proposals for 2023/24 and beyond. 
• Income - identify new opportunities and maximise existing income sources. 

All strategic financial plans & policies; annual budgets and strategic financial decisions are matters to be determined by elected members. The Council's statutory officers have specific responsibilities in terms of the financial management of the Council and all officers are available to provide professional advice to elected members in their decision making. 

Ordinarily, the budget process takes place from late Summer through to early Spring. 

In September / October, Council will be asked to approve the Medium-Term Financial Plan which includes updated financial assumptions for the next six years. 

The Budget Review Group process runs from October to February and allows elected members to undertake detailed scrutiny of officer proposals. 

In December, the Council receives a Budget Update, that subject to the availability of Scottish Government information, provides an update on detailed implications for Perth and Kinross Council for future financial years. 

In February, the special meeting of Council approves the Revenue Budget and Reserves Strategy and Capital Budget. It is at this point that elected members take formal decisions on specific budget proposals. 

The Council has separate accounting and budget arrangements for its social housing services (Housing Revenue Account) and Housing Investment Programme and a statutory responsibility to consult with tenants in the setting of annual rent levels. The principles set out within the Financial Strategy are, however, taken to apply to the management of the Council's resources for social housing services.