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Guildford Borough Council : November Update Of Financial Recovery Plan

Guildford Borough Council : November Update Of Financial Recovery Plan

At its meeting on 5 December, Council approved the November update of our financial recovery plan.

‘The MTFP and Financial Recovery Plan – November Update Report’ sets out the progress we’ve made to date in addressing the Medium-Term Financial Plan (MTFP) budget gap. It covers the period up to April 2027 and includes an update on the MTFP position, potential funding changes, and progress on our recovery plan workstreams.

The MTFP budget gap has fallen from £18.3m to £7.3m. The report gives a high-level update on the potential remaining budget gap and the on-going actions we need to take to close it.

Following a review of the capital programme, we’ll be removing £96.6m from the approved and provisional programme. This will reduce our projected borrowing needs and associated interest payments. 

Significant work is still required to produce a balanced budget for 2024 to 2025. Our goal is to protect our current level of reserves, set a balanced budget and create a robust Medium-Term Financial Plan.

Medium Term Financial Plan Update

Due to increased interest rates the cost of borrowing has increased significantly since many of the major schemes in the capital programme were approved. The proposal reduces the MTFP gap to £7.3m from the previous £18.3m budget gap (reported in July 2023). It reduces the size of the overall capital programme, which will lead to a reduction in planned borrowing requirements. 

We’re also taking action to reduce our total borrowing to £450m, including Housing Revenue Account [HRA] debt. This is a reduction from a potential peak of £600m (including HRA debt). This sum is before land sales on the Weyside Urban Village scheme, which will generate income to repay some of our borrowing. 

Balancing the 2024 to 2025 budget

We still have around £4.2m to identify in savings to balance the budget for 2024 to 2025. This does not include potential sources of funding from government schemes, which could see the gap reduce to £3m. We’ll receive notification of government funding awards in late December.

Ongoing work to close this budget gap include exploring:

  • service delivery options
  • collaboration opportunities
  • policy changes in accounting and discretionary policies
  • full cost recovery, income generation, fees, and charges
  • contract and procurement reviews
  • treasury management (borrowing and lending money)
  • grants and subscriptions

Capital Programme

We’ve undertaken a full review of the capital programme. We’ve agreed to remove over £96m of schemes within the approved and provisional capital programmes. The main areas of savings are:

Approved Programmes

  • £20.823m – Property acquisitions removed due to changes in investment rules
  • £4.170m – Shaping Guildford’s Future revised approach 

Provisional schemes

  • £38.292m – Property acquisitions removed due to changes in investment rules
  • £30.1m – Further investment removed in North Downs Housing and Guildford Borough Holdings Ltd 

Asset disposals

We’ve set a target sum of £50m of capital receipts to help further reduce our long-term borrowing needs. We’re reviewing our asset portfolio and developing plans before setting the budget in February 2024.

Governance improvements

We’ve made significant progress in many areas. We have robust monthly monitoring in place. We’ve published a budget book, improved monitoring, reviewed debt and improved control of the staffing budget.

Lead Councillor for Finance and Property, Cllr Richard Lucas, said: “We’ve made enormous progress on reducing our Medium-Term Financial Plan gap, but there’s still significant work required to close that gap and produce a balanced budget for consideration in February 2024.”