Agenda item

(A)       The Council had before it a report by the Director of Resources which presented a Medium Term Financial Strategy (MTFS) which pulled together all known factors affecting the financial position and financial sustainability of the organisation over the medium term.

The report recommended:-

that the Council -

(a)          welcome the publication by the Scottish Government of its Resource Spending Review through to 2026/2027 on 31 May 2022 and notes that this indicates a flat cash settlement for Local Government for the next 3 years, followed by a 1% increase in 2026/27;

(b)          approve the Medium Term Financial Strategy for the General Fund, 2022;

(c)          note that the report on TOM1.2 is also on the agenda today, which describes the approach the Council intends to take through transformation and multi-agency working to contribute towards closing the gap between income and expenditure forecast;

(d)          welcome the alignment of the MTFS and TOM1.2, together these documents represent the fiscal framework for Aberdeen;     

(e)          note that the publication of the National Care Service (Scotland) Bill and associated Financial Memorandum indicates that the first year of operation will be 2025/26, within the term of the MTFS, and this has the potential to remove c.25% of financial resources from the Council;

(f)           note the reported impact that inflation and supply chain volatility is having on our current financial year [Council Financial Performance Quarter 1, 2022/23: RES/22/152] and that the impact is anticipated to continue to have an effect on the future funding gap;

(g)          note that the commitments contained within the Partnership Agreement, adopted on 18 May 2022, remain uncosted for future years and are being worked on to support the update of the MTFS when the budget is set for 2023/24 in March 2023;

(h)          note the reprofiled capital programme, which was referred from City Growth and Resources Committee on 3 August 2022 [RES/22/152] to Council today, is the basis for capital financing costs and debt levels referred to in the MTFS;

(i)            note the 2023/24 Budget will be discussed and set by the Council in March 2023 reflecting the commitments within the Partnership Agreement; and

(j)            note the ongoing development of the data presented in relation to the Council’s Financial Resilience Framework and the insight this provides of the underlying strength of the Council finances that support the continued operation of services through the uncertain and volatile environment. The data identifies indicators to watch, and these should be carefully considered when setting future budgets. The Chief Officer - Finance will continue to develop the Framework.

(B)       The Council had before it a report by the Director of Customer Services which proposed the next iteration of the Council’s Target Operating Model (TOM) 1.2 to support the necessary scale of transformation that would contribute to the level of savings required over the next 5 years, as outlined in the MTFS.

The report recommended:-

that the Council -

(a)         agree the TOM 1.2 for 2022-27, attached to the report as Appendix A, to support the necessary scale of transformation to deliver the level of savings required over the next 5 years, as outlined in the MTFS;

(b)         note that the level of investment required to enable the release of savings would be identified as part of the Council Budget process, as outlined in the MTFS;

(c)          note the whole system change projects being taken forward with partners via the Multi-Agency Transformation Management Group (MATMG) and instruct the Chief Executive to seek further delivery opportunities of statutory services through a Statutory Function Review, reporting back to Council at its meeting on 14 December 2022; and

(d)         instruct the Chief Executive to report back to the next Full Council with the recommended interim structure resulting from the recent resignation of the Chief Operating Officer taking into consideration the longer term needs to support the changes from the 21/22 and 22/23 Programme of Government.

Councillor Yuill moved, seconded by Councillor McLellan:-

That the Council approve the recommendations contained within both reports.

Councillor Macdonald moved as an amendment, seconded by Councillor Tissera:-

            That the Council -

(1)      note the publication by the Scottish Government of its Resource Spending Review through to 2026/2027 on 31 May 2022 and notes that this indicates a flat cash settlement for Local Government for the next 3 years, followed by a 1% increase in 2026/27; noting 2.4.11 of the MTFS report which states “The Accounts Commission published its latest Local Government in Scotland Overview report on 25 May 2022, which continued to highlight the long-term position that Local Government is the poor relation of other parts of the Scottish public sector, excluding the effects of Covid-19 pandemic funding “...councils’ underlying cumulative funding has fallen by 4.2 per cent in real terms since 2013/14. This is in contrast to an increase of 4.3 per cent in Scottish Government funding of other areas of the budget over the same period.”;

(2)      agree the Scottish Government settlement for local government will result in further cuts to public services as outlined in recommendation 2.4 and the TOM1.2 as presented on the agenda;

(3)      approve the Medium Term Financial Strategy for the General Fund, 2022;

(4)      note that the report on TOM1.2 is also on the agenda today, which describes the approach the Council intends to take through transformation and multi-agency working to contribute towards closing the gap between income and expenditure forecast;

(5)      note the alignment of the MTFS and TOM1.2, together these documents represent the fiscal framework for Aberdeen;

(6)      note that the publication of the National Care Service (Scotland) Bill and associated Financial Memorandum indicates that the first year of operation will be 2025/26, within the term of the MTFS, and this has the potential to remove 25% of financial resources from the Council; reaffirming the Council’s position agreed in March 2022 that “the National Care Service consultation that took place during 2021/22 has potential to significantly impact local services, Council duties, obligations and funding ….. and should be resisted.”;

(7)      note the reported impact that inflation and supply chain volatility is having on our current financial year [Council Financial Performance Quarter 1, 2022/23: RES/22/152] and that the impact is anticipated to continue to have an effect on the future funding gap;

(8)      note that the commitments contained within the Partnership Agreement, adopted on 18 May 2022, remain uncosted for future years and are being worked on to support the update of the MTFS when the budget is set for 2023/24 in March 2023;

(9)      note the reprofiled capital programme, which was referred from City Growth and Resources Committee on 3 August 2022 [RES/22/152] to Council today, is the basis for capital financing costs and debt levels referred to in the MTFS; noting that the Administration’s Partnership Agreement at 9.3 on this agenda contains uncosted capital spend;

(10)   note the 2023/24 Budget will be discussed and set by the Council in March 2023 reflecting the commitments within the Administration’s Partnership Agreement; noting that at the budget-setting meeting in February 2012 the then SNP/Liberal Democrat administration were unable to bring forward an agreed budget;

(11)   note the ongoing development of the data presented in relation to the Council’s Financial Resilience Framework and the insight this provides of the underlying strength of the Council finances that support the continued operation of services through the uncertain and volatile environment. The data identifies indicators to watch, and these should be carefully considered when setting future budgets. The Chief Officer - Finance will continue to develop the Framework;

(12)   note the Target Operating Model (TOM) 1.2 for 2022-27, attached to the report as Appendix A, to support the necessary scale of transformation to deliver the level of savings required over the next 5 years, as outlined in the Medium-Term Financial Strategy (MTFS);

(13)   note that the level of investment required to enable the release of savings will be identified as part of the Council Budget process, as outlined in the MTFS;

(14)   note the whole system change projects being taken forward with partners via the Multi-Agency Transformation Management Group (MATMG) and instruct the Chief Executive to seek further delivery opportunities of statutory services through a Statutory Function Review, reporting back to Council at its meeting on 14 December 2022;

(15)   welcome the political commitment of all parties represented in the Council that there will be no compulsory redundancies; and

(16)   instruct the Chief Executive to carry out further engagement with staff and Trade Unions and report back to the December Council meeting with the results prior to agreeing TOM 1.2.

On a division, there voted:-

For the motion  (24)  -  Lord Provost; Depute Provost; and Councillors Al-Samarai, Allard, Alphonse, Bouse, Hazel Cameron, Clark, Cooke, Copland, Cormie, Davidson, Fairfull, Greig, Henrickson, Hutchison, MacGregor, McLellan, McRae, Mennie, Nicoll, Radley, Van Sweeden and Yuill.

For the amendment  (20)  -  Councillors Ali, Blake, Bonsell, Boulton, Brooks, Crockett, Farquhar, Graham, Grant, Houghton, Kusznir, Macdonald, MacKenzie, McLeod, Malik, Massey, Stewart, Thomson, Tissera and Watson.

The Council resolved:-

(i)           to adopt the motion;

(ii)          to welcome the political commitment of all parties represented in the Council that there will be no compulsory redundancies; and

(iii)         to request that the Council’s submission to the National Care Service call for evidence be circulated to all members after it had been submitted on 2 September.