November update of our financial recovery plan approved

On 5 December, Council approved the November update of our financial recovery plan.

MTFP and Financial Recovery Plan - November Update Report

This 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
progress on our recovery plan workstreams

Overview

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
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 programmes
this will reduce our projected borrowing needs and associated interest payments

Significant work is still required to produce a balanced budget for 2024-2025. Our goal is to:

protect our current level of reserves
set a balanced budget
create a robust Medium-Term Financial Plan

Medium Term Financial Plan Update

The cost of borrowing has increased significantly since we approved many of the major schemes in the capital programme. This is due to increased interest rates.

The proposal reduces the MTFP gap to £7.3m from the previous £18.3m budget gap that we reported in July 2023. It reduces the size of the overall capital programme. This 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. These 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. They 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 (long term spending on maintaining buildings, land and equipment)

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 before setting the budget in February 2024 we are:

reviewing our asset portfolio and
developing plans

Governance improvements

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

Read the Financial Recovery Plan November update report (opens new window)

Published on: 6 December 2023