FINANCIAL PLAN 2021 - 2025 DRAFT CONTENTS LEADER’S FOREWORD ........................................................................................................................ 1 CHAPTER 1: POLICY CONTEXT .......................................................................................................... 3 CHAPTER 2: FINANCIAL STRATEGY ................................................................................................. 12 CHAPTER 3: REVENUE BUDGET ...................................................................................................... 17 CHAPTER 4: SCHOOLS ...................................................................................................................... 42 CHAPTER 5: HOUSING REVENUE ACCOUNT (HRA) ....................................................................... 45 CHAPTER 6: COMMONWEALTH GAMES .......................................................................................... 51 CHAPTER 7: CAPITAL STRATEGY .................................................................................................... 57 CHAPTER 8: SECTION 25 REPORT – ROBUSTNESS OF ESTIMATES AND ADEQUACY OF RESERVES ........................................................................................................................................... 66 APPENDIX A: MEDIUM TERM FINANCIAL PLAN .............................................................................. 75 APPENDIX B: GRANTS ........................................................................................................................ 76 APPENDIX C: RESERVES POLICY .................................................................................................... 83 APPENDIX D: OTHER EARMARKED RESERVES ............................................................................. 89 APPENDIX E: BUDGET RISK .............................................................................................................. 90 APPENDIX F: PRESSURES................................................................................................................. 98 APPENDIX G: SAVINGS .................................................................................................................... 108 APPENDIX H: COUNCIL TAX ............................................................................................................ 115 APPENDIX I: CAPITAL RECEIPT FLEXIBILITY ................................................................................ 116 APPENDIX J: REVENUE BUDGET .................................................................................................... 117 APPENDIX K: HRA BUSINESS PLAN ............................................................................................... 121 APPENDIX L: CAPITAL POLICIES .................................................................................................... 122 APPENDIX M: TREASURY MANAGEMENT STRATEGY ................................................................. 125 APPENDIX N: TREASURY MANAGEMENT POLICY ....................................................................... 135 APPENDIX O: SERVICE & COMMERCIAL INVESTMENT STRATEGY .......................................... 145 APPENDIX P: CAPITAL RESOURCES .............................................................................................. 153 APPENDIX Q: CAPITAL PROGRAMME ............................................................................................ 156 APPENDIX R: TEN YEAR SUMMARY CAPITAL PROGRAMME ...................................................... 161 APPENDIX S: DEBT REPAYMENT POLICY ..................................................................................... 163 APPENDIX T: PRUDENTIAL INDICATORS ....................................................................................... 168 APPENDIX U: PAY POLICY STATEMENT ........................................................................................ 172 APPENDIX V: FEES AND CHARGES ................................................................................................ 183 LEADER’S FOREWORD This document sets out the Financial Plan for the Council for the 2021/22 financial year, outlining the vision and priorities that will inform future decisions and spending. The plan has been produced against a backdrop of the ongoing COVID-19 pandemic and it would be remiss of me not to highlight the tragic impact that the last year has had across our city. Families have lost loved ones, businesses have struggled and jobs have been lost. Many people have struggled financially, mentally and in lots of other ways. The pandemic has highlighted long-standing issues and inequalities that must be tackled to ensure that every neighbourhood and every community across Birmingham benefits from the recovery to come. And we will recover together as a city. We've seen the very best of our city, with families pulling together, neighbours looking out for each other and communities showing real strength and spirit. Now we will heal together, and this plan outlines our vision for: • An entrepreneurial city to learn, work and invest in • An aspirational city to grow up in • A fulfilling city to age well in • A great city to live in • A city whose residents gain the most from hosting the 2022 Commonwealth Games • A city that takes a leading role in tackling climate change Starting with the introduction of the Government-mandated Clean Air Zone this summer, we will take decisive action in response to the climate emergency, making Birmingham a cleaner, greener and healthier place to live and work. Birmingham is, and always has been, a resilient city. The strengths and assets that made this an attractive place to live, work and invest before COVID-19 have not gone away – in fact they are now more important than ever. • HS2 is still happening, bringing jobs and opportunities. • Some of the UKs biggest companies, such as PwC and HSBC are proud to call the city home. • We have fantastic universities that are producing a strong pipeline of talent. • And next year we play host to the 2022 Commonwealth Games - a huge event that will really put Birmingham on the global stage. 1 We will make these ongoing strengths work for the people of Birmingham, building more homes, creating more jobs and ensuring that the benefits are felt in every street, neighbourhood and community. But though there are many reasons for optimism, this is also a city of challenges; a city where over a decade of austerity has left its mark on our communities and public services. This Financial Plan outlines how we will meet those challenges, improving and modernising services and working with our partners to tackle inequalities to support and protect the most vulnerable in our city. Just as we have done throughout the pandemic, Birmingham will pull together and together we will build a better Birmingham. 2 CHAPTER 1: POLICY CONTEXT 1. Introduction 1.1. The Medium Term Financial Plan (MTFP) is an important strategy which will enable the Council to seize significant opportunities and deliver upon key priorities, for the benefit of the citizens of Birmingham. 1.2. It will do so by setting out how the Council will utilise the resources it has at its disposal, in the most effective and efficient way to promote opportunities and tackle inequalities in all parts of our diverse communities. 1.3. Despite the challenges posed by the pandemic, there is room for optimism. 1.4. In less than 18 months one of the biggest sporting events in the world, the Commonwealth Games will begin in Birmingham; 1.5. High Speed Rail (HS2) is due to arrive by late 2026 which will create approximately 26,000 jobs within the city and increase economic output by £4bn per year. 1.6. The city’s ambition to tackle climate change will not only improve our air quality and natural environment it will also deliver economic growth and job opportunities via decarbonisation (as set out in the Route to Zero Action Plan). 1.7. The impact of COVID-19 has been felt in respect of the tragic loss of human life, the restrictions it has placed on our everyday lives and in terms of the significant economic impacts it has had on workers and businesses across the city. 1.8. In Birmingham the crisis has revealed both the issues we need to put right and our capacity to adapt and to take radical action when this is called for. It has highlighted the strength and solidarity of Birmingham’s citizens and communities and their capacity to take voluntary action and unite to support those in need; the Council’s delivery capabilities, our capacity for innovation, and our renewed sense of purpose; and the potential of the city’s many strong partnerships to drive improvement and change, including the regional partnership of the West Midlands Combined Authority (WMCA) and Local Enterprise Partnerships. 1.9. However, worryingly, it has also highlighted the chronic and structural inequalities in the city and the continued level of poverty and vulnerability in some groups and communities. Many households remain in a precarious state, relying on parts of the labour market that have been weakened and made fragile by the pandemic. 1.10. This is an issue the Council will be firmly focused on during the period of this MTFP; we aim to drive a fundamental reset of life chances for the people of 3 Birmingham and we centre equality and aspiration in our Birmingham City Council Delivery Plan for 2020-2022. 1.11. COVID-19 has also revealed that many of our public services are stretched, fragile and not well designed