Agenda item

Budget and Medium Term Financial Plan 2024/25

Meeting of Cabinet, Tuesday, 27th February, 2024 10.30 am (Item 77.)

Decision:

*RESOLVED –

1. That the budget savings proposals described in paragraph 4.54 of the officer’s report are approved for immediate implementation.

That it be recommended that Council;

2. Notes the forecast outturn for 2023/24 which presents a deficit for the year of £282k to period 8 (paragraph 4.18) and the further management controls proposed to achieve a balanced outturn position for 2023/24 by year end.

3. Approves the overall revenue budget for 2024/25 (table 4 and Appendix B in the officer’s report).

4. Approves the use of £214k from the Budget Risk Reserve to balance the 2024/25 revenue budget (paragraph 4.66)

5. Approves the submission of a proposal to employ flexible use of capital receipts in the financial years 2023/24 and 2024/25 and to delegate the amendment and final approval of this proposal to the Service Director – Finance (CFO), in consultation with the Deputy Leader and Cabinet Member for Finance and Asset Management (paragraph 4.90 to 4.92).

6. Approves the 2024/25 Council Tax Requirement and financing (Appendix H and I in the officer’s report).

7. Increases the Council’s share of Council Tax for properties in each band, a 2.99% increase for a Band ‘D’ property in 2024/25 to £190.81 (paragraph 4.61).

8. Approves the Local Council Tax Support scheme which remains unchanged for 2024/25 (paragraph 4.64).

9. Notes the Collection Fund and the Tax Base forecasts (paragraphs 4.60, 4.63 and 4.33).

10. Notes the financial projections in the Medium-Term Financial Plan (MTFP) for 2025/26 to 2027/28 (Table 4 and paragraph 4.68).

11. Approves the estimates of reserves including maintaining the General Working Balance at £1.5m (paragraphs 4.70 – 4.72).

12. Notes the budget risks and sensitivity analysis (Appendix D) and the Chief Finance Officer’s assurances (paragraphs 4.73 – 4.88).

13. Notes that Cabinet (or the Joint Cabinet and Employment and General Committee) has still to make final decisions on the budget savings proposals described in paragraph 4.55 of the officer’s report.

REASON FOR RECOMMENDATIONS

For the Council to meet the statutory requirements relating to setting the General Fund revenue budget and the level of Council Tax for 2024/25.

Minutes:

The Service Director – Finance presented a report asking Cabinet to consider the General Fund revenue budget report for the financial year 2024/25 and the Medium-Term Financial Plan (MTFP) for the period 2024/25 to 2027/28 and to make recommendations to full Council on the budget allocations and Council Tax level.

The Council’s Budget Strategy was approved by Council on 19 July 2023. The Budget Strategy report set out the need to drive out savings of at least £2.5m at pace, within a framework that was prudent, responsible, and sustainable.

The Budget Strategy Implementation Plan was presented to Cabinet on 14 November 2023. This report set out a detailed approach to addressing the budget gap following extensive work with the Council’s Corporate Leadership Team (CLT) and Cabinet Portfolio Holders, drawing on the thematic interventions set out in the Budget Strategy.

The resulting implementation plan was split into 2 stages. Cabinet approved £539k of stage 1 savings proposals but the Stage 2 savings proposals required further development, including where appropriate engagement or consultation with service users, stakeholders, staff, and trade unions. These proposals were expected to deliver potential savings of between £1.690m and £2.460m.

The Council approved the General Fund Revenue Budget for 2023/24 on 22 February 2023. The budget was constructed in accordance with the Council’s budget principles and the 2023/24 budget was balanced with the use of £1.000m from the Budget Risk Reserve.

The period 5 forecast was reported to Cabinet on 14 November 2023 and presented an adverse position of £334k. This forecast deficit for 2023/24 had reduced to £282k at the end of period 8 and included the impact of the Local Government Employers pay offer, which was made in February 2023 and accepted late 2023.

Despite the improved position in the forecast adverse position the Council would need to continue to monitor the financial position carefully over the next month to identify areas where spending could be contained, and income maximised to ensure projected service expenditures were managed, as a minimum, within approved budgets.

The provisional Local Government Funding Settlement for 2024/25 had been published on 18 December 2023 and proposed an overall increase in Core Spending Power (CSP), of 6.5%. The Government had then announced in January 2024 an additional £600m funding for local authorities. The final Local Government Funding Settlement published on 5 February 2024 confirmed this figure with total CSP for local authorities set at £64,706m. This was an increase in cash terms of 7.5% compared to 2023/24.

Since publication of the Budget Strategy Implementation report, work had been ongoing in relation to reviewing service pressures and updating the budget assumptions to be included within the MTFP. These budget assumptions had been reviewed and updated to take account of known changes, new and emerging service pressures, and inflationary increases. Table 1 in the officer’s report detailed the new emerging service pressures.

It was noted that £539k of new stage 1 savings proposals were already built into the draft MTFP. These were largely officer operational decisions or decisions delegated to Cabinet members. The ongoing impact of these savings proposals would be £269k in 2027/28. Details of the individual proposals were set out in Appendix A of the officer’s report.

It was also noted that £2,407m of Stage 2 savings proposals had already been achieved for 2024/25, with the ongoing impact set to rise to £2,791m in 2027/28, although some of these were still subject to appropriate consultation and decision making. The full list of savings proposals were detailed in Table 2 of the officer’s report.

The overall Council Tax base for 2024/25 had been calculated and set at 30,443.17, an increase of just over 0.7% from 2023/24. To help maintain and protect current levels of service provision the MTFP assumed a Council Tax increase of 2.99% in 2024/25, in line with the referendum limit set by the Government. The Band D Council Tax would increase by £5.54 per annum in 2024/25. For a Band ‘A’ property (more than half the properties in the Borough), the increase was equivalent to an extra £3.69 per annum.

A 2.99% increase together with the increase in tax base would contribute an additional £72k per annum, over and above that which had been assumed in the original MTFP assumptions, to be invested in local service provision.

The final budget position, showing the movements (increases and decreases) from the original estimates within the MTFP approved in February 2023, was set out in Table 4 of the officer’s report. The 2025/26 budget process would require an early focus to allow maximum time for the development and delivery of further budget savings.

Reserves were an important part of the Council’s financial strategy and were held to create long-term financial stability. They enabled the Council to manage change and were a key element of its financial standing and resilience. The Council’s Reserves Policy was set out in Appendix F of the officer’s report, with further details on individual reserves being provided in Appendix G.

The Local Government Act 2003 (section 25) required the Chief Financial Officer (CFO) to report on the robustness of estimates and the adequacy of financial reserves when the statutory calculations to determine the Council Tax were reported. The Council had well established and robust budget processes which had been followed when compiling the 2024/25 budget and medium-term projections.

The savings proposals had also been subject to robust challenge and the MTFP assumed that they would be delivered in full.

As part of the Provisional Local Government Settlement, the Government announced in December 2023 that there would be a continuation of the capital receipts flexibility programme until March 2030, to give local authorities the continued freedom to use capital receipts from the sale of their own assets (excluding Right to Buy receipts) to help fund the revenue costs of transformation projects and release savings.

The Council intended to utilise £1.141m of capital receipts flexibility in 2023/24 and £1.334m in 2024/25. Full details could be found in the Flexible Use of Capital Receipts Strategy Revised 2023/24 and 2024/25 which was attached at Appendix C of the officer’s report.

In preparing the budget estimates for the coming financial year and updating the MTFP, detailed consideration had been given to the need for the Council’s finances to be at levels appropriate to enable the Council to deliver in full on the priorities and objectives that it had set out within the Council Plan for the period 2023 to 2027.