The Budget Scrutiny Task Group met to discuss the council's Medium Term Financial Plan, including the potential impacts of the recent Autumn Budget statement and proposals for new savings, investments and fees. The meeting also included presentations on the Environment & Communities and Regeneration, Economy and Planning directorates, and their proposed budgets for 2025/26.

Medium Term Financial Plan (MTFP)

The meeting included a presentation of the MTFP - Budget Scrutiny Task Group - 14 November 2024.

The Autumn Budget statement included an announcement of a 3.2% increase in Core Spending Power (CSP), described as better than expected. £1.3bn in additional core spending grant funding was announced, including £600m for adult social care. A further £1bn was announced for Special Educational Needs and Disabilities (SEND) provision and £230m for homelessness.

The report notes that:

Whilst individual local authorities have previously been able to broadly estimate how much of the nationally available sums they might receive, this has been made more difficult this time as Government has suggested that it may use different distribution methodologies for this additional funding.

It goes on to say that:

MHCLG¹ noted that the additional funding for 25/26 may be targeted to those with the greatest need, outside of the normal formula allocation system.

The report estimates that Westminster City Council will receive an additional £5m in grant support in 2025/26 from this newly announced funding. The report also notes the uplift in employers' National Insurance contributions, from 13.8% to 15%. While the government has pledged to fund the increase for direct council employees, the level of funding is still uncertain.

The report also notes the budget announcement regarding business rates: an extension of the retail, hospitality and leisure relief; an increase in the standard business rates multiplier; and the freezing of the small business rates multiplier.

In terms of the Housing Revenue Account (HRA), the report notes a consultation on a new long-term social housing rent settlement of CPI² +1% for five years and a proposal to reduce discounts on Right to Buy (RtB) schemes and enable councils to keep all receipts generated by sales.

In total, new savings options totalling £28.9m have been identified over a three year period, with £19.9m in 2025/26. Investment proposals totalling £10.1m in 2025/26 are also included. The budget assumes that one-off investments will be funded from reserves. Service pressures totalling £12.8m in 2025/26 are included in the budget.

The report states that:

Most significantly this includes demand and complexity pressures within Adults Social Care, increases in care leavers and uncertainty over health funding in Children’s Services, accommodation for increased rough sleepers and temporary accommodation staffing support.

The MTFP does not include any decisions on the level of council tax rises for future years. For every 1% increase, the net yield would be £690,000.

Key macro risks to the budget gap are identified as funding uncertainty for 2025/26 onwards and inflation. Every 1% increase above the Bank of England's target of 2% would cost the council approximately £3.7m.

The key identified micro risk is temporary accommodation: every 1% increase in homelessness acceptances above what has been budgeted for would cost the council approximately £480,000.

Environment & Communities

A presentation on the Environment and Communities directorate's proposed budget for 2025/26 was given during the meeting. This presentation is available on the council's website: Environment and Communities - Budget Scrutiny Task Group - 14 November 2024.

The report summarises the challenges faced by the directorate in delivering services in Westminster, describing them as unique.

It states that:

Some core services costs such as waste collection and street cleaning are comparatively very high, reflecting the impact of visitors and needs/expectations of residents, and satisfaction is significantly higher than LA averages.

It goes on to highlight other challenges, including the cost of living; high and increasing levels of crime; poor air quality; and the need to become a net zero council by 2030.

The report identifies re-procurement of four major contracts, for highways, waste, leisure and parks, as both a challenge and an opportunity to drive efficiencies, innovate and embed corporate priorities on inequality and climate.

The report proposes new savings totalling £9.89m over the period 2025/26–2027/28. These include a number of proposals to generate increased income, such as:

• Increasing leisure contract income by £80,000;
• Introducing a new in-house service to speed up vault repairs and charging fees for inspections and repairs;
• Passing on cashless parking end-user charges to customers in a new contract;
• Increasing commercial waste charges to customers to smooth the impact of increased South East London Combined Heat and Power (SELCHP)³ waste disposal costs from 2026/27;
• Increasing the standard bulky waste charge (for up to 5 items) from £34 to £39 plus inflation from April 2025;
• Increasing public convenience fees and charges following a modernisation programme;
• Increasing cemeteries income;
• Increasing income from the electric vehicle (EV) network;
• Introducing a charge for statutory undertakers for temporary repairs and 'make safes' of their assets by the council; and
• Introducing fixed penalty notices to applicants of temporary structure applications who do not comply with agreed conditions.

The report also proposes savings through service efficiency and innovations, such as:

• Reducing the Highways Operations Abnormal Loads budget by £120,000 by delivering efficiencies through the new CASCADE IT system;
• Identifying £40,000 of efficiencies in Highways Supplies and Services budgets;
• Changing footway construction materials to those that are greener, longer-lasting, safer and recyclable at sites across the city;
• Upgrading cleansing vehicles by replacing nine out of 19 street cleansing 7.5 tonne 'cage' vehicles with 12 EAV small electric bikes, generating a saving of £150,000 per year;
• Realising a £30,000 efficiency saving by enabling on-street washing of litter bins;
• Redesigning waste and recycling collection routes so that most vehicles will operate within a small area of Westminster rather than collecting across multiple wards/areas, saving £100,000; and
• Investing in a digital transformation data solution to support the continued identification and enforcement of homes that require an appropriate property licence, generating £60,000.

The report also proposes the following:

• Implementing a late-night levy payable by the holders of any premises licence or club premises certificate in the borough (which authorise the sale or supply of alcohol on any days during a period beginning at or after midnight and ending at or before 6am), potentially generating up to £100,000 in income;
• Implementing a private rented sector licensing scheme. Consultation is about to begin on the introduction of a selective licensing scheme. Dependent on the outcome of the consultation, an application would be made to the Secretary of State for a designation. If approved, the scheme will allow for many functions presently undertaken by residential Environmental Health Officers (EHOs), and funded by the General Fund, to be covered by selective licensing activities, releasing a saving of £300,000;
• Increasing penalty charge notice (PCN) income from additional enforcement by £2.5m;

A number of new investments are also proposed, totalling £3.166m. These include:

• £600,000 over two years to pilot new ways of working across Westminster and the council, building an Invest to Save proposal to deliver improved outcomes, demand management and efficiencies/savings through a new place-based model as part of the Community Hubs programme;
• £1.296m to fund combined mini-hub and full community hub operating costs, in addition to proposed sites;
• £150,000 to create a project team to develop the specification and subsequent mobilisation of the recommended option for the future management of parks and cemeteries, ahead of the current contract expiry in March 2026;
• £244,000 per annum over two years for specialist skills to ensure the council's future leisure contract delivers the optimum commercial vs community benefit;
• £920,000 of ongoing funding for the Changing Futures Specialist Team to support the delivery of the homelessness strategy by taking forward the learning from the Changing Future Programme;
• £100,000 per annum for two years (2026/27 and 2027/28) to provide additional funding for the Community Priorities Programme for Pimlico North and South to replicate the grant programmes in Paddington;
• £400,000 per annum for two years (2026/27 and 2027/28) for a grants programme to fund a series of supplementary advice services (for example, same-language advice) as the Cost of Living programme comes to an end;
• £70,000 per annum to fund a third graffiti vehicle service;
• £700,000 per annum for salaries and technical consultancy costs for new roles to support district heating network capability and capacity; and
• £180,000 per annum from 2026/27 to enforce higher standards from landlords.

The report also identifies the following unavoidable pressures:

• An increase in SELCHP gate fees from 2026/27, costing £2.54m;
• £150,000 per annum from 2027/28 to cover the maintenance of Sustainable Drainage Systems (SuDS)⁴;
• £150,000 per annum from 2027/28 for the operation and maintenance of market security barriers across four markets; and
• £190,000 to cover Parks Health and Safety & Infrastructure reactive maintenance works and regular surveys.

Regeneration, Economy & Planning

The meeting also included a presentation on the Regeneration, Economy and Planning directorate's proposed budget. Again, this presentation is available online: Regeneration Economy and Planning - Budget Scrutiny Task Group - 14 November 2024.

The report summarises national policy and local impact in this area.

In particular, the report notes that:

• The impact of the pandemic on productivity growth in London is still unclear and that it is still too early to understand how the pandemic and changed ways of working have impacted growth;
• Reductions in planning applications have resulted in less funding coming from the Community Infrastructure Levy (CIL)⁵ and Section 106 agreements⁶ for social housing, large infrastructure and road developments; and
• The Westminster Adult Education Service (WAES) is losing additional income streams at the end of 2023/24 as funding from the Multiply, Bootcamps and Mayor Academy schemes ceases.

New efficiency savings of £1.317m are proposed for 2025/26. These include:

• Requiring suppliers to contribute to a Social Value Service fund at contract stage. This would cost suppliers £75,000 and would connect them with community organisations and events;

• Recovering £40,000 in costs from the Business Improvement Districts (BIDs). The report notes that:

  Westminster has the highest number of the Business Improvement Districts (BIDs) in the country, with 18 established and a further 5 in the pipeline.

  The administration of the BIDs is said to cost an estimated £530,000 a year, with only £300,000 being recovered. This proposal seeks to recover a further small proportion of associated costs from the BIDs in the form of an annual partnership payment;

• Removing the £254,000 General Fund budget for the Westminster Adult Education Service (WAES) as it is a grant-funded service;

• Levying a fee for the service of creating Heritage Partnership Agreements and equivalent tools, simplifying the planning/listed building consent regime, potentially generating £50,000;

• Applying Community Infrastructure Levy (CIL) / Section 106 agreement administration fees. This saving seeks to replace current General Fund expenditure on back-office and staff costs with income from administration fees, generating £200,000;

• Levying a 5% admin charge for the Building Safety Levy, potentially generating £50,000;

• Increasing fees for discretionary services, such as pre-application advice, planning performance agreements and planning resourcing agreements, by 10%, potentially generating £160,000;

• Selling advertising on council regeneration hoardings, potentially generating £100,000;

• Generating £50,000 of income through Culture and Place Shaping activity;

• Reducing the budget for general expenses, such as staff events and training, by £18,000; and

• Reducing staffing costs by £45,000 following a review of directorate priorities and staff workload.

A total of £1.4m in investments are also proposed:

• £200,000 to support the development of the new Culture and Place Shaping Department;
• £100,000 to fund economic development, particularly business support interventions across High Street programme areas such as Paddington, Bayswater & Queensway and Pimlico;
• £95,000 for non-capitalised project costs for Culture and Place Shaping, including costs relating to Great Western Road; Harrow Road East; the Strand & Covent Garden parades; Half Penny Steps; and Westway Canalside Public Art;
• £50,000 for an intervention that improves young people's skills, with a focus on entrepreneurial skills, in Pimlico;
• £328,000 for the North Paddington Streets Programme;
• £32,000 to fund a permanent post for the Retrofit Taskforce;
• £423,000 for ongoing delivery of the North Paddington programme; and
• £200,000 to support premises and programming costs for the Health and Wellbeing programme in Lisson Grove and Church Street.

Finally, the report identifies £105,000 of pressures:

• £45,000 to cover Greater London Authority (GLA) audit costs within the Development and Regeneration service area; and
• £60,000 to enable Building Control Services to meet increased demand as a result of the Building Safety Act 2022.