This meeting of the Budget Scrutiny Task Group was scheduled to discuss the council's General Fund and Housing Revenue Account budgets for 2025/26. The agenda included presentations on the provisional Local Government Finance Settlement, proposed savings and investment proposals, and an update on the budget gap.

The meeting was also scheduled to discuss the Housing Revenue Account Business Plan, which included proposals for rent increases, capital investment, and policy initiatives.

General Fund Budget

The report pack for the meeting included a report titled Financial Planning 2025/26, that outlined the Council's General Fund revenue budget for the 2025/26 financial year.

Budget Gap

This report suggested that, despite a larger than expected increase in funding from central government, there was still a projected budget gap of £3.7m. The report said that:

This does not take into account any decision on the level of council tax. Every 1% increase in CT raises an additional £710k. Regulations allow an increase of up to 4.99% (incl.2% for the Adults Social Care precept)

The report also provided an update on the key risks to the budget. These included:

• Funding - Uncertainty around future funding reform
• Inflation - Increased inflationary pressures on pay and contracts.
• Interest - Future interest rate changes on the capital programme
• Temporary Accommodation - Costs associated with homelessness acceptances.
• Social Care - Increasing demand and complexity in social care.
• Savings - The risk that savings are not achieved as planned.
• School balances - Falling school rolls leading to deficits

Savings Proposals

A report titled Appendix 1 - Savings Proposals included a list of savings proposals. The proposals were divided into categories based on the relevant department, and each proposal was given a 'Community Impact' and 'Delivery' rating based on a traffic light system of Green, Amber and Red. These proposals included:

• Cashless Parking End-User Charges - Estimated to save £1.2m in 2025/26
• Pay to Park - Additional Income - Estimated to save £1.5m in 2025/26
• PCN Income from additional enforcement - Estimated to save £2.5m in 2025/26
• Commercial Waste: Above inflation price increases - Estimated to save £1.6m over 2 years from 2025/26
• Demand Management in Children's Services - Estimated to save £725,000 over 3 years from 2025/26.
• Digital and Process Transformation in Children's Services - Estimated to save £700,000 over 3 years from 2025/26
• New models of Care Leaver Accommodation - Estimated to save £800,000 over 3 years from 2025/26
• A2D Property Purchase - Estimated to save £4m in 2025/26
• Facilities Management contract savings - Estimated to save £700,000 in 2025/26

Investment Proposals

A report titled Appendix 2 - Investment Proposals listed the investment proposals. These were also divided into categories based on the relevant department. The proposals included:

• Coroners Court - £98,000 in 2025/26
• Personal Assistant Flat Rate - £1.45m in 2025/26
• Homecare (Minimum Income Guarantee) - £1.2m in 2025/26
• Investing in Housing Solutions statutory prevention service - £500,000 in 2025/26
• Insourcing Housing Solutions Service - £1.787m over 2 years from 2025/26.
• Rough Sleeping & ASB - £1m in 2025/26

Dedicated Schools Grant

The meeting was scheduled to receive a report on the Dedicated Schools Grant (DSG) which is a ring-fenced grant that the council receives from central government to fund schools in its area.

The report noted that the provisional DSG allocation for 2025/26 had increased by £7.009m or 3.5%. However, it also highlighted a number of pressures on the DSG, including increasing numbers of care leavers, support and accommodation for families with no recourse to public funds, and SEN transport costs.

General Fund Capital Programme

The meeting was also scheduled to consider a report on the General Fund Capital Programme, which sets out the council's planned capital expenditure over a 15 year period. The total value of the revised programme is £2.496bn (gross) and £1.32bn (net). The programme includes a number of schemes including:

• Westminster Builds - The council's house building programme. The revised programme included an additional £15m for Westminster Builds.
• Harrow Road regeneration - This project saw a £1.5m reduction, reflecting the latest cost forecast for the project.

Housing Revenue Account

The meeting was also scheduled to discuss a report titled Housing Revenue Account Business Plan 2025/26. The Housing Revenue Account is a ring-fenced account that holds money that the council receives from tenants' rents and other income from its council housing stock. By law the HRA must be kept separate from the council's other finances, and money in the HRA can only be spent on managing and maintaining council housing.

Key Points

The report highlighted the key points in the Housing Revenue Account Business Plan:

• Rent Uplift - The plan proposed a rent increase of 2.7% in line with the government's rent standard. The rent standard allows local authorities to increase rents by a maximum of CPI + 1%.
• Policy Initiatives - An additional £2.0m to support statutory health & safety requirements (under the Building Safety Act 2022) and an additional £1.0m to extend the rent support fund for a further year.
• Repairs & Maintenance - An increase in the repairs and maintenance budget of £7.3m.
• Capital Investment - Additional capital investment of £219m.
• Paddington District Heating Undertaking (PDHU) - A capital allocation for the PDHU, to cover the replacement of the existing secondary and tertiary pipe network within HRA owned blocks and dwellings.
• Borrowing Increase - An increase in borrowing of £110m.

The report stated that:

Servicing this debt requires the HRA to commit to the maximum rent increases for the medium-term.

Risks

The report identified a number of key risks to the Housing Revenue Account Business Plan:

• Interest Rates - Uncertainty over future interest rates for borrowing.
• Rents - Uncertainty over the future of the rent standard, and future rent increases.
• Repairs - Uncertainty over the future cost of responsive repairs.
• External Capital Funding - Reliance on external funding sources.