Content

Decision taken
1.   
Cabinet noted:

a)   
 the Statement of the Chief Financial
Officer on the robustness of budgets and adequacy of reserves
(appendix N).

b)   
that the following amounts for the year 2025/26 have been set in
accordance with regulations made under Sections 31A and 31B of the
Local Government Finance Act 1992:

 
2.   
Cabinet approved the budget proposals as set out in the agenda and
note that any comments from Overview and Scrutiny Committee will be
returned to Special Cabinet on 21 January 2025 for consideration,
before final recommendations are made to Council.
 

 
 
 
Reason for
decision
The budget proposals
were aligned to the Council’s Business Plan targets for
2025/26.
 
The Council’s
ability to deliver a balanced budget has becomes more challenging
each year, after a period of significant grant reductions,
inflationary increases and the ongoing impacts of the pandemic.
There had been a rise in demands on services such as homelessness
which had added even more pressures. A multi-year settlement would
be provided next year which will provide much needed certainty.
 
The Medium Term forecasts were updated and approved in
October 2024, which showed an increased budget gap for 2025/26 of
around 4.5 million pounds.
 
General Fund
 
The General Fund
budget was summarised in Appendix A, and split by service in
Appendix B.
 
The starting point for
2025/26 is a forecast, General Fund reserve balance, of
£6.5m. 
 
The 2025/26 budget
included an increase in the Net Cost of Services of £1.5m, to
£16.1m which included the inflationary impacts, along with
growth and savings as set out in appendices C and D.
 
The changes were
summarised in Section 3.1.6 of the report.
 
Savings had been
identified to the Council’s base budget of just over
£1.8m, which would support the Council to meet its growth
areas of spend of £2m, and inflationary impacts of
£1.4m.
 
It was proposed to
increase Council Tax by just under 3% per Band D property, the
maximum allowed without a referendum.
 
A full review of fees
and charges had been undertaken as set out in Appendices E and H
which had included looking at cost recovery of discretionary
services and benchmarking with other councils.
 
Appendix E also
included a cover sheet to highlight those fees and charges which
have deviated from a purely inflationary increase, and the
justification for these deviations.
 
The provisional
settlement from the Government was higher than anticipated when
setting the MTFS, which had assisted the Council in balancing the
budget for 2025/26, but it was not certain these grants would
continue, the use of these for one year, puts additional pressures
on later years in the MTFS.
 
The new Medium Term
Financial Strategy in Appendix L set out further gaps of £1.7
m in 2026/27 rising to a cumulative gap of £6m by 2028/29,
after a planned use of reserves of £2.7m over the MTFS
period.
 
The planned use was a
response to funding reductions expected, details of which are set
out in the Council’s Reserves Policy.
 
It would be
challenging to continue to find savings without impacting upon
services as the Council enters the next medium-term
period.   
 
The final government
settlement was awaited and was not expected to materially change
the 2025/26 budget, although it should be noted the grant for
National Insurance had been estimated as was not included in the
provisional settlement.
 
Housing Revenue
Account
 
The HRA budget
proposals were summarised in Appendix F, and principal variances
were set out in Appendix G.
 
Rent increases had
been proposed in line with rent policy of CPI+1%, which for 2025/26
equates to 2.7%.
 
It was intended to
maintain HRA balances at a minimum level of just under £3.3
million.
 
Capital
The proposed Capital
budget of just over £68m was set out in Appendix I, and included nearly £22m of rephasing from
the current financial year. 
 
Around £4m of
related to the General Fund, and around £64m related to the
HRA. Included in the HRA budget, was £6m on the Affordable
Housing Programme, with the remaining £58m being investment
into existing stock.
 
Capital Financing
Appendix J summarised
the Council’s estimated 5 year borrowing requirements through
to 2029/30.
 
For the General Fund,
the increase in the borrowing requirement continues.  The increase included the completion of some of
the regeneration projects already underway, along with new items
such as the works arising from the asset conditions reports on our
commercial and operational estate.
 
For the HRA, the
significant investment programme for the Council’s existing
housing stock over the next few years, and continued investment in
new housing, mean that our HRA borrowing requirement is now
predicted to reach around £370m by 2029/30. 
 
It was noted that due
to increased requirements on the HRA from the social housing
regulations, a review of borrowing rates, and increased capital
spend, the debt repayments for the HRA now stand at 33 years. This
is just outside of the 30 year business
plan. This could be considered as affordable, as the life of the
stock is longer than 33 years. However, the report included
recommendations to consider options over the coming year to seek to
bring borrowing repayments back into a 30
year window, to provide future flexibility and buffers to
and future legislative changes.
 
 
Medium Term Financial
Strategy
The MTFS set out in
Appendix L highlighted the challenges faced by the Council in the
period through to 2027/28 notably the likely requirement to find a
further £1.7m of annual General Fund revenue savings by
2026/27, after a planned use of reserves.
 
The Council’s
financial position would be affected by the Governments reform of
local government finance, which was currently being consulted upon,
along with the planned business rates reset in 2026/27.  The outcome of these was unknown at this
stage.
 
As with the MTFS
update in previous years, alternative scenarios had been modelled
due to volatile and uncertain economic conditions, which show the
three year savings target could range
between £4.7m and £7.5m.
 
Our level of General
Fund Capital Reserves was now depleted, which would constrain the
Councils options for major capital spend over and above those
projects already planned, unless sources of funding could be
identified.
 
Within the HRA, the
core income was more stable than the General Fund.  However, the level of capital spend and related borrowing over the next few years
is significant, and borrowing repayment now stands at 33
years. 
 
The document
demonstrated the Council’s commitment to achieving financial
stability. It is intended that the situation would be improved by
the driving out of further efficiencies from our Transformation
Programme, the identification of further opportunities to increase
income generation, and, opportunities to
repurpose or dispose of assets to reduce the councils borrowing
costs. 
 
Special Expenses
Special Expenses,
whereby Council Tax amounts are adjusted by settlement to take
account of differing expenditure levels, are set out in Appendix
M.