Decision Maker: Full Council

Outcome: Recommendations Approved

Is Key Decision?: Yes

Is Callable In?: No

Date of Decision: February 13, 2025

Purpose: Budget and Council Tax Setting

Content: 1.          THAT the Cabinet endorse the following:   (a)   The recommendations to the Council set out below.   2.          It is recommended that the Council approve the following:   (a)    The revised Revenue Budget for the financial year 2024/25 and the Revenue Budget for the financial year 2025/26 as set out in the General Fund Summary (Appendix 1) which includes: (i)      Additional spending in Adult Social Care of £11.1m and Children's Services of £4.7m (ii)     No Revenue Contribution to Capital in 2024/25 (b)    Any variation arising from the Local Government Finance Settlement 2025/26or any further savings made in 2024/25 arising at the year-end (after allowing for specific carry forward requests) be transferred to the Revenue Reserve for Capital, Transformation Reserve, and General Reserves with the level of each transfer to be determined by the S.151 Officer. (c)     That the level of Council Tax be increased by 2.99% for general purposes in accordance with the referendum threshold[1] for 2025/26 announced by Government (as calculated in Appendix 2) (d)    That the level of Council Tax be increased by a further 2.0% beyond the referendum threshold (as calculated in Appendix 2) to take advantage of the flexibility offered by Government to implement a "Social Care Precept"; and that in accordance with the conditions of that flexibility, the full amount of the associated sum generated of £2,201,721 is passported direct to Adult Social Care (e)    That the amounts set out in Appendix 2 be now calculated by the Council for the financial year 2025/26in accordance with Section 31 and Sections 34 to 36 of the Local Government Finance Act 1992 (f)      The S.151 Officer be given delegated authority to implement any variation to the overall level of Council Tax arising from the final notification of the Hampshire Police & Crime Commissioner, Hampshire & Isle of Wight Fire & Rescue Authority and Parish and Town Council precepts, and amend the calculations set out in Appendix 2 accordingly (g)    The savings proposals for each Portfolio amounting, in total, to £1.5m for 2025/26and continuing into future years as set out on the next page:           Portfolio Controllable Budget Savings Proposal   £ £ %   Adult Social Care & Public Health* 62,020,191 0 0.0%   Children's Services, Education & Corporate Functions* 47,243,346 721,100 1.5%   Climate Change, Biosphere & Waste 7,412,195 37,000 0.5%   Deputy Leader - Housing & Finance 8,501,964 601,000 7.1%   Economy, Regeneration, Culture & Leisure 10,794,751 1,900 0.0%   Leader - Transport Infrastructure, Highways PFI and Transport Strategy, Strategic Oversight and External Partnerships 16,520,833 0 0.0%   Planning, Coastal Protection & Flooding 2,538,260 0 0.0%   Regulatory Services, Community Protection & ICT 13,427,815 139,000 1.0%   Grand Total 168,459,355 1,500,000 0.9%     * Excludes the additional funding passported through to Adult Social Care of £11.1m (which if included would result in an overall increase of 17.9%) and the additional funding for Children's Services & Education of £4.7m (which if included would result in an overall increase of 10.8%)     (h)    Directors be instructed to start planning how the Council will achieve the savings requirements of £6.5m for the 3-year period 2026/27 to 2028/29 and that this be incorporated into Service Business Plans (i)      The minimum level of Revenue Balances as at 31 March 2026, predicated on the approval of £1.5m savings in 2025/26be set at £8.0m to reflect the known and expected budget and financial risks to the Council (j)      Members have regard for the "Statement of the Section 151 Officer in accordance with the Local Government Act 2003" (k)     The Capital Programme 2024/25 to 2029/30 set out in Appendix 5 which includes all additions, deletions and amendments for slippage and re-phasing (l)      The new Capital Investment Proposals ("New Starts") - 2025/26 set out in Appendix 4 be reflected within the recommended Capital Programme 2024/25 to 2029/30 and be funded from the available Capital Resources (m)  The allocation of Disabled Facilities Grants be made to the Better Care Fund, and reflected within the recommended Capital Programme 2024/25 to 2029/30 (n)    The S.151 Officer be given delegated authority to determine how each source of finance is used to fund the overall Capital Programme and to alter the overall mix of financing, as necessary, to maximise the flexibility of capital resources used and minimise the ongoing costs of borrowing to the Council (o)    That the S.151 Officer in consultation with the Leader of the Council be given delegated authority to release capital resources held back for any contingent items that might arise, and for any match funding requirements that may be required of the Council to secure additional external capital funding (e.g. bids for funding from Government or any other external source). 3.            It is recommended that the Council note the following in respect of the Council's Budget:    (a)    The Revenue Budget 2025/26 as set out in Appendix 1 has been prepared on the basis of a 4.99% increase in Council Tax, any reduction from the overall 4.99% Council Tax increase proposed will require additional savings of £1,101,000 for each 1% reduction in order for the Budget 2025/26 to be approved (b)    The Revenue Forecasts for 2026/27 onwards as set out in the section entitled "Revenue Forecasts 2026/27 to 2028/29" and Appendix 1 (c)     The estimated Savings Requirement of £6.5m for the three-year period 2026/27 to 2028/29, for financial and service planning purposes, be phased as follows: Financial Year In Year Savings Requirement £m Cumulative Saving   £m 2026/27 2.5 2.5 2027/28 2.0 4.5 2028/29 2.0 6.5   (d)    The Transformation Reserve held to fund the upfront costs associated with Spend to Save Schemes and Invest to Save Schemes is now fully committed and will only be replenished from contributions from the Revenue Budget and an approval to the transfer of any further savings at year end (e)    Should the Council elect to reduce the level of savings below £1.5m in 2025/26 (and £6.5m over the next three-year period), the Council's financial risk will increase and therefore the minimum level of General Reserves held will also need to increase to maintain the Council's financial resilience (f)      The Council Tax base for the financial year 2025/26 will be 57,697.1 [item T in the formula in Section 31 B(1) of the Local Government Finance Act 1992, as amended (the “Act”)]. (g)    The Council Tax element of the Collection Fund for 2024/25 is estimated to be in surplus by £2,163,470 which is shared between the Isle of Wight Council (85.5%) and the Police & Crime Commissioner (11.0%) and the Hampshire & Isle of Wight Fire & Rescue Authority (3.5%) (h)    The Business Rate element of the Collection Fund for 2024/25 is estimated to be in surplus by £6,918,907 of which is shared between the Isle of Wight Council (49%), the Hampshire & Isle of Wight Fire & Rescue Authority (1%) and the Government (50%) (i)      The Retained Business Rate income[2]for 2025/26 based on the estimated Business Rate element of the Collection Fund surplus as at March 2025, the Non Domestic Rates poundage for 2025/26 and estimated rateable values for 2025/26 has been set at £49,339,548.     [1] Council Tax increases beyond the referendum threshold can only be implemented following a "Yes" vote in a local referendum. [2]Includes Retained Business Rates of £19,757,296, "Top Up" of £12,743,652, S.31 Grants of £13,448,335 and a Collection Fund surplus of £3,390,265