The Public Cabinet of Bexley Council met on Monday 29 January 2024 to discuss the council's financial position and future strategy. Key decisions included the approval of planning assumptions for the Medium Term Financial Strategy, agreement on fees and charges, and the decision to implement an additional Council Tax premium.

Budget Monitoring and Medium Term Financial Strategy

The Cabinet received a comprehensive update on the council's financial position, including the Budget Monitoring Report for 2023/24 (Period 8) and an update on the Medium Term Financial Strategy for 2024/25 to 2027/28.

A significant point of discussion was the council's financial outlook, with a projected budget gap of £8.079 million in 2024/25, rising to £39.281 million by 2027/28. This gap is attributed to several challenging circumstances, including increasing demand and costs for services, particularly in Children's and Adult Social Care, rising inflation, and the impact of the cost of living crisis on residents and businesses.

To address the immediate budget gap for 2024/25, the council will utilise £11.252 million from its voluntary Minimum Revenue Provision (MRP) contributions. This is a one-off measure, and the council will need to identify sustainable ongoing funding sources for future years.

The Cabinet agreed to the current planning assumptions for the Medium Term Financial Strategy, which include a Council Tax increase of 2.99% for 2024/25, in addition to the 2.00% Adult Social Care precept. Fees and charges were also reviewed and agreed, with proposed increases varying by service.

The council's response to the draft Local Government Finance Settlement 2024 to 2025 was noted, highlighting concerns about the reliance on Council Tax increases and the fairness of funding distribution for London authorities. The provisional Dedicated Schools Grant allocations for 2024/25 were also noted, showing an overall increase of 8.10%.

A further report on the Medium Term Financial Strategy is scheduled for Public Cabinet on 22 February 2024.

Fees and Charges

The Cabinet agreed to the proposed fees and charges for 2024/25, which incorporate an uplift in line with the Council's charging policy. These increases vary by service, with some exceptions where fees will not be increased. The proposed fees and charges are detailed in Appendix C of the reports pack.

Council Tax

The Cabinet noted the assumption of a 2.99% Council Tax increase for the 2024/25 financial year, in addition to the 2.00% Adult Social Care precept. This decision was made in the context of the council's need to balance its budget and address the growing financial pressures.

Contract Inflation

The Cabinet noted the approach and the risk taken in regard to setting contract inflation. The council spends a significant portion of its budget on supplies and services and third-party contracts, making it vulnerable to increases in contract values when contracts are renewed. The Medium Term Financial Strategy currently sets aside £11.090 million for contract inflation in 2024/25, with further increases projected in subsequent years.

Draft Local Government Settlement

The Cabinet noted the outcome of the draft local government settlement published by the Department for Levelling Up, Housing and Communities on 18 December 2023. This settlement provides some certainty on government funding for 2024/25 and outlines detailed assumptions. However, concerns were raised about the reliance on Council Tax increases and the distribution of funding, particularly for London authorities.

Other Matters

The Cabinet also noted the Budget Monitoring Report for 2023/24 (Period 8), which indicated a forecasted overspend of £8.581 million. This overspend is attributed to increased energy costs, rising demand in Adult and Children's Social Care, contract inflation, and income pressures. The report detailed the financial performance across various directorates, highlighting significant pressures in Children's Services and Adult Social Care.

The meeting also included updates on the Capital Programme Monitoring, Treasury Management, and Business Rates and Council Tax Collection Performance. The council's overall investment balances and borrowing position were also reviewed.

The meeting concluded with the noting of a further report on the Medium Term Financial Strategy due to be presented to Public Cabinet on 22 February 2024.