The Budget Scrutiny Panel of Charnwood Borough Council met to consider the draft budgets for 2025/26, noting the provisional financial settlement information was not yet available. They did not identify any recommendations or observations to make to the Cabinet at this stage.

Draft Budgets 2025/26

The Panel discussed the draft budgets for 2025/26 in detail, and were provided with an update on the financial position of the council.

The Director Finance, Governance and Contracts explained that the council was in a better financial position than had been expected, with the 2023/24 outturn showing a use of the working balance around £1m less than originally budgeted. However, he noted that there was more uncertainty than there had been for the previous year's budget, particularly around compensation for food waste implementation costs and income from Extended Producer Responsibility (EPR) levies.

The Panel were informed that early indications are that the provisional financial settlement from the government will be broadly cash flat in comparison to previous years. However, this is based on the council increasing Council Tax by the maximum permitted amount. The Director explained that, when the effect of this loss in government funding is factored in, the actual settlement represents a reduction in funding of approximately £400k.

On the matter of the implementation of food waste collections, the Director stated that the capital cost of new vehicles should be met in full by the government, but that it was not yet certain whether the revenue costs of around £1m would also be covered. He also noted that the council had previously assumed income from EPR levies of £400k, but that this figure was now expected to be just over £1.4m.

The Director provided an update on the Housing Revenue Account (HRA). He informed the Panel that the HRA is facing significant financial pressures, and that an operating deficit of £1.184m is forecast for 2025/26. This is after the HRA finances the 2025/26 capital programme by £4.301m through the depreciation charge. He explained that service pressures include £254k in inflationary pressures and an ongoing additional resourcing requirement of £946k. The Director stated that borrowing of £5.156m would be required to set a balanced budget.

A member of the Panel asked who would be liable for the £5.156m borrowing should the council become part of a change to a unitary authority arrangement¹. The Director stated that the timing of any borrowing would reflect when the money was needed, and that liabilities would be picked up by whatever authority was formed as a result of any local government reorganisation. He stated that it was likely that guidance would be provided on what borrowing could be undertaken and levels of reserves to be maintained, should any process of local government reorganisation be progressed. The Director stated that the borrowing set out in the report was reasonable.

There was some discussion about the proposed increase to the HRA budget for repairs and maintenance. The Director explained that this was necessary to reflect both inflation within the industry and the need to invest in the service, and to deal with a backlog of repairs. There was concern that income from rents remained largely the same. The Director responded that it was hoped that the work being undertaken would lead to a reduction in the resources required in future years.

The Panel also discussed the level of the General Fund Working Balance, and noted that it was currently considered to be appropriate at £3m.

The Panel concluded their discussion by seeking clarification on a number of issues:

• Options for savings: The Panel asked for more information on the options for savings that had been identified. In response, the Director explained that these needed to be worked through before being put forward, and that some were sensitive in nature. However, he confirmed that any options put forward would be made visible before being decided.
• Letting of council buildings/commercial properties: The Panel asked about the council's approach to the letting of its buildings and commercial properties, and were provided with a brief overview.
• Approach to borrowing: The Panel asked about the council's approach to borrowing, and whether longer or shorter loan terms might be most beneficial. The Director acknowledged the difficulty in predicting future interest rates but said that the council always took a reasoned and sensible approach to borrowing.
• Void properties: The Panel asked if the likely increase in council housing rental income, as work to deal with void properties progressed, was known. The Director stated that the void information in the draft budget reflected where the council expected to be.
• Financial help from the government: The Panel asked if it was known whether the council would receive any financial help from the government in respect of its obligations under Awaab's Law. The Director replied that any assistance was unlikely before February or March 2025.

Following discussion, the Panel agreed to note the draft budgets and to continue their scrutiny of the budget setting process.

Recommendations/Observations for Panel's Report

It was noted that the Panel were required to submit their final report to the Scrutiny Commission on 13 January 2025, and that their next meeting would be on 7 January 2025. As a result, it was agreed that a draft report template and the minutes of the Panel's meetings to date would be circulated to members as soon as possible. This would enable them to consider what, if any, recommendations or observations they wished to make to the Cabinet in advance of the meeting on 7 January.

It was also agreed that the meeting on 7 January would include a verbal update on the Provisional Financial Settlement from the Government.