The Cabinet of Cardiff Council met on Thursday, 9 January 2025, to discuss and approve the proposed approach to the 2025/2026 budget consultation. The meeting confirmed that the formal budget consultation will commence on 9 January 2025 and conclude on 5 February 2025, with the results informing the final budget proposal.

2025/2026 Budget Modelling Update and Consultation Requirements

The Cabinet discussed the updated budget position for the 2025/26 financial year, which has been significantly impacted by the Provisional Local Government Financial Settlement. A key challenge identified is a budget gap of £23.410 million, which needs to be addressed through a combination of efficiency savings, service changes, and potential increases in fees and charges.

The council is proposing to implement efficiency savings totalling £11.457 million, which is almost half of the budget gap. These savings are intended to be achieved through back-office efficiencies, such as reducing building running costs and adopting new technology, with a focus on minimising impact on frontline services.

However, efficiency savings alone are not sufficient to close the entire budget gap. Therefore, the council is considering service change proposals and potential increases to fees and charges. The report outlines that a 3.95% increase in Council Tax is modelled as part of the Medium-Term Financial Plan, which would generate an additional £7.536 million. This increase is considered necessary to help fund key services, though the final decision on the Council Tax level will be made following the consultation process.

The council has also highlighted the impact of the UK Budget announcements, particularly changes to employers' National Insurance (NI) rates and thresholds, which are estimated to increase costs for the council by £9.827 million for directly employed staff and an anticipated £5.100 million for commissioned services. While HM Treasury has indicated funding will be provided to public sector organisations to compensate for the impact on directly employed staff, only 85% of this cost is currently factored into the draft budget for prudence.

The Provisional Local Government Financial Settlement, received on 11 December 2024, indicates an increase of 5.3% in Cardiff's Aggregate External Finance (AEF), equating to £33.955 million. This increase is attributed to changes in data underpinning the settlement, including rises in the city's population and pupil numbers. However, this increase only covers just over 50% of the total gross pressures faced by the council.

The report details various transfers of funding into the Revenue Support Grant (RSG) from specific grants, including those for homelessness prevention and teachers' pay and pensions. It also notes the cessation of some grants and reductions in others, such as the Looked After Children Change Fund and the All Wales Play Opportunities Grant.

The council is committed to protecting frontline services, particularly education and social care. The budget modelling reflects a net increase for central education services (£8.8 million), schools (£19.8 million), Children's Services (£7.5 million), and Adult Services (£12.1 million). No savings targets are being set for schools, and the budget for delegated schools' budgets is projected to increase.

A comprehensive city-wide consultation on the 2025/26 budget proposals will commence on 9 January 2025 and run until 5 February 2025. The consultation will be conducted through various channels, including online surveys, hard copies in community venues, social media campaigns, and targeted engagement with seldom-heard groups. The results of this consultation will be a key consideration for Cabinet in preparing their final budget proposal for Council consideration in March 2025.

The Cabinet resolved to note the updated budget position for 2025/26 and agreed to the proposed approach to the budget consultation, confirming its commencement and end dates.