The Cabinet of North West Leicestershire Council met on Thursday 09 January 2025 to discuss the council's financial position, budget proposals for the upcoming year, and strategies for capital investment and treasury management. The meeting agenda included the 2024/25 Quarter 2 General Fund Finance Update, draft budgets and strategies for 2025/26, including the General Fund budget, Housing Revenue Account budget, Capital Strategy, and Treasury Management Strategy, and proposed changes to Council Tax discounts and exemptions.

2024/25 Quarter 2 General Fund Finance Update

The Cabinet received an update on the financial position of the General Fund as at Quarter 2 of the 2024/25 financial year. The report indicated a forecast overspend of £2,136,000 on the General Fund budget for 2024/25. This overspend is attributed to several factors, including increased staffing costs due to recruitment and retention challenges, higher demand and costs associated with temporary accommodation, and increased repairs and maintenance for council properties and vehicles. The report noted that while the position is a forecast and could change, it is expected to be funded from the Council's Medium-Term Financial Plan (MTFP) reserve. The Cabinet considered the recommendations presented in the report, which included noting the forecast overspend, noting special expenses forecast outturn figures, noting and approving supplementary estimates, and noting the revised General Fund Capital Programme.

Draft 2025/26 General Fund Budget and Council Tax

The Cabinet considered the draft General Fund budget for 2025/26, alongside the Medium-Term Financial Plan (MTFP) for 2025/26 to 2029/30. The report highlighted significant pressures facing the council, including high inflation, recruitment and retention challenges, and continued demand for services. A balanced budget for 2025/26 was presented, with a surplus of £661,000 to be set aside in a contingency budget. However, a funding gap is forecast to widen from 2026/27 onwards, reaching £3.5 million by 2029/30. This is attributed to pressures on the council's cost base and anticipated changes to funding streams, particularly concerning business rates retention. The Cabinet was asked to recommend the draft General Fund Revenue, Capital, and Special Expenses budget, the MTFP, budget proposals, and proposed fees and charges for 2025/26 for statutory consultation. They also noted the key risks to the budget.

Draft 2025/26 Housing Revenue Account (HRA) Budget and Rent Setting

The draft Housing Revenue Account (HRA) budget for 2025/26 was presented, forecasting an operating surplus of £1,968,000, an increase from the previous year. This surplus is partly due to a reduction in operating expenditure and an increase in income, primarily from fewer void properties and improved investment income due to higher interest rates. The report proposed a rent increase of 2.7% for 2025/26, in line with the Rent Standard. The HRA Capital Programme for 2025/26 to 2029/30 totals £68.122 million, an increase from the previous five-year programme, with significant investment planned for stock improvements and new homes. The Cabinet was asked to recommend the draft HRA budget, rent increase, MTFP, budget proposals, and fees and charges for 2025/26 for consultation.

Draft Capital Strategy, Treasury Management Strategy and Prudential Indicators

The Cabinet reviewed the draft 2025/26 Capital Strategy, Treasury Management Strategy Statement, Minimum Revenue Provision (MRP) Statement, and Non-Treasury Investment Strategy. These strategies underpin the council's approach to managing its capital investment and treasury activities, ensuring they are affordable, prudent, and sustainable. The Capital Strategy outlines plans for capital expenditure totalling £25.1 million in 2025/26, funded through a mix of grants, capital receipts, revenue contributions, and prudential borrowing. The Treasury Management Strategy addresses the management of the council's cash flows, borrowing, and investments, with a focus on security and liquidity. The strategies also detail prudential indicators to manage financial risks. The Cabinet was asked to approve these for statutory consultation.

Council Tax Discounts and Exemptions

The Cabinet considered proposed changes to Council Tax discounts and exemptions, primarily aimed at addressing empty homes and second homes. The proposals included introducing a 100% premium on second homes from 2026/27, increasing premiums on long-term empty properties to up to 400% of the standard Council Tax, removing the one-month discount for empty properties, and removing the six-month discount for properties undergoing major repairs. These changes are intended to bring unoccupied properties back into use and generate additional revenue. The Cabinet noted the proposals, considered recommendations from the Scrutiny Committee, and was asked to approve proposals 1, 2, and 4, and reject proposal 3. An Equality Impact Assessment was conducted to evaluate the potential effects of these changes.