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1.1 To note the latest Medium-Term Financial Strategy (MTFS)
contained in Section 3 of this report and the changes to the
medium-term budget gap compared to the forecast in the 2024/25
budget report, as summarised in Table 2.. To note the following for
onward consideration by the Executive:
 
• 2% pay inflation per annum pay inflation over the entire
forecast period. The previous assumption was 3% per annum in years
one and two, followed by 2%.
• £4.000m being added to the 2025/26 MTFS pay
inflation to provide some headroom for the possibility of some pay
‘catch-up’ being required over and above the 3% 2024/25
final budget report pay estimate.
• Updated demography estimates for the five-year forecast
period to reflect current best estimates, to be reviewed and
updated throughout the budget process. • Revised directorate
non-pay inflation estimates for the forecast period, to be reviewed
and updated throughout the budget process.
 • An additional £3.000m Inflation,
Energy and Demand risk buffer in 2025/26 and over the medium term.
Together with the restoration of the base Inflation, Energy and
Demand contingency to 2023/24 levels in the 2025/26 budget, this
brings the total Inflation, Energy and Demand contingency to
£8.000m over the forecast period. • In recognition of
the Second Homes Premium planned to be introduced for Council
Taxpayers from 2025/26, an extra ~0.3% taxbase increase has been
included in the MTFS, representing an estimated additional
£0.388m income.
• An estimated additional £2.678m of social care
funding being made available to Islington in 2025/26. This is based
on forecasts provided by the council’s external financial
advisors and is in line with the £0.500bn additional,
national allocation announced by the government between the
provisional and final 2024/25 local government finance settlements.
This will be reviewed in the Autumn MTFS Update Report, as 2025/26
core funding projections become clearer.
• In addition to the social care funding assumed above, a
continuation of Adult Social Care council tax precept flexibilities
is considered probable for 2025/26 and is assumed, for financial
planning purposes, at 2% in the latest budget forecast.
1.2. To note the high-level context, objectives and timeline for
the 2025/26 budget setting process. (Section 4)
1.3. To note the latest position in relation to the earmarked
reserves and balances and that reserves forecasts do not assume use
of the Flexible Use of Capital Receipts Strategy in the financial
year 2024/25. (Section 5)
1.4. To note the Housing Revenue Account (HRA) update. (Section
6)
1.5. To note the capital programme update. (Section 7)
 
 
AGREED RECOMMENDATIONS
 
– as detailed in the report
– as detailed in the report
– none