Decision Maker: Cabinet

Outcome: Recommendations Approved

Is Key Decision?: Yes

Is Callable In?: No

Date of Decision: February 19, 2025

Purpose: To present a balanced revenue budget for 2025-2026 aligned to the Our City: Our Plan and an update on the Medium Term Financial Strategy (MTFS) for the period 2025-2026 to 2027-2028, for recommendation to Council.

Content: That Council be recommended to approve: 1.    The net budget requirement for 2025-2026 of £361.3 million for General Fund services, reflecting the work of the Our Future Council Programme over the last 12 months.   2.    The Medium-Term Financial Strategy (MTFS) 2025-2026 to 2027-2028 as detailed in Sections 4 and 8, and the key assumptions underpinning the MTFS as detailed in Appendices 2 to 9 of the report.   3.    A Council Tax for Council services in 2025-2026 of £2,104.29 (Council element) for a Band D property, being an increase of 4.99% on 2024-2025 levels, which incorporates 2% in relation to Adult Social Care.   4.    The refreshed Reserves Strategy as detailed in Appendix 13.   5.    The establishment of an Executive Director of Families post and subsequent recruitment that would be subject to a Special Appointments Committee as per the Council’s Constitution.   6.    The redesignation of the Director of Transformation post to Director of People Services and subsequent recruitment that would be subject to a Special Appointments Committee as per the Council’s Constitution.   That Council be asked to note: 1.    That the Deputy Chief Executive would retain Section 151 Officer responsibility, allowing the Director of Finance post to become vacant, as a result the budget for this post would be given up as a saving.    The Cabinet approves: 1.    The updated assumptions used in the Budget for 2025-2026 and the MTFS 2025-2026 to 2027-2028 as detailed in the report and Appendices 2 to 9.   2.    That the budget for 2025-2026 is in balance without the use of the General Fund Reserve, but that £5.0 million of capital receipts and / or earmarked reserves is required to fund transformation activity and to balance the budget. And that authority be delegated to the Section 151 Officer to allocate this between capital receipts and reserves as determined prudent during 2025-2026.   3.    That savings proposals totalling £12.8 million (of which £8.4 million are one-off, and £4.4 million recurrent) as detailed in Appendix 6, are approved by way of the report.   4.    That savings proposals totalling £5.2 million (recurrent), as detailed in Appendix 7, are approved subject to implementation plans being set out within an Individual Executive Decision Notice (IEDN) and that authority for this is delegated to the relevant Cabinet Member and the Cabinet Member for Resources in consultation with the relevant Director and Section 151 Officer.   5.    That savings proposals and savings targets totalling £5.6 million (recurrent), as detailed in Appendix 8, are approved and would be implemented and actioned in line with the existing delegations outlined in the Council’s Constitution.   6.    That savings proposals and savings targets totalling £10.2 million (recurrent), as detailed in Appendix 9, are approved subject to implementation plans being set out in a future report to Cabinet.   7.    That £300,000 continues to be set aside to fund specific targeted support with regard to council tax payments, and that authority continues to be delegated to the Cabinet Member for Resources in consultation with the Section 151 Officer to approve any changes to the Council Tax Discretionary Discount Scheme   8.    That the General Fund Reserve is increased by £2.0 million in order it can be maintained at approximately 5% of net budget over the medium term (which is in line with the Reserves Strategy).  This would be funded in-year by one-off efficiencies, further detail would be provided to Cabinet in the Performance and Budget Monitoring Report to Cabinet in March.   9.    That authority is delegated to the Section 151 Officer, to approve the calculation and allocation of growth in the central share of business rates for 2025-2026 and future years to be passported to the West Midlands Combined Authority (WMCA).   10. That authority be delegated to the Cabinet Member for Resources, in consultation with the Section 151 Officer to allocate budgets from the Corporate Contingency budget for inflation / demand and emerging pressures once business cases have been completed.   11. That the Council enter into the Better Care Fund Section 75 Agreement along with the necessary ancillary agreements from the main agreement for 2025-2026 with the Black Country Integrated Care Board, and delegate authority to the Cabinet Member for Resources, Cabinet Member for Adults and Wellbeing, in consultation with the Director of Adult Social Care and the Section 151 Officer to approve the final terms of the agreement.   12. That authority is delegated to the Cabinet Member for Resources and the Cabinet Member for Children, Young People and Education, in consultation with the Section 151 Officer and the Director of Children’s Services, to approve changes to the local funding formula for Schools including method, principles and rules adopted.   13. The continuation of the ‘Our Future Council’ Programme or work, designed to identify and deliver required savings and transformation, as set out in Section 3 and Appendix 1.   That Cabinet notes: 1.    The significance of the continued financial distress in the sector as summarised in Section 3.     2.    The significant progress made in responding to the Council’s financial challenge through the ‘Our Future Council’ programme of transformation and cost reduction, as set out in Section 3.   3.    That, in the opinion of the Section 151 Officer, the budget estimates and assumptions included in the 2025-2026 budget (and MTFS) are robust. That a corporate contingency of some £3.0 million will be held centrally for 2025-2026 to mitigate budget related risk (which includes the risk of increases in demand, uncertainties with regards to future funding and any under-delivery against savings proposals).   4.    That, due to external factors, in particular the impact of the increasing demand for services, cost of living and inflationary pressures, budget assumptions remain subject to significant change, which could therefore result in alterations to the financial position facing the Council, and that this risk is mitigated by way of the corporate contingency noted above.   5.    That there continues to be a considerable amount of uncertainty with regards to future funding streams for local authorities over the medium term.  At the point that further information is known it would be incorporated into future reports to Councillors. Any reduction in the Government’s allocation of funding to the Council would have a significant detrimental impact and further increase the budget deficit forecast over the medium term.   6.    That, in the opinion of the Section 151 Officer, the proposed levels of reserves are adequate in respect of the forthcoming financial year. And that, the proposed use of earmarked reserves during 2025-2026 is prudent and proportionate for 2025-2026, but that this is not a sustainable solution to the Council’s underlying medium term financial gap.   7.    That the 2025-2026 budget and MTFS incorporates £6.8 million of savings proposals (£6.3 million of which are recurrent and £500,000 one off) approved in previous reports.   8.    That the 2025-2026 and MTFS assumes the delivery of savings proposals / targets totalling £40.7 million (of which £31.8 million are recurrent and £8.9 million one-off), are included in this budget and that these proposals are in line with the Our Future Council programme, its vision statements, guiding principles and approach as previously approved by Cabinet and set out in Appendix 1. And that (subject to approval) these savings need to then be actioned and delivered, and that monitoring is in place to help ensure this. Savings proposals can be found in Appendices 5 to 9.   9.    That the work of the Our Future Council programme, and its focus on savings and transformation, would continue and that it is estimated that a further £17.2 million of budget reductions need to be identified for 2026-2027, rising to £23.5 million in 2027-2028 in order to address the projected budget deficit.   10. That Councillors must have due regard to the public sector equality duty (Section 149 of the Equality Act 2010) when making budget reduction decisions.   11. The outcome of the public consultation on the budget as set out in Section 12 and Appendix 14 and that the Council continues to engage with residents, businesses and other key stakeholders throughout the year with regard to people’s priorities for Wolverhampton.   12. That the Budget and MTFS (including savings proposals) has been subject to thorough scrutiny as set out in Section 12.   13. That external auditors have provided independent assurances with regards to the Council’s arrangements for financial sustainability, governance and value for money (including borrowing).   14.That, as a consequence of the size of the financial challenge, the need to deliver planned savings and the level of uncertainty across both demand for services and funding levels, the overall level of risk associated with the Budget and MTFS continues to be assessed as Red.