Decision Maker: Cabinet

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: Yes

Date of Decision: November 13, 2024

Purpose: To provide an update on the Draft Budget for 2025-2026 and the Medium Term Financial Strategy and agree the next steps that will be taken in order to address the financial pressures faced by the Council over the medium term.

Content: That Cabinet approve: 1.    The ‘Our Future Council’ Programme and its continued direction of travel, including its approach, guiding principles and service vision statements, as detailed in section 3 of the report.   2.    Subject to the outcome of Budget Consultation and Scrutiny, the specific Our Future Council savings proposals, amounting to £10.4 million (£700,000 of which is one-off and £9.7 million recurrent), outlined in section 4 and Appendix 1 to the report.   3.    The savings targets, amounting to a further £19.9 million (of which £300,000 is one-off and £19.6 million recurrent), as outlined in Section 5 and Appendix 2 to the report, noting that further work would be undertaken to understand the impact and implications of delivering against these targets, in advance of setting the 2025-2026 Budget and Medium-Term Financial Strategy in February 2025.   4.    The updated draft Medium-Term Financial Strategy, including changes to inflation, demand and development as set out in Sections 7 to 9 of the report, noting that at this stage significant risk exists in relation to these assumptions and that proposed savings still need to be delivered to achieve these financial forecasts.   5.    The approach to public consultation as set out in Section 13 of the report.   6.    That authority be delegated to the Cabinet Member for Resources, in consultation with the Director of Finance, to finalise the specific questions with regards to the public consultation exercise in line with the approach outlined in Section 13 of the report.   7.    That authority be delegated to the Director of Finance to action the necessary virements in order to capture the estimated savings outlined in this report, including those where further work is required to quantify the level of saving.   That Cabinet note: 1.    That there is a significant financial challenge over the medium term, and that as at February 2024, the projected revenue budget deficit was £27.1 million in 2025-2026, rising to £32.6 million in 2026-2027.   2.    The actions taken to reduce costs, as set out in the report, which subject to approval and consultation, (and subsequent delivery) would reduce the draft forecast deficit position to £11.2 million in 2025-2026, and to £8.0 million in 2026-2027. Furthermore that at this stage significant risk exists in relation to these assumptions, and that proposed savings (if approved) still need to be delivered in order to achieve this reduced (but still significant) deficit forecast position. Work would therefore continue to be undertaken to bring forward proposals to set a balanced budget for 2025-2026 and deliver a sustainable Medium Term Financial Strategy.   3.    That, in line with Government referendum limits and in line with what was reported in the February Budget and MTFS report, our working assumptions are that Council Tax would  increase by 4.99% for 2025-2026 which incorporates 2% in relation to Adult Social Care, as set out in Section 8 of the report.   4.    The proposals to revise the Council’s senior management structures as referenced in Section 4 of the report. This would be subject to a separate report to Councillors.   5.    That there continues to be considerable amount of risk with regard to the Council’s finances, particularly in relation to increased costs and demand, and uncertainty regarding future funding streams for local authorities, over the medium term. Savings (as outlined in the report) should they be approved, also need to be delivered.   6.    That there is a risk that Government does not extend the current capital receipts flexibilities beyond the end of the current financial year and the actions in place to mitigate this risk as set out in Section 12 of the report.   7.    That as set out in Section 9 of the report, the updated draft Medium Term Forecast Position is that £11.2 million of one off resources (reserves) would be needed to balance the 2025-2026 Budget and that further work is therefore being done to reduce the Council’s reliance on one-off resources.   8.    That the Council would continue to lobby Government with regards to the need for fairer funding (and multi-year settlements), particularly in relation to increased demand and costs prevalent in such areas as children’s and adult’s social care and temporary accommodation. That the 2025-2026 draft budget and Medium-Term Financial Strategy would continue to be updated in line with any announced changes in funding.   9.    That, due to external factors, budget assumptions remain subject to change which could, therefore, result in alterations to the financial position of the Council.  This includes assumptions with regards to the level of resources that would be available to the Council.   Any reduction in Government’s allocation of funding to the Council would have a significant detrimental impact and further increase the budget deficit over the medium term.    10.That the Our Future Council Strategy and approach outlined in the report would be subject to the Council’s Scrutiny processes as set out in Section 13 of the report.   11.That as part of the Our Future Council Programme of work and in recognition of the Council’s commitment to the wellbeing of its staff, an exercise is being undertaken to review and assess staff workload in order to ensure it remains manageable. And that as part of this, operational mitigations (such as deprioritising certain tasks or reallocating additional resources) would be considered.   12.The Council has a good track record of strong financial management, and significant progress has been made in responding to the Council’s financial challenge. However, more work is required to ensure that the Council is able to set a balanced budget for 2025-2026 and has a sustainable Medium-Term Financial Strategy. Work would therefore need to continue to identify further savings proposals which would be reported back in future reports. 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 Draft Budget and Medium-Term Financial Strategy therefore continues to be assessed as Red.