The committee reviewed and noted the draft budget proposals for 2025/26, having previously received a presentation at a joint meeting of the Overview and Scrutiny Committees. The response to an action point raised at the previous meeting, asking about the Mayors Future Fund (MFF), was sent to members earlier that day.

Draft 2025/26 Budget Proposals

The committee were presented with an overview of the draft budget strategy and proposals for 2025/26 by Nigel Howcutt, the Chief Finance Officer, Catherine Silva Donayre, the Strategic Director for Corporate and Commercial and Aidan Wilkie, the Strategic Director for People and Transformation.

The draft proposals include a balanced budget, in line with the assumptions outlined in the Medium Term Financial Strategy (MTFS), approved in November. The process of setting the budget is becoming increasingly difficult as cost pressures grow faster than council tax and core funding.

The draft budget will be subject to a number of budgetary assumptions, that will continue to be worked on. Any significant changes to the assumptions will be reported back to members.

The Council is working to deliver a number of corporate strategies, including a Commercial Strategy, a Transformation/Change Strategy and a Place Strategy, that are reflected in the budget proposals.

The Commercial Strategy was approved by cabinet in September 2022 and aims to deliver:

a change in culture and approach to a more agile and commercially aware operating model

This strategy has resulted in a multi-year programme that aims to increase income generation and improve the efficiency of service delivery.

The draft budget for 2025/26 includes a number of assumptions, including:

• A Council Tax Increase of 2.99% (£6.86) for a band D property plus a 1% increase in taxbase.
• A 3.5% pay award settlement.
• A vacancy factor of 5% for non-front-line services.
• Baseline Government funding (Core grant and Retained business rates set at £4.4m in 2025/26).
• An inflationary increase in utilities of 5%.
• An increase in Fuel of 5%.
• An increase on Supplies and Services of 3.1%.

The Council has a policy of maximising council tax income to support service provision. The report notes that:

if Local Authorities do not maximise their Council tax income, they are creating a budget reduction that may require savings efficiencies.

The budget assumes a continuation of the current New Homes Bonus strategy, in which funding is not used to support ongoing services, due to its time-limited nature, and instead is added to the Dacorum Development Reserve for future, one-off spending.

The most significant risk to the Council's budget is:

if approved government funding did not meet the budgeted expectations.

This risk is currently considered low following the Autumn Statement.

A number of service risks remain under scrutiny and will be reported back to members if performance differs from expectations. The most significant service risks are:

• The impact of the wider economic pressures on demand for Council services and income generating services.
• Income generating services.
• The refuse service.
• The temporary accommodation service.

The key assumptions incorporated into the draft HRA budget are:

• Annual rent increase of 2.7% (CPI +1%) on all properties, circa £1.4m income.
• An increase in repairs and maintenance budgets of 1.2%, circa £0.8m.
• An increase in pay award of 3.5% for 24/25, circa £0.6m.
• Use of internal borrowing from the Council’s own cash balances to finance capital expenditure once other financing resources have been applied.

The draft Housing Revenue Account (HRA) Budget for 2025/26 is balanced following a proposed increase in average dwelling rent to £141.03, an increase in repairs and maintenance budgets, and a series of reserve transfers.

The 2025-2030 Capital Programme is largely a continuation of the 2024-2025 programme. New additions to the programme include:

• Investment in Adventure Playgrounds.
• Investment in Hemel Leisure Centre, including filter pumps and a flexi- pool floor.
• An increase in budget for Temporary Accommodation.
• Investment in the Old Town Hall.
• Investment in the Planning system.
• Investment in green waste collection service growth.
• Increases in the Commercial Property and Estates works budget.
• Investment in cemeteries.
• Investment in car parks.

The draft budget for 2025/26 includes a net contribution to reserves of £0.415m. The report notes that the budget:

is robust in its formulation and the level of reserves set for 2025/26 is adequate to mitigate the foreseeable risks to the organisation at this point in the process.