This meeting will provide the committee with an opportunity to review the council's spending plans for 2025-26, including the proposed budget for the Housing Revenue Account. The committee will also receive an update on the council's progress towards meeting the Decent Homes Standard.

Council Budget 2025-26

The committee will be asked to review and comment on the council's draft budget proposals for 2025-26. The draft budget report identifies a projected overspend of £26m on the General Fund budget for 2024-25. To help address this overspend, and a forecast budget gap of £3.4m for 2025-26, various budget reduction measures have been agreed for implementation during 2024-25 and 2025-26. These amount to a total of £4.698m for 2025-26.

Despite these measures, the report identifies an adjusted total pressures funding requirement of £65.023m for 2025-26. This will be funded through a combination of sources including the Settlement Funding Assessment (increased by 1.23% from the previous year), an increase in Council Tax of 4.99%, and the use of £21.745m of reserves. Because of the reliance on reserves to balance the budget, the report proposes that a savings target of £30m be agreed for the 2026-27 budget.

The announcement of new grants allocated on the basis of need and deprivation for 2025/26 is viewed as the first step ahead of a broader funding redistribution.

The draft budget proposes increases to fees and charges across a range of Council services.

Unless pre-defined by statute or otherwise agreed, all services are expected to uplift their fees and charges annually in line with inflation plus one percent, or for full cost recovery if this is higher, to allow for stability in real terms.

Increases to existing fees and charges have generally been set at CPI plus 1%, which is 2.7% for 2025-26, though in some cases higher increases have been proposed to achieve full cost recovery. The draft budget also proposes the introduction of a number of new fees and charges, including fees for commercial food waste collection, and charges for new environmental enforcement activities, and legal services.

The report highlights the importance of the UK Shared Prosperity Fund (UKSPF) grant in supporting the delivery of services in 2025-26.

The GLA has been allocated £62.98m for 2025/26, which is divided into £20.09m in capital funding and £42.89m in revenue funding. Of this, based on the method used by the GLA to distribute the previous round of UKSPF, the Council will have an estimated £1m allocation, split between capital and revenue.

Approval is being sought for the Council to accept the funding, which is estimated to be in the region of £1m.

The committee will also be asked to review and comment on the proposed budget for the Dedicated Schools Grant (DSG).

The 2025/26 overall DSG allocation is £395.95m, a 9.7% increase, of which £51.96m is part of the Early Years Block and remains provisional.

Housing Revenue Account budget

The committee will also review and comment on the proposed budget for the Housing Revenue Account (HRA). The report highlights the significant financial pressures facing the HRA, including the costs of maintaining the Decent Homes Standard and delivering the Building for Lewisham programme.

In 2024/25 an overspend of £9.5m is currently being reported in the R&M accounts, which is being covered by once-off provisions, additional income and underspends elsewhere.

The Quality and Investment management team have calculated that long-terms R&M allocations should be in the region of £23.0m + Inflation. However, a requirement of £28m is needed for 2025/26, £25.5m for 2026/27 and a core budget of £23.0m is required from 2027/28 onwards. There is a gap in the 2025/26 allocations of £2.5m which the council is seeking to reduce by efficiencies and/or additional income.

The draft budget proposes that the HRA meet this funding gap through a 2.7% increase in dwelling rents.

A 2.7% increase in average rents for HRA dwelling stock 2025/26 equates to an average increase of £3.26pw over a 52-week period. This will increase the full year average dwelling rent for the London Borough of Lewisham from £120.63pw to £123.89pw. The proposed increase will result in additional income of £1.8m for the HRA.

This increase reflects the government's rent policy, which allows increases in line with CPI plus 1%.

The Government did not cap the increase for 2024/25 and has not currently capped the increase for 2025/26. The Council recognises the fact that tenants still face high living costs, however the Council will need to apply the maximum allowable increase of 2.7% for 2025/26, to be able to afford to continue to deliver services to residents, maintain and invest in the housing stock and make sure that the Housing Revenue Account is sustainable in the medium and long term.

Consultation on the proposed increase has already taken place.

Tenants were asked to provide comments and feedback on the proposed rent changes and illustration for inclusion in the Mayor and Cabinet budget report at meetings held with Brockley PFI and Council tenants.

The report also provides details of proposed increases to service charges, which will be set at full cost recovery based on the audited accounts for 2023-24, plus a 2.7% inflationary uplift.

For 2025/26, it is proposed to set charges at full cost recovery based on audited accounts for 2023/24, plus an increase of 2.7%.

The report acknowledges that this could have a negative impact on tenants.

The Council recognises the fact that tenants still face high living costs and that it would be unfair to implement this increase in full in one year.

The report also proposes an increase to garage rents, which will be set at CPI plus 1%, which is 2.7% for 2025-26.