Agenda item

To consider a report from the Head of Democratic Services that sets out the Council’s Medium Term Financial Strategy 2025/26 to 2029/30 and also provides the month 5 in year financial health monitoring report.

Appendix 2 – Financial Health Monitoring Month 5 – to follow as supplementary information

The Board considered a report from the Head of Democratic Services that set out the Council’s Medium Term Financial Strategy (MTFS) 2025/26 to 2029/30 and also provided the month 5 in year financial health monitoring report.

In attendance for this item were:

·  Cllr Debra Coupar Executive Member for Resources

·  Victoria Bradshaw, Interim Assistant Chief Executive – Finance, Traded Services & Resources

·  Andy Dodman, Interim Assistant Chief Executive – People, Digital & Change

To support this item a presentation was made covering the following key points:

·  The projected budget gap over the next three years which is a total of £194.5m of which £106.7m relates to 2025/26 which is largely caused by demand and inflationary led pressures in children and families and adults and health budgets. The current financial challenge is the largest the Council has faced in recent years.

·  A summary of the assumptions contained in the MTFS such as core government funding remaining frozen, assumptions around business rates growth and council tax non-collection rates and planned increases in Council Tax rates which are assumed at 2.999% for the core increase and 1.999% for the ASC precept.

·  Other assumptions for 2025/26 include the staff pay award at 3.5% and Real Living Wage +£0.88/hr totalling a pressure of £18m and a further £49.1m in demand and demography pressures.

·  Details on £37.4m of savings proposal for 2025/26 that were recommended to Executive Board on 16 October for consideration and approval. These proposals include further saving proposals for future years to assist with planning over a 3 year period.

·  In the current financial year the position has stabilised with the projected overspend at £22m, a small reduction on the previously reported £22.2m. Work continues within directorates to continue to find savings and mitigate pressures with a focus on Staffing and critical spend only.

·  If the existing staff pay award is accepted there would be an additional budget pressure of £2.3m.

Responding to comments and question from Board members the following issues were discussed:

·  On the staff pay award the Board asked about how much each percentage point increase costs the authority. The Board were informed that 1% equates to £4m cost to the Council so £400K per 0.1% in salary increase. The proposed pay award for 2024/25 is actually a lump sum offer of £1,290 per staff member so the percentage increase can vary based on the existing salary.

·  The Board asked about the difference between the saving plans set when the budget was set and the pressures that have emerged which are in year pressures. The Budget is set each year in December and in between that time and the start of the financial year further pressures emerged which create in year pressures to be mitigated with further savings.

·  The Board heard that if savings are not achieved on the in year pressures in 2024/25 these will be funded through the strategic contingency reserve which was established to manage unforeseen budget pressures. If the strategic contingency is fully utilised in year then there will be reduced reserve provision available for the following 2025/26 financial year.

·  The Board asked about any assumptions being made linked to the new Government and additional funding. In response the Board were informed that no assumptions have been made linked to Government spending plans not least because there has been media coverage of a difficult budgetary provision at national level. 

·  In response to a question on multi-year funding settlement allocations the Board heard that these would be beneficial to the Council as they would enable much greater certainty on which to make financial plans. It will not necessarily provide additional funding, details on the Government’s plans are expected on the 30^th  October when the Chancellor of the Exchequer gives her budget speech.

·  Responding to a further question on the staff pay awards the Board heard that the reduction in inflation in recent months should mean that the 3.5% figure is more likely to be sufficient in future years assuming lower inflation continues.

Resolved

The Board:

a)  Noted and commented on the updated Medium Term Financial Strategy for 2025/26 to 2029/30

b)  Noted and commented on the latest in year Financial Health Monitoring report covering Month 5 of the current financial year.

c)  Noted that savings proposals will be considered at future meetings of the Executive Board and that budget proposals for 2025/26 will be the focus of a Scrutiny Working Group in December 2024, as in previous years.