Agenda item

To receive the 2024/25 Financial Monitoring Report.

The Cabinet Member: Finance, Governance & Customer Services presented the report of the Interim Director: Finance, People and IDT.

The Medium Term Financial Strategy (MTFS) 2024/25 to 2027/28 was approved at Full Council on 29 February 2024 and included the 2024/25 revenue budget and medium term capital programme.  Since this approval, the economic climate had continued to be challenging with cost pressures being experienced, particularly in relation to the provision of Adult Social Care.

The report set out the latest financial monitoring position for the year relating to the revenue budget, capital programme and income collection.  It provided the latest projections in relation to the projected outturn position, progress against the approved 2024/25 capital programme and gave a summary of collection information in relation to Council Tax Business Rates and Sales Ledger income.

Nationally, Councils continued to face extreme challenges with unprecedented pressures driven by high costs and high demand for services, particularly in relation to Adult Social Care, Children’s Safeguarding and School Travel Assistance.    The autumn budget had set out its medium term financial plan for local councils which included a one year spending review covering 2025/26 and a further spending review in late spring 2025 to cover the period 2026/27 and 2027/28.   The headline figures indicated a real terms increase in core local government spending of 3.2% in 2025/26 including at least £1.3 billion of new grant funding of which £600 million would be new grant funding to support social care.  Further details would be announced in the local government financial settlement in December 2024.  The government were committed to reforming the approach to local government funding considering up to date need and local revenue with a targeted approach to the 2025/26 financial settlement.  This would be followed by a multi-year settlement.

Inflation fell to 1.7% which was below the Bank of England’s 2% target which was an indication that price increases were steadying.  The Bank of England’s base rate reduced from 5.25% to 5.00% in August with further cuts predicted for later in the year, although it was still higher than anticipated when the Council’s budget was set.   Whilst the funding outlook for the medium term remained uncertain, the administration would continue to address the priorities that residents expressed were important to them - a thriving economy, creating well paid jobs, ensuring the borough was a great place to live and learn, preserving the environment and addressing the climate change crisis.  It was a key priority that the Council remained efficient but kept the lowest council tax in the Midlands, whilst making wise investments to support front line services and be the best it could for its local residents.

The projected year end was summarised in the report which set out the Council had a one-off contingency of £1.595m set aside for the pressures of adult social care.  Prior to application of remaining contingencies included in the revenue budget, the projected outturn position was currently expected to be over budget by £4.498m at year end, which was an increase of £0.944m since the last report.  By using the specific earmarked social care contingency and an element of the general budget contingency this would bring the overall position within budget at year end.  The key pressures continued to be adult social care, children’s safeguarding, family support and education and skills.

The report reflected a positive treasury management benefit of £1.5m within Finance and IDT which ensured the Council had not required to use the budget strategy reserve set aside to support the medium term financial strategy which remained at £21.7m.   In relation to the Dedicated Schools Grant there was a national funding gap due to the pressure on high needs provision.  The Council was projecting a £6m deficit at year end but there was not an expectation for councils to fund this as a statutory override would be put in place until 2025/26.

In relation to corporate income collection, business rates were on target.  Council tax was slightly behind target but the this was on course to be met by year end. 

While it has been extremely challenging the aim was to continue to deliver quality services to the residents of the borough and protect critical front-line services.

Cabinet Members welcomed the report which showed due diligence and that the Council was in a good position to deliver a balanced budget despite the increased demand on adult social care and children’s safeguarding.  A balanced budget had been achieved by hard work and thinking outside the box with projects such as the growth fund, solar farm and NuPlace, green energy, new jobs and businesses which helped to support services on the front line.

The Leader of the Conservative Group enquired about the impact on the Council of the government’s increase on the rate and threshold of national insurance for employers.  He raised that the challenges of the last 14 years included the pandemic and the war in Ukraine.  In relation to capital slippage and development within the borough, there was a need for affordable dwellings and he noted the deferment of up to £20 million of the capital housing budget by four years which suggested young people were unlikely to get a NuPlace home any time soon.

The Leader expressed that the new multi-year funding awards were fantastic and he welcomed the new governments sensible approach.   The was an absolute commitment to NuPlace and there were plans to expand, together with Telford and Wrekin homes and the budget coming forward in March 2025 would provide for that.  In relation to the 14 years of previous government being ancient history, the Leader expressed that thousands of residents could not just write off its effects and the £150m taken away from Council services.   The government had planned and proposed new national insurance rules for employers, but this had zero impact on local authorities as the increase would be funded entirely by the government.

RECOMMENDED TO FULL COUNCIL that:

a)    the 2024/25 revenue budget position be noted; and that Full Council approve the use of £0.216m Special Fund balances for additional lighting works to be undertaken in the Special fund areas;

b)   the position in relation to capital spend be noted; and recommends that Full Council approve the changes to the capital programme detailed in Appendix C and all associated changes to the Medium Term Financial Strategy, including Treasury and Prudential Indicators;

c)            Notes the collection rates for NNDR, council tax and sales ledger;

d)   Notes the current position in relation to Treasury & Prudential Indicators; and

     e)   Authority to approve bids from the Invest to Save/Capacity Fund is delegated to the Chief Executive after consultation with the Leader or the Cabinet Member with responsibility for Finance.