Agenda item

To receive the Medium Term Financial Strategy 2025/26 – 2027/28.

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

The report sought approval of the Council’s Medium Term Financial Strategy (MTFS) for the next four years from 2025/26 to 2028/29 and contained details on the Capital Strategy, Medium-Term Capital Programme, Investment Strategy, Treasury Management Strategy and Prudential Indicators.

The report built on the previous MTFS report considered by Cabinet at its meeting on 6 January 2025 which had been subject to public consultation and scrutiny by Members of the Council’s cross-party Business & Finance Scrutiny Committee.

Since the approval of the current Medium Term Financial Strategy on 29 February 2024, which covered a four year period to 2027/28, many Councils had seen an increase in demand for key services and higher costs, particularly for the provision of social care.

On the whole, the first one-year funding settlement announced by Government had been positive with significant increase in funding which was welcomed following a period of significant budget challenges, however the Council had a long track record of financial management and had managed to maintain financial stability and set a balanced budget for 14 consecutive years.

Key points from the report included the proposed general council tax increase for 2025/26 across all council tax bands of 2.99% equivalent to £0.69p per week for an average band B property as well as a 2% increase for the adult social care precept, equivalent to £0.46p per week, which would raise an additional £4.5m. All funding raised through the council tax increase would be invested in the provision of social care services. The Council would continue to offer the lowest level of council tax in the Midlands and of any unitary authority in the country despite the requirement for a general increase.

The net revenue budget set for the current year and which forms the basis for the budget for future years was anticipated to be £157m with £88m generated from council tax, £57m generated from business rates and £12m funded from Government. In 2024/25, 75% or £118m of the net budget was spent on social care for Adults and Children.

The proposed Capital Programme which totals over £376m would see £30m invested into transport and highways schemes, £45.2m for education capital projects including investment into school expansions, £9.7m for affordable or specialist housing programmes, £8.7m for leisure and cultural schemes and over £26m for towns fund projects which would avoid the closure of libraries and community centres. Further investments also included an additional £7.7m for social care services, £94m for schemes such as Nuplace, Telford & Wrekin Properties and the Long Term Empty Property Strategy and £1.7m into enhancing the Borough’s green spaces including a total of 20 local nature reserves and over 300 green guarantee sites.

The Council’s Growth Fund which had been in operation for 9 years had delivered projects such as the development of the Station Quarter and the new Digital Skills and Enterprise Hub and had a cumulative investment of £79.4m which was estimated to deliver an ongoing gross return, additional business rates income of 6.53% and would help deliver a further 1,445 new jobs for the Borough to help reduce the number of young people not in education, employment or training.

The four-week budget engagement process ran from 7 January 2025 to 5 February 2025 with online sessions with key stakeholders, voluntary and community sectors, Town and Parish Councils, businesses and local residents. The MTFS had been published on the Council’s website and feedback had been gathered via a wide range of channels including email, social media, in writing and via telephone.

The Vice-Chair of the Business & Finance Scrutiny Committee presented the Committee’s response to the proposals following it’s meeting on 7 January 2025. The Committee recognised that whilst the provisional settlement from government was better than in previous years, the financial landscape for local government had remained challenging and whilst Committee members, on the whole, were unanimously supportive of the budget approach being taken, it had been recognised that each group may have chosen to focus their priorities in different ways.

Cabinet Members acknowledged how the Council had faced numerous challenges in recent years, particularly following the increase in demand for services which had resulted in higher costs. Members recognised that despite the welcomed news of the funding settlement from Government that there were still huge challenges ahead for the organisation. Members commented on the investment opportunities and how the Council had continued to deliver high quality homes, create new jobs, provide transport networks, protect and enhance green spaces and invest in improving local schools despite the significant number of savings made since 2010 and demonstrating its commitment to continue to protect, care and invest. Members were also pleased that the Council had continued to offer services such as free parking for residents and free green waste collections.

The Leader of the Liberal Democrat Group supported the report and was pleased to learn of the improved settlement from Government this year when compared to previous settlements. It was recognised that there were challenges with Adult Social Care and that the Council had a statutory duty to provide these services despite the need to source additional funding in response to the increase in demand. He stressed the need for longer-term planning and certainty from local Government in relation to funding streams, particularly around Adult Social Care which was not set to be resolved until 2028. He welcomed the investments that had been made by the Council over time, highlighting that borrowing can lead to assets and that the investments made had generated significant gains for the Borough such as Nuplace which had provided good quality homes at commercial rents. He commented on the importance of supporting residents amid the cost of living crisis and asked Cabinet to consider keeping council tax increases in line with inflation rates and suggested extending the discount scheme to protect vulnerable residents from the impact of rising costs.

The Leader of the Conservative Group thanked officers for the detailed report and highlighted that in a recent briefing conducted by officers, the Council’s gross debt was expected to reach £657m by the end of the medium-term period. He acknowledged whilst some investments would yield a return, that the Council should not continue to borrow money for the purpose of return on investment due to the return of investment on capital borrowing being much lower. He commented on the assumptions made around inflation in the previous report and that the Council’s budget included an allowance for pay awards of around 4% and 2% for other costs to the Council such as contractors and asked for confirmation on if those values remained correct. He raised concerns about the amount of debt the Council had incurred and the risk this posed to the Council if the debt was not paid off.

The Deputy Leader of the Council highlighted that many local authorities across the country had been affected by the funding cuts made by the previous Government and that the proposed budget had been designed to continue the Council’s ethos to protect, care and invest. He commented that despite the oppositions disapproval to borrowing, that the borrowing made by the Council to date had continued to deliver quality homes, new businesses and jobs which had returned income to the Council to help deliver vital services. He reiterated that the Cabinet would continue to invest for the benefit of Borough residents and provided assurance that the Council would continue to strive to secure funding to deliver much needed services.

RECOMMENDED TO FULL COUNCIL that:-

a)    the Medium-Term Financial Strategy (MTFS) for 2025/26 to 2028/29 and the budget framework for 2025/26 set out in this suite of reports be approved;

b)   a council tax increase of 4.99% for 2025/26 including the Government’s 2% Adult Social Care precept, equivalent to £0.69 per week general council tax increase for the average Band B property and £0.46 per week for the ASC precept, which will be fully invested in the provision of social care services for the most vulnerable members of our community be approved;

c)    the net investment of £7.7m into Adult Social Care in 2025/26 be approved;

d)   the budget savings listed at Appendix 10 totalling £13m in 2025/26 and £11.8m ongoing be approved;

e)    the continuation of work with partner organisations, including Town & Parish Councils and Voluntary Sector and Community Groups to seek to identify ways to mitigate the impact of some of the cuts to services that we can no longer afford to deliver and to note the availability of the Invest to Save/Capacity Fund which is available to support partnership working be approved;

f)     the base budget in Appendix 8 be approved;

g)   the policy framework for Reserves and Balances and their planned use outlined in Appendix 6 be approved;

h)   the Risk Register at Appendix 14 be approved;

i)     the endorsement of the Council Tax Reduction Scheme a link to which is included within Appendix 16, ready for implementation from 1 April 2025 be approved;

j)     the continuation of the Council Tax Reduction Hardship Assistance Policy, also within Appendix 16 be approved;

k)    the revenue implications of the medium-term capital programme for the period 2025/26 – 2028/29 set out in the Capital Strategy and Programme reports also on this agenda be approved;

l)     delegated authority be granted to the Director Finance, People & IDT after consultation with the Cabinet Member for Finance, Governance and Customer Services to action any virements required following the final allocation of the Dedicated Schools Grant and other Grants and following the completion of the NNDR1 and final estimates of Business Rates income;

m)  delegated authority be granted to the Director Adult Social Care after consultation with the Cabinet Member for Adult Social Care and Health Integration and Transformation, to enter into appropriate Section 256 and Section 75 Agreements under the NHS Act 2006 (as amended);

n)   authorisation of Director Policy & Governance to execute all necessary contract documentation including affixing of the common seal of the council as appropriate to enable the council to enter into appropriate Section 256 and Section 75 Agreements under the NHS Act 2006 (as amended) be approved;

o)   this suite of MTFS reports as the Council’s Efficiency Strategy for 2024/25, including the documentation at Appendix 13, to enable new capital receipts to be used to fund the revenue costs of transformation and efficiency projects as assumed throughout these reports be approved;

p)   delegated authority be granted to the Director Finance, People & IDT after consultation with the Cabinet Member for Finance, Governance & Customer Services to amend the use of the contingency in 2025/26 and to make any other associated adjustments to accommodate any difference in funding between that currently assumed and final grant allocations when received;

q)   delegated authority be granted to the Director Finance, People & IDT after consultation with the Cabinet Member for Finance, Governance & Customer Services to make changes to the Medium-Term Financial Strategy with immediate effect to reflect all grants received from Government with authority to incur associated spend;

r)    the Pay Policy for 2025/26 included as Appendix 17 be approved;

s)    the additional recommendations contained in other reports included in this suite of Medium-Term Financial Strategy reports included on this agenda be approved;

t)      the savings delivered of £181.7m since 2009/10 as a result of reduced government funding from 2011 whilst the cost and demand for many Council services have been increasing and in particular for Adult Social Care be noted;

u)   that 75pence in every £1 the Council spends is now allocated to Social Services be noted;

v)    that a number of the investments made in this report also generate a financial benefit, as well as fulfilling their primary purpose, which is invested in front line services be noted;

w)  national and international economic pressures which have resulted in an extremely challenging financial outlook for U.K public services with interest rates remaining high be noted; and

x)    the CFO’s robustness statement in Appendix 15 be noted.