Report by Director of Finance

Further to Minutes 42 and 53 of the Policy Committee meetings held on 13 December 2023 and 19 February 2024 respectively, the Director of Finance submitted a report on the Budget and Medium-Term Financial Strategy (MTFS) for the three years 2024/25 – 2026/27.  The report provided an update on the results of the budget consultation exercise as well as changes arising from the publication of the Provisional Local Government Finance Settlement and other changes that had arisen since the report to Policy Committee in December 2023. The following documents were attached to the report:

• The Medium Term Financial Strategy (MTFS) 2024/25 - 2026/27
• Summary of the Proposed General Fund Budget 2024/25 – 2026/27
• General Fund Revenue Budget by Service 2024/25 – 2026/27
• Detailed General Fund Budget Changes 2024/25 – 2026/27
• The Housing Revenue Account (HRA) Proposed Budget 2024/25 – 2026/27
• The Dedicated Schools Grant Budget Proposals 2024/25
• The General Fund and HRA Capital Programmes 2024/25 – 2026/27
• The Flexible Use of Capital Receipts Strategy 2024/25
• Fees and Charges Proposals from April 2024
• Equality Impact Assessment of the Budget Proposals
• Summary of the Response to the Budget Engagement
• Summary of the Results of the Residents’ Survey 2023

The report explained that the underpinning rationale of the Medium-Term Financial Strategy was to deliver a balanced and affordable 2024/25 budget, to ensure that the Council’s finances were robust and sustainable over the medium term and that, in the longer term, the Council’s finances were not reliant on the unsustainable use of one-off reserves or funding. The Strategy was informed by the Council’s Vision: “to help Reading realise its potential and to ensure that everyone who lives and works here can share the benefits of its success”, as well as its Corporate Plan themes of Healthy Environment, Thriving Communities and Inclusive Economy.

The 2024/25 Budget and MTFS 2024/25 - 2026/27 reflected the changing landscape in which Councils were operating and was based on another one-year Local Government funding settlement. The most significant impacts on the Budget and the MTFS included inflationary pressures across all service areas and the impact of the cost of living crisis, in particular high cost placements in children’s services arising from increased complexity and market challenges, the cost of temporary accommodation arising from increased homelessness presentations due to landlords moving out of the private rented sector and mortgage costs increasing and higher waste disposal costs.  The budget and MTFS assumptions included:

a)      Council Tax increases of 2.99% plus an Adult Social Care precept of 2.0% for each year 2024/25-2026/27;

b)      Delivery of £8.465m of efficiencies and increased income across the period;

c)       A net draw from earmarked reserves totalling £3.084m in 2024/25;

d)      A housing rent increase for 2024/25 of 7.7% in line with approved Government policy of CPI + 1%;

e)      General Fund capital investment of £190.519m and Housing Revenue Account (HRA) capital investment of £142.612m over the 5 year period 2024/25 to 2028/29;

f)        £1.587m of transformation funding for 2024/25 to support delivery of efficiency savings assumed within the MTFS, taking the total transformation funding to £21.729m across the whole life of the Delivery Fund.

The Dedicated Schools Grant (DSG) High Needs Block was anticipated to be £12.000m in deficit by 31^st March 2024. The Council was one of 55 local authorities taking part in the Department for Education’s Delivering Better Value programme. The aim was to support local authorities and their local area partners to improve the delivery of Special Educational Needs and Disability (SEND) services for children and young people whilst working towards financial sustainability. The Council had been awarded a grant of £1.000m to support the implementation of new programmes of work. Further details were set out in paragraphs 2.8 to 2.12 of the report and in Appendix 6.

The report had been prepared with reference to the following documents: Medium Term Financial Strategy 2024/25-2026/27 Update Report agreed by Policy Committee (13th December 2023); Autumn Statement 2023 – HM Treasury (22nd November 2023); the Final Local Government Finance Settlement 2024/25 – DLUHC (5th February 2024); and 2024/25 Budget & Medium Term Financial Strategy 2024/25-2026/27 Report approved by Policy Committee (19th February 2024).

The following motion was moved by Councillor Brock and seconded by Councillor Gittings and CARRIED:

Resolved –

That, in relation to the report on the 2024/25 budget and Medium-Term Financial Strategy to 2027, due regard be taken of the results of the budget consultation exercise (as outlined in Appendices 11 and 12 of the report) and the 2024/25 General Fund and Housing Revenue Account budgets, Capital Programme and Medium-Term Financial Strategy as set out in Appendices 1-10 be approved, whilst noting the following:

(a)           the Council’s General Fund Budget Requirement of £167.886m for 2024/25 and consequent increase in the band D Council Tax for the Council of 2.99% plus an additional 2.00% Adult Social Care Precept, representing a band D Council Tax of £2,016.88 per annum, an increase of £95.86 per annum excluding precepts from Police and Fire, as set out in paragraph 2.4 of the report;

(b)        the proposed efficiency and invest to save savings of £3.862m and additional income of £0.781m in 2024/25 required to achieve a balanced budget for that year as set out in Appendices 2 and 3 to the report;

(c)        the overall savings proposed within the MTFS of £8.465m (of which increases to income, fees and charges is £1.202m) and three-year growth changes to service budgets of £32.053m as set out in Appendices 3 and 4 to the report;

(d)        the budgeted net draw down from earmarked reserves totalling £3.084m, as set out in paragraph 5.20 of Appendix 1 to the report;

(e)        the Housing Revenue Account budget for 2024/25 of £54.106m as set out in Appendix 5 and the average increase of 7.7% in social dwelling rents from April 2024;

(f)         the allocation of £99.317m Dedicated Schools Grant (DSG) as set out in Appendix 6 to the report;

(g)        the General Fund and Housing Revenue Account Capital Programmes totalling £190.519m and £142.612m respectively over the next five years, as set out in Appendices 7a and 7b to the report;

(h)        the Strategy for the use of flexible capital receipts to deliver future transformation and ongoing savings as set out in Appendix 8 to the report;

(i)         the Fees and Charges set out in Appendix 9 of the report;

(j)         the Equalities Impact Assessment as set out in Appendix 10 to the report.

A recorded vote having been required, the voting was as follows:

For the motion:  42

Councillors Asare, Ayub, Barnett-Ward, Brock, Challenger, Cresswell, Cross, Davies, G Dennis, Eden, Edwards, Emberson, Ennis, Gavin, Gittings, Griffith, Hacker, Hornsby-Smith, Hoskin, Juthani, Keane, Keeping, Kitchingham, Lanzoni, Leng, Lovelock, Magon, McCann, McElroy, McEwan, McGoldrick, Moore, Mpofu-Coles, O’Connell, Page, Rowland, Terry, Thompson, White, Williams, Woodward and Yeo.

Against the motion:  5

Councillors Ballsdon, Goss, Mitchell, Robinson and Singh.