This report provides an update on the development of the Council’s Medium Term Financial Strategy 2025/26-2027/28.

The Committee considered a report providing an update on the development of the Council’s Medium Term Financial Strategy (MTFS) 2025/26-2027/28.  The following documents were attached to the report:

·         Summary of the Proposed General Fund Budget 2025/26 to 2027/28

·         Summary of General Fund Budget Changes 2025/26 to 2027/28

·         Summary of HRA Budget 2025/26 to 2027/28

·         General Fund Capital Programme 2025/26 to 2027/28

·         HRA Capital Programme 2025/26 to 2027/28

The report noted that the Council remained financially stable, but that the impact of increasing demand for council services, combined with the increasing cost of meeting that demand, meant that financial stability could not be guaranteed over the three years of the MTFS.  The 2024/25 Quarter 2 Performance & Monitoring report (Minute 45 above refers) had forecast an adverse net variance of £9.620m, despite additional in-year savings of £8.580m having been identified in response to pressures identified at Quarter 1.  The report set out a range of measures in place to mitigate the pressures and listed task & finish groups that had been created to drive delivery of key projects to mitigate future demand and costs.

The report explained that the updated MTFS included the Council’s current working assumptions following the announcements made by Central Government in the Autumn Budget (30October 2024) and Local Government Finance Policy Statement (28 November 2024).  These assumptions would need to be reviewed once the Provisional Local Government Finance Settlement had been published.  The report summarised key planning assumptions relating to Adult Social Care, Brighter Futures for Children, Homelessness, Housing Benefit, Pay Inflation, Capital Financing, Council Tax, New Homes Bonus and Extended Producer Responsibility. 

The report also set out the full year implications of the budget pressures identified in the Quarter 2 report which had been considered and factored into the MTFS assumptions.  The net impact of the changes resulted in a current estimated budget gap for 2025/26 of £6.414m, increasing to £15.560m for 2027/28.  There was a significant budget gap across the three years of the MTFS and the Council therefore needed to consider implementing additional savings in a range of areas which were listed in the report.  A public consultation on the MTFS Update, including where future savings would best be focused, would be launched on 19 December 2024 and conclude on 16 January 2025.  Following the consultation, and the announcement of the Provisional Local Government Finance Settlement, a further report would be submitted to the Committee on 17 February 2025 and the Council meeting on 25 February 2025 in order to approve the budget and associated Council Tax level for 2025/26.

Resolved –

            That the Committee note the Medium Term Financial Strategy update as set out in the report and the associated appendices, including:

a)    The Council’s General Fund Budget Requirement of £184.586m for 2025/26 and an assumed increase in the band D Council Tax for the Council of 2.99% plus an additional 2.00% Adult Social Care precept, or £100.64 per annum representing a band D Council Tax of £2,117.52 per annum;

b)   The current forecast budget gap of £6.414m for 2025/26 which would need to be addressed in order to present a balanced budget to Council in February 2025;

c)    The proposed savings and efficiencies of £5.032m and £5.391m of additional income already included within the current gap position for 2025/26 as shown in Appendix 2;

d)   The overall savings currently proposed within the MTFS of £11.153m (£8.430m savings and efficiencies and £2.723m additional income);

e)    The Housing Revenue Account budget for 2025/26 to 2027/28 as set out in Appendix 3, which included an assumed increase in social dwelling rents of 2.7% for 2025/26;

f)     The General Fund and Housing Revenue Account Capital Programmes as set out in Appendices 4 and 5 respectively.