Agenda item

Report from the Strategic Director of Finance and Customer Services.

Recommendations:

1.    That the MTFS 2024/25 to 2027/28 update be noted.

2.    That Cabinet note the potential requirement to use reserves in order to balance the Council’s outturn position for 2024/25.

Consideration was given to the report which set out an update on the Council’s Budget and Medium Term Financial Strategy (MTFS) to 2027/28. The update included the standard technical updates required, recognition of financial pressures impacting the delivery of services and the ongoing impact on the Council’s base costs from the period of high inflation. The technical adjustments also included the Council’s assessment of the potential impact of the Autumn Statement and Autumn Policy update which had been a positive outcome for Council’s, though it did not go far enough to resolve the pressures facing the sector.

The MTFS would be revised further in advance of the Council Budget setting meeting in March 2025, to take account of the Local Government Finance Settlement for 2025/26, when issued, along with budget policy proposals on levels of Council Tax, reserves, fees and charges and any budget savings or investments.

The Autumn Policy update announced on the 28 November gave the Council further details about the new funding announced in the  Autumn Statement which had helped to shape the MTFS position. However, until the Provisional Financial Settlement was released in mid to late December 2024, the Council

would not have specific allocations.

The MTFS review included the impact of the September Financial Monitoring 2024/25 report to Cabinet in November 2024, that projected a financial overspend of  £5.3m that would require the use of the Council’s reserves to achieve a balanced financial outturn position for 2024/25. However, Directorates were working on recovery plans to mitigate the financial overspend for 2024/25 as much as possible, to minimise the use of reserves. The impact of the budget recovery plans developed to date were factored into the MTFS position, though the Council’s approach would be to continue to develop additional opportunities to reduce the current overspend further.

The Budget and Council Tax Report 2024/25 reported that there was a budget gap for 2025/26 of £6.630m. Taking this with the further financial challenges the Council had faced during 2024/25, many of which would continue to present a challenge heading into 2025/26 onwards, meant the Council faced a complicated budget setting process. After taking account of the pressures and some mitigations against them, along with the estimated positive impact of the Autumn Statement, the Council would still face budget gaps for 2025/26 to 2027/28 (as set out in the table in the report summary). This was before budget policy proposals on levels of Council Tax, reserves, fees and charges and any budget savings or investments.

A key challenge for 2025/26 and the MTFS was that there remained significant uncertainty as to how Governments Financial Settlement for 2025/26 onwards would look. The Government had stated that they were only providing a single year Financial Settlement for 2025/26, although they had indicated that it would be followed by a 3 year spending period approach, which would be helpful for long term planning. There had been a significant change in approach towards the funding for Local Authorities and a clear acknowledgement in the Autumn Statement that Local Authorities needed

more resources to support demand and cost pressures, which was positive for the sector.

During the meeting it was confirmed that the settlement was expected on Thursday 19 December, with the Council expecting more resources and funding. However, there would continue to be ongoing pressures. Officers had tried to be as accurate as possible when producing the report and the additional funding had been built in as well as possible. However, the final figures were required for the complete picture.

Resolved:

1.    That the MTFS 2024/25 to 2027/28 update be noted.

2.    That Cabinet note the potential requirement to use reserves in order to balance the Council’s outturn position for 2024/25.