Agenda item

REPORT OF THE SERVICE DIRECTOR – RESOURCES

To consider the revenue budget and investment strategy for 2025/26.

RECOMMENDED TO CABINET: The Finance, Audit and Risk Committee commented on the budget process, assumptions and risks contained within the report, in the context that Cabinet recommend to Council that:

(1) Notes the position on the Collection Fund and how it will be funded.

(2) Notes the position relating to the General Fund balance and that due to the risks identified a minimum balance of £2.6 million is recommended.

(3) Notes the net revenue savings that are likely to be required in future years, combined with the Chief Finance Officer’s section 25 report (Appendix D) which provides a commentary on the risks and reliability of estimates contained in the budget.

(4) Approves the revenue savings and investments as detailed in Appendix B.

(5) Approves the capital programme as detailed in Appendix C.

(6) Approves a net expenditure budget of £22.792m, as detailed in Appendix E.

(7) Approves a Council Tax increase of 2.99%, which is in line with the provisions in the Medium-Term Financial Strategy.

(8) Approves the Investment Strategy as detailed in Appendix F.

(9) Approve the adoption of the four clauses in relation to the Code of Practice on Treasury Management (as detailed in paragraphs 8.32 to 8.35).

REASON FOR DECISION:

(1) To ensure that all relevant factors are considered in arriving at a budget (revenue and capital) and Council Tax level for 2025/26. To ensure that the budget is aligned to Council priorities for 2024-28 as set out in the Council Plan.

(2) The Council’s Investment Strategy is set to comply with relevant statutory guidance, including the CIPFA Prudential Code. The Strategy also sets out the Council’s approach to risks in relation to the investment of surplus cash.

Audio recording – 41 minutes 20 seconds

N.B. Cllr Paul Ward declared an interest in this item due to his employment. He had spoken to the Monitoring Officer and had been advised that he could take part in the debate and vote on Recommendations 2.1 to 2.7 and 2.9, however needed to leave the Chamber and not take part in debate or vote on recommendation 2.8.

The Chair advised that recommendations 2.1-2.7 and 2.9 would be taken as one recommendation and 2.8 as a separate recommendation, and so to debate and vote would be separately.

The Service Director – Resources presented the report entitled ‘Budget 2025/26 (Revenue Budget and Investment Strategy)’ with a focus on recommendation 2.1 to 2.7 and 2.9 and highlighted the following:

· The Government confirmed the funds for NI insurance employer payments were less than the total expenditure for the Council but more than expected in the draft Budget.

· At the last meeting of this Committee, it was recommended that Cabinet and Council consider whether investments related to statutory services and the Implications of not going forward with them. This information had been added to the Cabinet report.

· For the first time, the Budget report combined Capital, Revenue and Treasury reports, which was common in other Councils. This allowed the implications of capital funding to be seen more clearly.

· The Report sets out that the Medium Term Financial Strategy (MTFS) was confirmed in September at Council, and the Report adhered to that strategy.

· Following the MTFS, Officers and Executive Members looked at where the Council could make savings and where the Council needed to make investments.

· The next stage were the Budget Workshops with sessions for the Administration and for Opposition groups.

· There was a requirement to consult Business Ratepayers. This had been published on the North Herts Council website with e-mails to business groups to be sent which would request feedback before the next Council meeting.

· The reasoning for some of the investments was set out in Section 8.1.

· The changes since the draft and why these were featured in the budget was highlighted in Section 8.4

· From 26/27 the Council would have a 3-year settlement.

· In estimating the budget for future years, the report took a middle case assumption.

· The Report looked at the assumptions of the budget in Appendix D and a key part showed positive and negative predictions to what the Council could receive as part of future funding.

· Table 3 looked at specific grants. Some concerns and opportunities in terms of the budget projections were that the UK Shared Prosperity Fund, which gave scope in terms of investments in the District and the Healthy Hub Funding where there was uncertainty over the expectations of what needed to be delivered for this grant.

· The Domestic Abuse Grant which was added to general funding which was added as a budget pressure to allow the funding for the service to continue.

· The reserves that the Council had were detailed out in 8.12, the main one of these was the Business Rates Grant Reserve which sat at £6.4 million.

· The Council could release most of the grant over the medium term.

· The biggest provision of the Council was against Business Rates, due to a backlog of appeals and this funding would be released as appeals were settled.

· The reports recommendation for minimum funds balance was £2.6 million. The Council had funds above this recommendation and if the balance were close then concerns would have been raised.

· In future years if the Council had more risks due to projects, then the minimum balance would increase.

· The revenue effect of the lost or gained interest from investments was detailed in Section 8.27

· The principles the Council must agree in terms of Treasury Management were in Section 8.29-8.35

· Expected funding over a 5-year period and sets savings target, with a net expenditure budget of £22.792m as detailed in paragraphs 8.37 – 8.41 of the report and Appendix E.

The following Members asked questions:

· Councillor Ralph Muncer

· Councillor Ruth Brown

· Councillor Paul Ward

· Independent Member John Cannon

In response to questions, the Service Director – Resources advised that:

· The final Local Government settlement benefited the Council with an assumed £0 of contribution in the provision estimates and the Government had allocated £157k. However, the cost of the National Insurance payment was higher at £370k.

· Gaps in the budget, which were highlighted as ‘TBC’, all related to savings rather than investments, which would not impact expenditure in the budget.

· The areas that are ‘TBC’ were the car parking charging due to having a consultation which would affect the scope of charging and when it would be implemented, and the agency for leisure which was subject to confidentiality.

· The summary in Appendix E highlighted the reserves, the general fund reserve was different from the other reserves, as it could be used to support general spending. Other reserves were created for specific use, some of these had been ringfenced for projects and that information was shown in table 4.

· The items shown as ‘TBC’ were still potential savings for 2025/26 and for contribution towards the 2026/27 savings. The targets for future years were net targets and if investments created bigger expenditure, this would add to the savings needed.

· A spike in net expenditure in 2025/26 was caused by carry forwards which were reported to Cabinet.

· Churchgate spend came primarily from some grants and also the surplus funding. The funding was subject to some uncertainty due to commercial tenants playing rent.

· Homelessness grant funding was in a reserve for specific projects, this was reported to Cabinet.

· Welfare grant funding was and accumulation of funding the Council had got during Covid and there was a planned use of that reserve over time, but this would not be an ongoing spend, it would only be while the grant was available.

Councillor Ruth Brown proposed, and Councillor Stewart Willoughby seconded and, following a vote, it was:

RECOMMENDED TO CABINET: That Finance, Audit and Risk commented on the budget process, assumptions and risks contained within this report, in the context that Cabinet recommended to Council that: