Agenda item

Service and Financial Planning 2025/26

The Deputy Leader and Executive Member for Finance and Assets.

Minutes:

The Deputy Leader and Executive Member for Finance and Assets, Councillor Lewanski, introduced the report into Service and Financial Planning 2025/26. He also presented the updated Medium Term Financial Plan forecast and the latest revenue and capital, and fees and charges proposals for 2025/26.

 

It was noted that local government continues to face financial challenges in the current economic crisis. Pressures facing councils include the cost of living crisis and the cost of homelessness. Despite this, the Council remained confident of being able to balance its budget for 2025/26 with the proposals included in the report to Executive. The Council had prudently avoided high levels of external debt and reserves remained buoyant. There was also an overall revenue budget underspend for the last financial year 2023/24 which had been added to reserve balances.

 

It had nevertheless been challenging over the summer to consider the budget in depth and work up a set of draft revenue and capital proposals for 2025/26 that ensure the Council moves into the new year with a strong service plan and sound financial footing. The Medium Term Financial Plan was supported by publication of the service plans which set out how each service will operate and what they plan to achieve over the coming year.

 

The report shows that a balanced budget can be set, after allowing for a final drawdown of reserves of £0.279 million for 2025/26. The Council still awaits the outcome of the Provisional Local Government Settlement in December and therefore the final position may vary depending on the outcome of the settlement. Similarly recent Budget announcements may increase or decrease the Council’s budget requirement.

 

Councillor Lewanski noted that despite the general picture, the budget proposals allowed for high quality services to continue. Service budget growth requirements were relatively modest and largely offset by savings. Wherever possible, savings proposals had been identified that have a low risk impact on service delivery. Officers had carried out an in depth review of fees and charges for all services. This had identified opportunities to adjust existing budgets to reflect forecast income levels and increase fees in line with the recommended Policy. The Council was very mindful of the potential impact on residents and will, as usual, consult widely on the proposals in the report before making a final decision in January.

 

The budget report highlighted potential risks, issues and opportunities that the Council may face in 2025/26. One of the key risks is the cost of homelessness and the Council is again, hoping for an extension of the homelessness support grant in 2025/26 which will be confirmed hopefully in December.

 

Medium Term Financial Plan (MTFP)

 

The report also includes updated Medium Term forecasts which map the potential impact of increasing costs and reductions in Government funding over the next five years. The forecast gap remains potentially significant if action is not taken to address it but the MTFP and supporting strategies provide a solid framework for future financial planning.

 

Reserves

 

The Council’s Revenue Reserves remain more than sufficient to support and balance the Budget and mitigate potential risks while the Council focuses on developing new income streams and reducing costs through the Financial Sustainability Programme.

 

Council Tax proposed

 

Council Tax proposals to increase the Reigate & Banstead element of the average Band D charge by less than 15 pence per week, being a £7.69 increase overall at the 2.99% level. This is subject to confirmation of the Government’s referendum limit in the Provisional Local Government Settlement in December and approval by Full Council in February.

 

Capital Programme

 

The current programme had been subject to a highly detailed review in 2025 and the final outcome will be presented to Executive in January once the review is complete and its scrutiny process had taken place later in November. It was likely that this review will generate significant savings to ensure that the Council eradicates any historical capital slippage from the programme and rationalises capital plans to ensure the Council’s capital programme is fit for purpose and further reduce the need to borrow money externally. There were several new capital growth proposals in the report, including an extra allocation to support deliver of the Council’s Environmental Strategy. Some of the proposals were also possible from the allocation of Strategic CIL funding which again reduced the need to borrow.

 

It was noted that since publication of the agenda pack, the report had been updated to correct three minor typographical errors in Tables 12 and 18 and in paragraph 70.

 

The Leader, Councillor Biggs, thanked the Chief Finance Officer, Lisa Nyon, and her team and all officers involved in the budget from its start in early summer. He looked forward to it going to the Budget Scrutiny Panels in November and to Overview & Scrutiny Committee in December.

 

Executive Members asked to see the minor typographical changes that had been made following publication of the report. There were no further questions from Executive Members.

 

The Chair of Overview & Scrutiny Committee, Councillor Harrison, told the Executive that O&S budget scrutiny panels will take place later in November. Any Member was welcome to attend. This year there were two Budget Scrutiny Panels - one on capital was on 21 November and one on revenue was on 27 November. The full O&S Committee then took place the week after that. Councillor Harrison acknowledged that although the Council was close to closing its budget gap, there was still a gap of around £200k. Also, the Council needed to know the final government settlement which would come in December. There were some reductions proposed in the capital budget. The Panels would look at the reduction on interest rate costs; salary increases were unknown as yet. The O&S Committee will consider the report and give the Executive their view on the proposed budget.

 

The Chair of the Audit Committee, Councillor Essex, asked about the risks identified for 2025/26. He had asked for the operational risk register to be updated to include the Harlequin theatre and RAAC concrete. He asked about the proposals to spend £100k next year on maintenance spend at the Harlequin. The Leader noted that the maintenance figure may be needed next year and whatever costs needed to bring the Harlequin back into operation. He said that they could look at the risks involved.

 

Visiting Members asked the following questions:

 

·       Forecast NNDR (business rates) forecast – hopefully, the Council will have more people paying business rates in the borough. Was the sum left, a percentage of what the Council will collect and what will the Government leave the Council? Officers noted that a percentage of 40 per cent was left for this authority.

 

RESOLVED – that the Executive agreed:

 

(i)             That the national and local policy context (Annex 1) and significant financial uncertainties at this stage in the budget-setting process be noted.

(ii)           That the service proposals set out in this report which seek to respond to this context and deliver our corporate priorities, be endorsed.

(iii)         That the draft service business plans for 2025/26 to 2027/28 be noted, and that Heads of Service finalise the plans for their service areas in consultation with the relevant Portfolio Holders.

(iv)         That the following be approved for consultation under the Council’s budget and policy framework:

 

a. Medium Term Financial Plan Forecasts and proposed actions to address the forecast Revenue Budget gap (Annex 2).

 

b. Service Revenue Budget growth proposals totalling £0.666 million, savings of (£0.687) million and additional fees and charge income of (£0.182) million (Annex 3).

 

c. Central Revenue Budget savings and growth proposals totalling (£0.189) million, and £1.716 million provision for the 2025/26 pay award (Annex 3).

 

d. Revenue Reserve Balances forecast at 1 April 2025 of £29.231 million (Annex 6); and

 

e. A forecast drawdown of revenue reserves of £0.279 million to balance the Revenue budget for 2025/26, subject to final announcements in and any outstanding items in the provisional local government settlement to be included in the final January 2024 Budget report.

 

(v)           That the Capital Programme Growth proposals totalling £0.839 million (Annex 4) be approved.

 

(vi)         That the Fees & Charges Policy (Annex 5) be approved.

 

(vii)    That the Reserves Policy (Annex 6.1) be approved.

Supporting documents: