Agenda item

Appendix A to this report will be published in a Supplementary Papers pack to this agenda.

 

The Deputy Chief Executive and Section 151 Officer presented the Medium-Term Financial Plan (MTFP) - Tranche 2 Budget including Fees and Charges (following consultation) report for the consideration of Cabinet.

 

As a result of the recommendations agreed during Minute item 69/24 there would need to be some adjustments made to the MTFP and this will be reported to the Cabinet and Council at the meetings due to take place on 19^th February 2025 as the agendas for these meetings had already been published. It was reported that these amendments would reflect the following:

 

1)    An additional £85,000 be added to parking budgets, which is broken down as:

 

                                              i.          Additional funding of £70,000 for increased numbers of Civil Enforcement Officers (CEOs)

                                             ii.          £15,000 for maintenance of an Automatic Number Plate Recognition (ANPR) system

 

2)      £100,000 added to the Capital Budget in 2025/26 for ANPR systems to Recreation Road South, St Johns and Windsor Street car parks.

 

Members were informed that the Council had set its budget in two Tranches this year, as it had during the 2024/5 Medium Term Financial Plan (MTFP) process. The initial Tranche was published in December 2024 and approved initial pressures and increases at Council in January 2025. This second Tranche should be considered as the final now that the Local Government Settlement figures were known.

 

It was highlighted that as with many Local Authorities the additional National Insurance contributions would impact on the budget. Members were informed that Bromsgrove District Council currently had a shortfall of £200,000 per annum. Furthermore, it was noted that not all Grant allocations were currently known.

 

Departmental changes, due to contract pressures had also been taken into account. These departmental changes resulted in an overall £1.387million revenue pressure in the 2025/6 financial year and then £938,000 by 2027/8.

 

At Tranche 1, there was a £1million deficit which needed to be closed, rising to an ongoing £1.5million in 2027/8. It was clarified that £1million of this ongoing amount from 2026/7 onwards was linked to the impact of the delivery of the Food Waste Service at the Council.

 

The Provisional Local Government Settlement was made on 18^th December 2024. In that Settlement the Council’s Core Sending Power was unchanged at £13.42million. This zero increase in spending power resulted in a significant change in funding with Councils now expected to have a 2.99 per cent increase in Council Tax to get to that a ‘break even’ position, with a reduction of ‘Other Grants’ by a corresponding amount.

 

It was reported that the Government had given specific targeted Grant Funding for a number of initiatives. This funding was single year, as Local Government funding was due to change significantly for the 2026/7 settlement.

 

The impacts on the Council for this targeted funding was detailed as follows:

 

·       £700million additional grant funding – Bromsgrove District Council had not received any additional grant funding.

·       Council Tax in Tranche 2 would be increased from 1.99 per cent to 2.99 per cent.

·       £233million additional Homelessness Prevention Grant – It was confirmed that Bromsgrove District Council had received £349,000, which was £89,000 more than in the MTFP Tranche 1 reports discussed and approved in December.

·       £1.1billion new funding through implementation of the Extended Producer Responsibility scheme for recycling – it was reported that Bromsgrove District Council had received £1,004,000 funding through this scheme which was included in the Tranche 2 budget proposals.

·       Business Rates to support to the retail, hospitality and Leisure sector was expected to be neutral and Government funded.

·       UK Shared Prosperity Fund had been extended for 2025-26 at a reduced level of £900million – Bromsgrove District Council had received £918,000 split (Revenue £748,000 and Capital £170,000).

 

There were further Significant Grant levels to consider, which included:

 

·       Housing Benefit Administration Subsidy - £146,878

·       Discretionary Housing Payments - £62,332

·       Housing Benefit Subsidy - £11,192,229

·       Disabled Facilities Grant - £1,285,847 (up from £1,130,316)

·       DEFRA allocation for Food Waste Bins/Vehicles - £902,511 (although this had been awarded it was noted that this would still result in a shortfall for implementation of the Food Waste Service due to the high costs of new vehicles and implementation of the service.)

 

The Council had assessed a number of other options to move to what it believed was a considered sustainable position over the 3-year planning period. This process had resulted in the following additional income:

 

·       Council Tax – The Government expects as part of the Local Government Settlement for all Councils to increase Council Tax levels by the maximum 2.99%. The Council assumed a 1.99% increase in Tranche 1 and so this increases that level by £96,000 to come in line with Government expectations

·       Actuarial Changes from 2026 - Following a conversation with the new Actuary and the Worcestershire Treasurers at the end of November 2024, expectations were now that in the 2026 Triennial Revaluation there would be minimal increases. This saved £150,000.

·       EPR Funding Allocations – the Council had received £1,004,000 in EPR Funding allocated over the three-year funding period with £250,000 allocated for specific marketing initiatives to move the initiative forward across all sectors.

·       Capitalisation of Salaries – The Council should be allocating staff costs to capital projects. It had not done this in the past. At the moment an assumption of a 5% recharge had been made which needed to be sustainable over time.

·       One Off Funding from the Finance Reserve. There were finance specific items in the departmental pressures that were one off in nature. These could be funded from the Earmarked Finance Reserve.

·       Departmental Efficiencies – to balance the overall budget, there was the requirement for departmental efficiencies to be made.

·       Savings on the VM Ware Contract – it was expected that this contract would have a 10 fold increase with a change of supplier but in December the Council was able to limit this to a far smaller increase.

 

During the presentation of the report, several areas of extra costs were brought to Members’ attention, as follows:

 

·       WRS Uplift for Inflation – these were the agreed increases approved at the WRS Board in November 2024.

·       Local Government Settlement Costs – these now reflected the changes to funding in the 2025/26 Local Government Financial Settlement. The most significant was the £352,000 reduction in Government Grants.

·       The Sunrise Project - This project focussed on supporting the most vulnerable and complex customers often known to organisations for repeat and reactive demands and identified as having a high level of contact with multiple partner agencies. The expenditure would improve the financial sustainability and health and wellbeing of residents, and in particular those more vulnerable residents. The project was tenure blind and included the provision of access to courses to improve employment opportunities and quality of life.

·       The Final Local Government Settlement on 3rd February allocated the Council £0.1m for the National Insurance changes. This was £200,000 less than the Council’s requirements. This difference shown now needed to be reflected as a pressure.

 

Cabinet were also informed of the potential risks that needed to be considered, as follows:

 

·       The 2025/6 Local Government Financial Settlement was only for one year and overall have a £352,000 reduction in central grants.

·       The new financial settlement formula in 2026/7, which would be for three years, but the make-up of this settlement formula would only be consulted on from Spring of 2025.

·       The status of Councils with “Disclaimer Opinions” on their accounts. It was understood there was over five hundred of these opinions across English Councils.

·       The delivery of projects on time and within allocated budgets – it was noted that the largest risk at this time was the delivery of the Levelling Up Projects. The Council had received approval from the Ministry of Housing, Local Government and Communities on 30th January 2025 that delivery of these projects could be extended until 31st March 2026. However, it was important to note that although this extension had been provided to Local Authorities nationally it would be prudent to complete the projects in as quick a time as possible in order to not increase costs due to delays.

 

The greatest risk was currently considered to be the Devolution of powers in Local Government and the setting up of Unitary Councils. In light of this, the Council was reviewing schemes that could be delivered and completed within the next three years to ensure that a legacy of a sustainable attractive Bromsgrove be transferred on vesting day.

 

Initiatives under review for inclusion and approval following updated business cases included:

 

·       Full funding of the 10-year play strategy agreed by Council in 2024 (only 5 years are in the present capital programme) including non-Council assets set out in that report.

·     Rubery – high street design feasibility study and then implementation  to create central plaza/meeting space and reconfigure parking – circa £120,000.

·       Investment in a new Depot to reflect differing needs for services and vehicles in the future.

 

For Tranche 2, the opinion of the Interim Director of Finance was that the risks contained in the 2025/26 budget estimates had been minimised as far as was possible.

 

The biggest change for this budget would be the capitalisation of salaries which had not been done previously. However, it was noted that there had not needed to be any service cuts made as a result of any changes to budgets previously which had been positive for the Council, its staff and its residents.

 

Budget and MFTP proposals forecast the level of General Fund balances at £12.781m as at 31st March 2028 (before the adjustments for Parking) which was over five times the recommended 5% of net level. However, it was recommended that the level of reserves should not fall below £5million as due to the changes in the structure of Local Authority structures and funding in the future. It was thought that there would be an expectation that any redundancies as a result of the restructure would need to be paid from Reserves.

 

Following the presentation of the report Members thanked the Deputy Chief Executive and Section 151 Officer for all his hard work on this and previous budgets. In addition, Members stated that all his work during his time at the Council had been much appreciated.

 

The Leader invited the Chairman of the Overview and Scrutiny Board to speak. He reported that at the meeting of the Overview and Scrutiny Board held on 11^th February 2025, Members raised monies due to be received from the now defunct Greater Birmingham and Solihull Local Enterprise partnership (GBSLEP). It had been reported that the ringfenced £2.45million funding allocated to former member Councils might not be released as expected. A letter had been received from Birmingham City Council stating that the money would not be released at the end of this financial year. However, Members were informed that external advice would be sought in this matter going forward in order to ensure that all monies would be received as previously agreed. It was hoped that this would be in the financial year 2026-2027.

 

The Chairman of the Board then highlighted some areas that had been discussed at previous meetings of the Finance and Budget Working Group in respect of the loss of Business Rates relief for Bromsgrove School. It was reported that any dividends would be received at the end of the next financial year, and it would amount to approximately £250,000.

 

The Poverty Trust Commission had also been discussed at the last meeting of the FBWG as a result of the discussion at the Council meeting held on 22^nd January 2025. At this meeting Members expressed their concerns in funding this project with little information to scrutinise. Therefore, it had been requested at this Council meeting that further information would be provided to Members of the FBWG at its meeting held on 10^th February 2025. After further scrutiny it was decided that there was still not sufficient information available and therefore another FBWG meeting had been arranged to look at this matter in more detail. This meeting was due to be held on 18^th February 2025, in time for any further consideration at the Full Council meeting on 19^th February 2025.

 

The Overview and Scrutiny Board had also raised the possibility of additional funding for the Artrix. However, it was noted that no further funding could be allocated as The Artrix was now being managed by a charity and that any further funding would be subject to subsidy control legislation in respect of charities.

 

The Cabinet Member for Finance queried if any Alternative Budgets were yet to be received and the deadline or receipt in advance of the Full Council meeting on 19^th February 2025. The Deputy Chief Executive and Section 151 Officer undertook to provide Members with this information.

 

RECOMMENDEDthat

 

1)              The Tranche 2 growth proposals be approved.

2)    The additional funding to the Council as per the final Local Government Settlement, including the estimated levels for 2026/7 and 2027/8.

3)      The Tranche 2 savings proposals, including an increase of Council Tax of 2.99% be approved.

4)    the Commercial and Worcestershire Regulatory Services fee increases for 2025/26 be approved.

5)      The updated five-year Capital Programme 2025/6 to 2029/30 along with its ongoing revenue costs be approved.

6)    The levels of Earmarked Reserve being carried forward into future years and the setting up of the Property and ERP Reserves be approved.

7)  The level of General Fund balances following additions from the 2025/6 MTFP be approved.

8)  Members take account of any feedback from the Tranche 2 consultation process undertaken.