Agenda item

The Deputy Chief Executive and Director of Resources, Bromsgrove District Council (BDC) and Redditch Borough Council (RBC), introduced a report detailing the draft Worcestershire Regulatory Service Budgets 2025/26 – 2027/28. Members’ attention was drawn to the Recommendations as detailed on pages 25 to 27 of the main agenda pack.

Members were informed that, Appendix 1 to the report showed the 2025/26 – 2027/28 budget breakdown for the district councils’ partnership.

The following assumptions had been made in relation to the projections:-

• The enhanced pay award for 2024/25 had been accepted by employers and unions, the additional pressure on WRS salaries would be £21k. WRS were not able to fund this increase, therefore an increase in partner funding would be required.

·       3% pay award across all staff for 2025/26, 2% for 2026/27 & 2027/28. This would be subject to the National Pay Negotiations that were ongoing and therefore the final position would reflect any formally agreed increases, the budget also included any employee entitled to an incremental increase.

·       Increase in Rent of £2.6k in 2025/26, a further 3% in 2026/2027 and 2027/2028.

·       Increase in ICT Hosting of £2.6k, a further 3% in 2026/27 and 2027/28.

·       Increase in Support Hosting of £3.8k in 2025-26, a further 3% in 2026/27 and 2027-28.

·       Pension back-funding to be paid by all partners.

The unavoidable salary pressures were not able to be met by WRS generating additional income, therefore, an increase to partner funding would be required  year on year, as detailed on page 28 of the main agenda pack. Salaries equated to 80% of the turnover so the higher pay award cost needed to be met.

Following the autumn budget, NI costs had increased from 13.8% to 15%, also the per-employee threshold at which employers become liable to pay NI reduced to £5k. This had created a pressure of £71k on the salary budget

It was understood that this increase in cost pressures would be covered for local authorities by way of additional new burdens funding, however, in the absence of clarity about how this would be delivered, officers would ask Members to approve the budget at this stage and would commit to bringing a further paper back to the Board at the meeting scheduled in February 2025, hopefully having received clarity on the Government’s intentions of how that funding would be delivered.

The Deputy Chief Executive and Director of Resources mentioned the re-valuation of the pension fund, which happened every three-years and the potential this had for having further financial impact going forward. He suggested to the Board that, should Members so require, he would invite a representative from the Government Actuary’s Department to a future meeting of the Board with regard to this as the shared service and staff were part of the Worcestershire Pension Fund.

In response to questions from Board Members on the rent, ICT hosting and support hosting, the Deputy Chief Executive and Director of Resources explained that these increases were in-line with the RPI (Retail Price Index)  for the current year. Therefore, the actual increase may change in April 25. For 2026/27 and 2027/28 a further 3% had been added to rent, ICT support & hosting support.

These pressures were not able to be met by WRS, therefore an increase to partner funding would be required, as follows:-

The Director of Worcestershire Regulatory Services (WRS), responded to a question on income generation targets and in doing so, highlighted that income generation was far better this year than the previous two years. The Technical Services team were a driving force in income generation. The Muller Primary Authority contract would generate income, and officers would look to build on the Primary Authority income stream. Officers were also looking to further promote the dog warden service to other authorities located within viable locations.

The Director of WRS responded to further questions on the setting of Fees and Charges, and in doing so explained that fees and charges were a reserved matter, being set by each partner authority. He explained that with some based on cost recovery only, no significant profit could not be made so WRS officers worked closely with their finance colleagues in the individual authorities to ensure that any increase in fees and charges was defensible so that authorities were not challenged or judicially reviewed. Furthermore, some other fees and charges were set by Central Government, and many had not changed in many years, despite local government representatives lobbying for this. WRS officers also worked together with finance officers to increase and align relevant fees and charges across the six partners where appropriate, being mindful of consistency where WRS was wholly responsible for the cost of any process e.g., stray dog fees were set across Worcestershire for economy of services.

Members expressed some concerns with regard to the increase of partner contributions and what could be done to avoid further increases in 2025/26.

The Deputy Chief Executive and Director of Resources and Director of WRS explained that WRS staff had received the same pay award as Government local authority employees. Officers would continue to scope income generation and look at economy of scale. Members were further informed that in 2010 WRS were asked to delivery 17% of savings of expenditure within the 3-year time scale of the WRS project, and that WRS had achieved 24%. During the following 3 years WRS had delivered differing levels of savings to all partners but in total reducing district partner costs by over £300,000. Between 2016/17 and 2020/21, WRS was asked to manage cost increases through income generation and received no additional funding in base budget through the period.  WRS officers had a better grip on their financial costs and always tried to ensure a reasonable margin with any income taken on. The current increase was mainly due to salaries with the recently agreed pay award.

The Director of WRS commented that the quality-of-service individual partners received from WRS, was at a level that partners would struggle to deliver at the cost of their individual contributions. Therefore, there was significantly less spend by partner authorities than many similar local authorities and WRS delivered a good service.  Members were reassured that officers continued and would continue to keep an eye ongoing cost.

RECOMMENDED that

1.1the 2025/26 gross expenditure budget of £5,356k as shown in Appendix 1, be approved;

1.2the 2025/26 income budget of £1,258k as shown in Appendix 1, be approved;

1.3the revenue budget and partner percentage allocations for 25/26 onwards, be approved, as follows:-

1.4  the additional partner liabilities for 2025/26 in relation to unavoidable salary pressure, be approved as follows:-

1.5  the additional partner liabilities for 2025/26 in relation to increase in hosting costs, be approved as follows:-