Agenda item

Draft Budget 2024/25 and Medium-Term Financial Plan

Decision:

RESOLVED

KEY DECISION

That the Executive:

a) Approved for consultation the 2024-25 Draft Revenue Budget, which includes:

i. an estimated net revenue budget of £371.5m (£759.6m including the Dedicated Schools Grant) as set out in Appendix A, noting that this is subject to further update and change following the publication of the provisional Local Government Finance Settlement.

ii. a Band D Equivalent Council Tax of £1,740.22 for North Northamptonshire Council, representing an increase of 2.99% in the ‘core’ Council Tax and a further 2% for the Adult Social Care Precept.

iii. pressures of £53.4m, including adjustments for the reversal of one-off funding in 2023-24, and savings, efficiencies and income proposals of £18.5m as detailed in Appendix B.

iv. the provisional Dedicated Schools Grant budget of £388.1m for 2024-25, pending the final settlement, as detailed in Appendix C.

v. the draft planned use of, contribution to, and movement in, reserves as identified in paragraph 5.52, section 9 and Appendix D of the report, noting the reserves will be reviewed again after the Finance Settlement and prior to the final budget proposals, to consider the risk applying at that time.

vi. corporate budget requirements as set out in paragraph 8.1, including a contingency sum of £4.1mas set out in paragraph 8.2.

b) For the Dedicated Schools Grant (DSG):

i. Noted the provisional allocations of the funding for the Schools Block, High Needs Block, Early Years Block and the Central School Services Block.

ii Following consultation with the Schools Forum, delegated authority to the Executive Member for Children, Families, Education and Skills in consultation with the Executive Member for Finance and Transformation, Executive Director for Adults, Health Partnerships and Housing (and Children’s Services – Interim), and the Executive Director of Finance and Performance (S151 Officer) to determine the DSG 2024-25 schools funding formula, high needs funding arrangements and the early years funding formula in line with Department for Education guidance.

c) Noted the decision making principles of the Transformation and Efficiency Board for Children’s Services (Northamptonshire Children’s Trust) as set out in paragraphs 7.17 to 7.20 and delegates authority to the Executive Member for Children, Families, Education and Skills in consultation with the Executive Member for Finance and Transformation, the Executive Director for Adults, Health Partnerships and Housing (and Children’s Services - Interim) and the Executive Director of Finance and Performance (S151 Officer) to approve allocations from the Transformation and Efficiency funding held within the Children’s Trust budget in support of change programmes. Investment decisions will be subject to approval following the submission of detailed business cases.

d) Endorsed the budget consultation process as outlined at paragraphs 13.16 to 13.20 which commences following the approval of the recommendations in this report.

e) Noted that the funding allocations are estimates only at this stage and will not be confirmed until the publication of the provisional Local Government Finance Settlement.

f) Delegated authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (S151 Officer) to amend the draft budget following the publication of the provisional Local Government Finance Settlement.

The Executive also:

a) Noted the changes to the draft budget arising from the Provisional Local Government Finance Settlement.

b) Approved the use of the Budget Delivery Smoothing Reserve to meet the net shortfall in funding of £0.748m arising, predominantly, from a reduction to the Services Grant. Noting that further work will now be undertaken to look at options to meet this shortfall on a recurring basis.

Reason for Recommendations: To ensure that the Council complies with its Constitution and legislative requirements in setting the budget for North Northamptonshire Council from 2024-25.

Alternative Options Considered – This is the start of the formal budget consultation for the General Fund and any comments from the consultation, together with any changes from the Finance Settlement, will be considered as part of this process to inform the need for alternative options.

Minutes:

The Chair invited Cllr Lyn Buckingham to address the Executive. Cllr Buckingham welcomed the budget but noted with disappointment the single year government grant that made planning outside the short-term difficult. Cllr Buckingham also made reference to difference in Service Grant noting the smoothing reserve being used to mitigate this.

Cllr Jim Hakewill was then invited by the Chair to address the meeting. Cllr Hakewill questioned when the Executive would be holding face-to-face meetings in local towns to explain the budget to residents. Cllr Hakewill referred to fees and charges, noting that income derived from these was important to support Council services, however, he considered that these significant costs were being raised behind closed doors and asked what involvement Executive Members had in agreeing revised fees and charges. Cllr Hakewill also queried when the Executive would request that the Council’s scrutiny function examine the implications of these charges for residents and businesses for 2024/25.

The Chair then invited Cllr Lloyd Bunday, Executive Member for Finance and Transformation to introduce the draft revenue budget 2024-25 and the indicative Medium-Term Financial Plan for North Northamptonshire Council, including the addendum published on 20^th December 2023 following the publication of the provisional Local Government Finance Settlement on 18^th December.

Responding to the speakers, Cllr Bunday concurred with Cllr Buckingham’s frustrations regarding a single year financial settlement. In response to Cllr Hakewill’s comments, Cllr Bunday detailed the array of public meeting opportunities and online access to the budget scrutiny process for those interested in the Council’s draft budget. Cllr Bunday also noted that in-line with the Council’s Constitution, Executive Members did have reference to decisions made relating to fees and charges.

Cllr Bunday stated that the report before members set out the Draft Budget for 2024/25 and the Medium-Term Financial Plan to 2028. It was noted that should the recommendations in the report be approved, the draft budget would form the basis for a consultation process offering residents, local partners and other stakeholders the opportunity to review and provide comment on the proposed budget until 26^th January 2024. The budget would also be presented to the Corporate Scrutiny Committee on 23^rd January, with feedback from this meeting and the wider consultation response presented to the Executive at its meeting on 8^th February. The Executive would, at this meeting, consider the final draft budget proposals and Council Tax Levels for 2024-25 with a view to recommending these to Full Council for approval at its meeting on 22^nd February 2024. Full Council would also receive the final information from all the precepting authorities required to propose the Council Tax for all areas of North Northamptonshire.

Cllr Bunday urged all those who held an opinion regarding the draft budget to use the time of consultation to share their thoughts, before providing details of the wide range of services the Council provided to its residents, with the budget underpinning the priorities contained within the Council’s Corporate Plan.

It was noted that when the draft budget before members was published, details of the Local Government Finance Settlement from central government were awaited. Given the financial pressures, risks and uncertainties faced by local government over the short and medium-term, it was considered that the failure of central government to provide a forecasted settlement over several years had added to this uncertainty. In addition, it was reported that the government financial policy issued on 5^th December 2023 as the precursor to the settlement had made it clear that the settlement would be one of funding by growth and not new or increased grant funding.

The meeting was advised that the provisional Local Government Finance Settlement had been published on 18^th December. Following this, an addendum to the main budget report had been published setting out the revised financial position for the Council and comparing the settlement to the assumptions made within the draft budget report before the Executive.

It was noted that while the settlement represented a 6.5% (£4bn) increase nationally in Core Spending Power, high levels of inflation and service demand growth had resulted in significant pressures to Council services, outstripping this increase and required further savings to be found. As per the addendum to the main report, additional recommendations were required requesting the Executive note the changes to the draft budget arising from the provisional Local Government Finance Settlement.

Cllr Bunday outlined the unprecedented financial challenges faced by the Council in recent years, predominantly resulting from external factors such as the longer-term impact of the Covid pandemic and sustained high inflation. Although the draft budget before members was balanced, the Council’s Medium-Term Financial position remained very challenging, with further transformation opportunities requiring delivery to help create a strong and modern authority delivering quality, cost-effective services for the benefit of its residents.

It was reported that the budget outlined an estimated net revenue of £759.6m including a Designated Schools Grant of £388.1m. Although a balanced budget had been proposed for 2024/25, it was recognised that there was a funding gap of £36m for 2025/26, rising to £83.6m by the end of the 2028 financial year.

Approximately half of the growth in the Core Spending Power in the government settlement would come from local taxpayers through Council Tax increases, with the budget assuming that Full Council would increase Council Tax by 4.99%; 2.99% for the “core” Council Tax and 2% for the Adult Social Care precept. Cllr Bunday stated that the proposed Council Tax for a Band D property would be £1740.22, an increase of £82.71 per year or £1.59 per week. A property in Band A would see an increase in Council Tax of £1.06 per week, and Band B £1.23 per week.

It was noted that Full Council had previously accepted the recommendation to maintain the Local Council Tax Support Scheme at 25% for 2024/25.

Cllr Bunday made reference to Business Rates as the second largest income source for the Council amounting to £110.5m annually. It was heard that the Council had benefitted from the present Business Rates Retention system due to an above average increase in business growth across the area, however the way the scheme operated in future years could have major financial implications for the Council.

The meeting was advised that the Dedicated Schools Grant that formed part of the budget was a ringfenced grant allocated to support a range of education related services. It was forecasted that the High Needs Block of the grant would overspend at the end of 2023-24 with discussions ongoing as to how this could be mitigated.

In reference to directorate budgets, it was noted that demand-led services were the most volatile and carried the highest risk. During the current financial year significant overspends had been witnessed for both Children’s and Adults Social Care Services. It was recognised that safeguarding and care of the most vulnerable in society was important in all that the Council did, however, it must work to stay within available resources so that all services were protected. It was heard that tackling overspends and implementing change took time, but it was necessary that services reviewed operations and sought greater efficiencies to ensure long term financial sustainability and the ability to continue to deliver the services residents valued.

Cllr Bunday referenced Northamptonshire Children’s Trust, the organisation delivering children’s social care and targeted early help on behalf of North and West Northamptonshire Councils and funded predominantly from the two unitary authorities by means of an agreed contract sum. It was heard that as part of delivering the contract sum for 2024-25, a Transformation and Efficiency Board had been created between the two unitary authorities and the Trust to create systemic improvement in services for children in Northamptonshire, whilst driving value for money to ensure that resources were used effectively to support and improve outcomes.

The contract sum for the Children’s Trust was agreed at £177.4m, of which the Council’s share was £78.6m. In negotiating the contract sum for the Children’s Trust it was felt that stronger governance arrangements could be put in place in order to consider and approve transformation business cases.

The Children’s Directorate draft budget, including the Children’s Trust, reflected a net pressure of £15.231m, of which £14.373m relates to the Children’s Trust and £858,000 to the Children’s Service delivered within the Council.

The Adult Social Care draft budget reflected a net pressure of £15.730m. The main pressures included contractual inflation and other increases for independent care placements, incorporating the National Living Wage pressures for social care providers. The projected inflation requirements of £3.988m included the provision for the national living wage in line with announcements by government, and other overheads as well as general fee movements in line with market factors. Within Adult Social Care there was a provision for demographic growth of £11.015m, North Northamptonshire having seen a significant increase in the number of clients requiring care.

It was reported that additional costs of £1.498m for the ringfenced grant funding to meet Social Care-related demand in respect of discharge and capacity funding were included within the budget and a further £1.078m in support of discharge.

It was recognised that risk remained in the budget assumptions for Adult Social Care due to the influence of service demand, with a reserve set aside to help underwrite such risk and to smooth any impact over the longer term whilst alternative mitigations were sought.

The main savings within Adult Social Care were the reduction in the number of residential placements made in the independent sector of £695,000 and demand management efficiencies of £2.6m.

Pressures and savings were outlined to the meeting in relation to the following service areas:

· Strategic Housing, Development and Property Services

· Public Health and Communities

· Communities and Leisure

· Place and Economy

· Planning and Development Services

· Enabling and Support Services

Cllr Bunday reported that investment income of £4.697m reflected the increase in the Bank of England base rate on future investments and was based on an average cash balance of £157m at a weighted average rate of 5.01% for a full year.

It was heard that the Corporate Resources revenue budget for 2024/25 was £34.397m. Amongst other items this held a corporate contingency of around 1% of the revenue budget, MRP required to fund borrowing on maturity and contingency for future pay awards. It also reflected the uncertainty of future insurance costs.

The Council’s Treasury Management Debt Portfolio and other associated Treasury Management costs were reported as being £12.5m.

Cllr Bunday stated that there continued to be risks around the overall cash and loan position for North Northamptonshire, not only from a volatile marketplace, but also due to the outstanding legacy audits for 2020/21 and the disaggregation of the opening position from Northamptonshire County Council.

When announcing the Settlement, the Secretary of State had highlighted that the Government continued to encourage local authorities to consider the use of their reserves to maintain services in the face of service pressures.

Cllr Bunday noted that in terms of reserves, most were earmarked for specific purposes or ringfenced, the Council holding just over £24m of general reserves which provided a working balance to help cushion the impact of unexpected events or emergencies. Members were reminded that once reserves were spent, they were gone and therefore a strategy for replenishing any reserve that was to be used must be in place.

Cllr Bunday noted that the second recommendation as set out in the addendum to the main budget report was to approve the use of the Budget Delivery Smoothing Reserve to meet the net shortfall in funding of £0.748m arising, predominantly, from a reduction to the Services Grant. Members noted that further work would be undertaken to look at options to meet this shortfall on a recurring basis.

The Reserves Strategy included a range for the level of general fund balances to be at a minimum of 5% and a maximum of 10% of the net revenue budget. The level of reserves included in the budget were £24.2m, approximately 6.5% of the proposed net revenue budget of £371.5m.

Cllr David Brackenbury thanked Cllr Bunday for his comprehensive overview of the draft budget, noting the hard work of the Finance team and service directorates to achieve a balanced budget position. Cllr Brackenbury echoed concerns in relation to the single year financial settlement from Government and welcomed the forthcoming consultation period as an opportunity for interested stakeholders to contribute.

Cllr Matt Binley spoke to note the amount of time that had gone into production of the draft budget and stated that there had been a number of challenging conversations in the course of its development. Cllr Binley also stated his frustration at the single year financial settlement but welcomed the balanced draft budget when set against a challenging financial environment. Cllr Binley noted that the public were welcome to attend any of the budget-related Council meetings and that significant time had gone into the setting of fees and charges from an Executive Member perspective.

The Chair concluded debate by noting the challenging environment to achieve a balanced budget and offered thanks to all those involved in its production for their hard work in pushing each and every department to make savings to allow for the draft before members to be considered.