Agenda item

General Fund Draft Budget 2024-25 and Medium-Term Financial Plan

Decision:

RESOLVED

 

KEY DECISION

 

That the Executive endorsed the contents of the report and recommended the budget proposals on to Council for approval.  This includes:

 

a)   the 2024-25 revenue budget for approval and adoption as set out in this report, which sets:

                                                  

i.        a budget requirement of £763.773m including Dedicated Schools Grant of £388.440m resulting in a net revenue budget requirement of £375.333m as set out in Appendix A.

 

ii.       a total Council Tax requirement for the Council’s own purposes of £201.599m as contained in paragraph 5.25.

 

iii.      An average Band D Council Tax of £1,740.22 for North Northamptonshire Council, representing a 2.99% increase in the ‘core’ Council Tax and a further 2% for the Adult Social Care Precept, noting that a separate Council Tax Resolution Report will be presented to Council.

 

iv.     the detailed proposals of savings, pressures and income generation for 2024-25 as set out within the report and Appendix B.

 

v.       the provisional Dedicated Schools Grant budget of £388.440m for 2024-25, as detailed in Appendix C, and summarised in paragraphs 5.42 – 5.56.

 

vi.     the draft planned use of, contribution to, and movement in, reserves as identified in paragraph 5.57, section 9 and Appendix D of this report, subject to the final call on reserves as a result of the Final Financial Settlement or other changes.

 

vii.    the corporate budget requirements as set out in paragraph 8.1, including a contingency sum of £4.101m as set out in paragraph 8.2.

 

viii.   the Treasury Management Strategy for 2024-25 as set out in Appendix H, including the Authorised Borrowing Limit of £907m and to note a further update to the Strategy will be provided once the disaggregation of the former Northamptonshire County Council’s Balance Sheet has been finalised.

 

ix.     the recommended Flexible Use of Capital Receipts Strategy as set out in Section 10 and Appendix J.

 

x.       that Council delegate authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to agree any necessary variations to the budget prior to 1st April 2024.

 

xi.     that Council delegate authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to agree the use of the following reserves which will provide the flexibility to manage the overall budget during 2024-25.

 

         Transformation Reserve

         Public Health Reserve

         Waste Management Reserve

         Adult Social Care Reserve

         Budget Delivery Reserve

         Business Rates Retention Reserve

    General Risk Reserve

 

b)   the forecast financial position for 2025-26 to 2027-28, noting that this will be reviewed as further information becomes available and updated as part of the budget process for 2025-26 onwards.

 

 

That the Executive:

 

a)      noted that the financial position has been based on the Provisional Local Government Finance Settlement announced on 18th December 2023 together with any further announcements and updates to the forecast budget position as at the date of the publication of this report;

 

b)    noted the net movement of £3.875m in 2024-25, together with the associated funding, against the draft budget reported to December Executive and as summarised in paragraph 2.5, noting that any impact in the medium term has been reflected in the table under paragraph 5.1;

 

c)    noted that, at the time of writing, the Final Local Government Finance Settlement is yet to be published and, therefore, some figures may be subject to change;

 

d)    considered the consultation feedback as summarised in the report and attached at Appendix E;

 

e)    considered the Equality Impact Screening Assessment as at Appendix F;

 

f)      considered the outcome from the Corporate Scrutiny Committee, as detailed at Appendix G and any separate representations to this Committee;                    

 

g)    noted the legal background for setting the revenue budget and Council Tax as set out in Appendix I.

 

h)    considered the Section 25 Report of the Executive Director of Finance and Performance (Section 151 Officer) as set out in Section 15, including her review of the robustness of the estimates and the adequacy of the reserves;

 

i)      delegated authority to the Executive Member for Children, Education and Skills and the Executive Member for Finance and Transformation in consultation with the Executive Director for Adults, Health Partnerships and Housing (and Children’s Services – Interim) and the Executive Director of Finance and Performance (Section 151 Officer) to approve North Northamptonshire’s Schools Funding Formula and to finalise the funding allocation for schools, in line with North Northamptonshire’s Schools Funding Formula;  

 

j)      delegated authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to draft the recommended budget resolution for Council in accordance with the necessary legal requirements and to take into account the decisions of the Executive and any final changes and other technical adjustments that may be required;

 

 

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 – The budgets have been subject to a formal budget consultation and scrutiny and the feedback has been considered as part of this process.

 

Minutes:

The Chair invited Cllr Jim Hakewill to address the Executive. Cllr Hakewill queried what risks were involved for the Council regarding previous legacy authority acquisition policies and whether an income pressure of £442k associated with a one-off rental pressure for the Commercial Property Portfolio would be exacerbated inf future. Cllr Hakewill also referred to proposed revenue expenditure to fund a temporary travellers’ stopping site.

 

The Chair then invited Cllr Anne Lee to address the meeting. Cllr Lee noted that the Labour Group was in the process of developing alternative General Fund Budget options that would be submitted prior to Budget Full Council on 22nd February. Cllr Lee queried whether the introduction of a green waste collection subscription service had been the correct decision to take given the increase in running costs and that the service operated at a loss. Cllr Lee also noted that the voluntary sector should have a longer-term contract to allow for longer-term planning, referencing the specific example of the Citizen’s Advice Bureau (CAB) and the importance of the advice they provided.

 

The Chair thanked the speakers for their comments and invited Cllr Lloyd Bunday, Executive Member for Finance and Transformation to introduce a report that set out the final General Fund Budget for 2024-25 and Medium-Term Financial Plan for North Northamptonshire Council.

 

In response to Cllr Lee’s comments, Cllr Bunday raised personal interest as the CAB were customers of his in a personal business capacity.

 

Cllr Bunday stated that the draft budget had previously been presented to the Executive at its meeting on 21st December 2023, at which it had been approved for public consultation alongside the draft Housing Revenue Account and Capital Programme. It was reported that an addendum to the main budget report setting out the provisional Local Government Finance Settlement,  published shortly prior to the meeting had also been presented and was now incorporated within the Budget.

 

It was heard that the consultation process had concluded on 26th January 2024 and a summary of feedback received was included as an appendix to the report before members. Cllr Bunday referred to a number of areas of concern and suggestion made by respondents and encouraged all attendees to consider the responses received.

 

The meeting heard that draft budget had formed the subject of seven sessions of the Corporate Scrutiny Committee starting with the Children’s Trust in December and ending on 23rd January 2024, with the committee’s feedback considered in the previous agenda item and appended to the report before the Executive.

 

It was noted that report built on the draft budget proposals and reiterated the key points to ensure that this was a complete document when setting out the revenue budget for 2024-25 and the Medium-Term Financial Plan for North Northamptonshire Council, including the proposed Council Tax level for 2024-25.

The Revenue Budget and Medium-Term Financial Plan were part of a suite of reports that would be considered by Council at its meeting on 22nd February 2024. Also included for consideration would be the Housing Revenue Account Budget 2024-25, the Capital Strategy, Capital Programme 2024-25 to 2027-28 and the Treasury Management Strategy.

 

Since the draft budget had been presented in December, there had been a requirement to increase the net budget for Adult Services. Although actions have been taken to mitigate a growth of £9.205m it has still resulted in a net pressure of £4.096m.

 

The meeting noted that during January 2024, 46 MPs had written to the Prime Minister urging that help be given to local government to mitigate pressures being experienced relating to social services. As a result, a further £600m had been made available to local authorities, with details of how this funding, additional fees and charges had affected the overall budget detailed within the report.

 

The report detailed the level of call upon the Council’s reserves which would smooth the impact of the service demand while work was undertaken on further revised service models to be delivered from 2025-26 and into future years. It was noted that that the government settlement was one of funding by growth and not new or increased grant funding. The lobbying of specific MPs to gain additional grant funding was welcomed.

 

The meeting was advised that the Local Government Provisional Finance Settlement published on 18th December 2023 was a one-year settlement only. Cllr Bunday stated that the failure of government to provide a forecasted settlement over several years had added to the financial pressures, risks, and uncertainties, over the short and medium term, faced by local authorities.

 

With the additional funding, the settlement assumed an increase of 7.5% in the Core Spending Power for local authorities to meet demand and cost pressures. Whilst this was helpful, elevated levels of inflation and demand growth had resulted in significant pressures across Council services which had outstripped this increase and required further savings to be found. It was also predicated on an expectation that Council Tax levels would be increased by the maximum allowed. The draft budget therefore assumed that the Council would increase Council Tax by 4.99%, 2.99% for the “core” Council Tax and 2% for the Adult Social Care precept.

 

The proposed Council Tax for a Band D property for 2024-25 would be £1740.22, an increase of £82.71 per year or £1.59 per week. A Band A increase would be £1.06 per week and Band B £1.24 per week.

 

The final Local Government Finance Settlement was laid before parliament on 5th February 2024 after the report before members had been published. The Council had received further funding of approximately £36,000 above the sums included within this report. It was proposed that the additional funding be used reduce the call on reserves and this would be reflected in the report and recommendations to Full Council at its meeting on 22nd February 2024.

 

Members were asked to consider the final budget proposal in conjunction with the observations of the Council’s Corporate Scrutiny Committee and the wider consultation with our residents and stakeholders and to agree the recommendations set out in the report.

 

Cllr Bunday offered thanks to all those who had contributed to the budget setting process, noting that setting a balanced budget in an authority of such magnitude was not a straightforward process and took considerable time and effort from many officers and members. Details of the wide range of services provided by the Council to the residents of North Northamptonshire were detailed and it was heard that the budget would underpin the priorities contained within the Council’s Corporate Plan.

 

It was noted that the budget setting process was set against a backdrop of events and circumstances beyond the realm and control of the Council, with Bank of England base rates remaining at a fifteen year high of 5.25%, with global conflict continuing to impact on utility and food prices. Additionally, many were still living with the effects of the Covid pandemic. Although inflation was falling, the cost-of-living crisis that these pressures contributed to, were still very real for many of the Council’s residents.

 

Members were reminded that although the draft budget as presented was balanced, the Council’s Medium-Term Financial position remained incredibly challenging, and it must continue to deliver further transformation opportunities to help create a strong and modern Council delivering quality, cost effective services for the benefit of its residents.

 

The meeting heard that the budget outlined an estimated net revenue of £763.994m including a Designated Schools Grant of £388.44m. Members were asked to recognise that there was a funding gap of £41.454m for 2025/26 rising to £87.67m by the end of the 2028 budget 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 Full Council having approved the recommendation to maintain the Local Council Tax Support scheme at 25%.

 

It was heard that the second largest income source for the Council was Business Rates amounting to £110.5m. While the Council had benefitted well under the present Business Rates Retention system due to an above average increase in business growth across its area, the way scheme operated in future years could have major financial implications for the authority. It was noted that the Council could be affected by the resetting of the point from which growth was measured, funding levels, growth of businesses, the number of businesses ceasing to trade or a reduction in collection rate.

 

It was reported that the Dedicated Schools Grant was a ringfenced grant allocated to Local Authorities by the government to support a range of education related services. The Department of Education (DfE) currently operated a four-block funding model, with the High Needs Block forecasted to overspend at the end of 2023-24. Discussions were ongoing with the School’s Forum and the DfE as to how this could be best mitigated.

 

Cllr Bunday reported that demand-led services were the areas of greatest volatility and carried the highest risk with significant overspends noted for the current budget year in relation to Children’s Service and Adult Social Care. It was recognised that safeguarding and care of those most vulnerable in  society was important in all the Council did, however, there was a requirement to work hard to stay within available resources so that all services were protected for communities.  The meeting heard that tackling overspends and implementing change could take time, with the position potentially deteriorating prior to improvement, however, it was necessary that services reviewed their operations and sought greater efficiencies going forward to ensure long term financial sustainability and the ability to continue to deliver services valued by residents.

 

Cllr Bunday detailed that background to Northamptonshire Children’s Trust who had been delivering children’s social care and targeted early help on behalf of North and West Northamptonshire Councils and outlined the funding mechanisms involved. It was noted that initial contract sum for 2024-25 was submitted on 15th September 2023 in accordance with the contract. The Intelligent Client Function had led a working party to undertake a detailed review of the contract submission, this had resulted in a final contract sum being presented to the Strategic Group at the meeting on 28th November 2023 and agreed by the Northamptonshire Children’s Trust Joint Committee in January 2024.

 

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 aiming 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 North Northamptonshire Council’s share was £78.6m. In negotiating the contract sum for the Children’s Trust, it was felt that stronger governance arrangements should be put in place to consider and approve transformation business cases, with funding levels for this outlined in the report. The overall contract sum for the Trust had increased from 2023/24 by £32.362m, with the Council’s share of this being increase being £14.291m.

 

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

 

It was heard that the Adult Social Care draft budget reflected a net pressure of £19.826m, an increase of £4.096m from the draft budget presented to Executive at its December meeting. The main pressures affecting the service were detailed to the meeting, including contractual inflation, increases for independent care placements, provisions for the national living wage as well as general fee movements in line with market factors. In addition, there had been a significant increase in the number of clients requiring care.

 

The meeting recognised that risk remained in the budget assumptions for Adult Social Care due to the influence of the demand within the system. A reserve had been set aside to help underwrite such risk and to smooth any impact over the longer-term whilst alternative mitigations were sought.

 

Cllr Bunday reported that the Council’s Treasury Management Debt Portfolio and other associated Treasury Management costs were £12.5m and there continued to be risks around the overall cash and loan position for North Northamptonshire Council, 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.

 

It was reported that in his written statement to Parliament when announcing the Local Government Settlement, the Secretary of State highlighted that local authorities were encouraged to consider, where possible, the use of their reserves to maintain services in the face of service pressures. Cllr Bunday reminded members that CIPFA, as part of their Financial Management code states that a core element of a financially sustainable and resilient council was to maintain a prudent level of reserves with a responsibility on the Council’s Section 151 officer to ensure that this requirement was met.

 

Concluding, Cllr Bunday provided details of the Council’s reserves, with meeting noting that the majority of reserves were earmarked for specific purposes or ringfenced, with just over £24m of general reserves held by the Council providing a working balance to help cushion the impact of unexpected events or emergencies. Cllr Bunday cautioned 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. 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 within the proposed budget were £24.2m, approximately 6.4% of the proposed net revenue budget of £375.3m.

 

Cllr David Brackenbury offered thanks to Cllr Bunday for his detailed analysis of the budget as well as the Finance Team for their work in its preparation. Cllr Brackenbury noted that demand-led services were impacting upon every area of the Council, this being a national issue that affected the ability of the authority to fund the statutory demands placed upon it. This issue had been raised with the government and strategic decisions would need to be taken in the fullness of time. It was heard that generation of local growth was key in assisting some of the financial predicaments faced by the Council, with its Big50 vision aiming to articulate that North Northamptonshire was an attractive place to live, visit and set up business.

Cllr Brackenbury noted that all directorates had been extensively scrutinised with  spending reigned in as tightly as possible, the recent Spending Panel introduction providing a welcome check where taxpayer funds were spent. Cllr Brackenbury welcomed an increase in statutory planning fees that would add an additional £801,000 into the budget.

 

Cllr Binley referred to Cllr Hakewill’s comment  regarding the one-off rental pressure within the Council’s Commercial Property Portfolio, noting it was already budgeted for and was common practice within commercial leases. Regarding Cllr Lee’s green waste collection comment, it was heard that this was not a statutory service, although new legislation was due to come through requiring such waste to be collected where requested. There was no requirement for this service to be operated free of charge to residents, with most authorities charging for such a service. Cllr Binley reported that the operation of the Council’s service was proceeding well, with far greater subscription uptake than originally forecast. 

 

Cllr Gill Mercer welcomed the government’s recognition of the pressures affecting Adult Social Services by announcement additional funding that would result in a lower level of reserves being utilised. It was heard that current service demand was unprecedented, and officers were to be congratulated in reducing the overspend with mitigations to reduce pressure on reserves.

 

Cllr Scott Edwards spoke to note the Children’s Services was also demand-led, with pressures affecting the higher needs block for SEND, with work ongoing with the government to increase funding in that regard. Cllr Edwards thanked the officers within the service for the hard work they undertook in putting children’s needs at the centre of everything they did.

 

Cllr Helen Howell welcomed the budget before members, noting that whilst the Council had many statutory obligations resulting in financial pressures, it also wished to encourage people to live, work and play in North Northamptonshire and therefore needed to provided other services that would enhance and enrich residents’ lives such as the provision of libraries, heritage assets and open spaces which benefitted the health and wellbeing of residents. Referring to the budget consultation results, Cllr Howell noted that, 44.3% of respondents supported the raising of Council Tax, indicating residents understood that despite the cost-of-living crisis the Council faced financial pressures too.

 

Cllr David Howes spoke to reference the Northamptonshire Traveller Unit budget pressure and that an enhanced out of hours service would be impactful in dealing with unauthorised encampments in a timely manner.

 

Concluding debate, the Chair spoke to note that the Council’s financial position was not unique to the authority and offered his thanked to the entire Finance Team for providing a balanced budget in an organisation that provided over 800 services with annual transactions of £1.5bn. It was noted that the Council needed to listen to residents and articulate its concerns regarding statutory service provisions, and the unprecedented demand for those services. The Chair stated that he had written to the Secretary of State to request multi-year settlements for local authorities and to examine funding nationally to enable the Council to deliver its services with sufficient funding to do so. It was heard that lobbying in this regard was ongoing to ensure that Council received the support that both it and its residents deserved.

 

 

(Cllr Mark Rowley arrived part-way through debate and therefore did not vote in relation to this item)

 

 

RESOLVED

 

KEY DECISION

 

That the Executive endorsed the contents of the report and recommended the budget proposals on to Council for approval.  This includes:

 

a)   the 2024-25 revenue budget for approval and adoption as set out in this report, which sets:

                                                  

i.        a budget requirement of £763.773m including Dedicated Schools Grant of £388.440m resulting in a net revenue budget requirement of £375.333m as set out in Appendix A.

 

ii.       a total Council Tax requirement for the Council’s own purposes of £201.599m as contained in paragraph 5.25.

 

iii.      An average Band D Council Tax of £1,740.22 for North Northamptonshire Council, representing a 2.99% increase in the ‘core’ Council Tax and a further 2% for the Adult Social Care Precept, noting that a separate Council Tax Resolution Report will be presented to Council.

 

iv.     the detailed proposals of savings, pressures and income generation for 2024-25 as set out within the report and Appendix B.

 

v.       the provisional Dedicated Schools Grant budget of £388.440m for 2024-25, as detailed in Appendix C, and summarised in paragraphs 5.42 – 5.56.

 

vi.     the draft planned use of, contribution to, and movement in, reserves as identified in paragraph 5.57, section 9 and Appendix D of this report, subject to the final call on reserves as a result of the Final Financial Settlement or other changes.

 

vii.    the corporate budget requirements as set out in paragraph 8.1, including a contingency sum of £4.101m as set out in paragraph 8.2.

 

viii.   the Treasury Management Strategy for 2024-25 as set out in Appendix H, including the Authorised Borrowing Limit of £907m and to note a further update to the Strategy will be provided once the disaggregation of the former Northamptonshire County Council’s Balance Sheet has been finalised.

 

ix.     the recommended Flexible Use of Capital Receipts Strategy as set out in Section 10 and Appendix J.

 

x.       that Council delegate authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to agree any necessary variations to the budget prior to 1st April 2024.

 

xi.     that Council delegate authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to agree the use of the following reserves which will provide the flexibility to manage the overall budget during 2024-25.

 

         Transformation Reserve

         Public Health Reserve

         Waste Management Reserve

         Adult Social Care Reserve

         Budget Delivery Reserve

         Business Rates Retention Reserve

    General Risk Reserve

 

b)   the forecast financial position for 2025-26 to 2027-28, noting that this will be reviewed as further information becomes available and updated as part of the budget process for 2025-26 onwards.

 

 

That the Executive:

 

a)      noted that the financial position has been based on the Provisional Local Government Finance Settlement announced on 18th December 2023 together with any further announcements and updates to the forecast budget position as at the date of the publication of this report;

 

b)    noted the net movement of £3.875m in 2024-25, together with the associated funding, against the draft budget reported to December Executive and as summarised in paragraph 2.5, noting that any impact in the medium term has been reflected in the table under paragraph 5.1;

 

c)    noted that, at the time of writing, the Final Local Government Finance Settlement is yet to be published and, therefore, some figures may be subject to change;

 

d)    considered the consultation feedback as summarised in the report and attached at Appendix E;

 

e)    considered the Equality Impact Screening Assessment as at Appendix F;

 

f)      considered the outcome from the Corporate Scrutiny Committee, as detailed at Appendix G and any separate representations to this Committee;               

 

g)    noted the legal background for setting the revenue budget and Council Tax as set out in Appendix I.

 

h)    considered the Section 25 Report of the Executive Director of Finance and Performance (Section 151 Officer) as set out in Section 15, including her review of the robustness of the estimates and the adequacy of the reserves;

 

i)      delegated authority to the Executive Member for Children, Education and Skills and the Executive Member for Finance and Transformation in consultation with the Executive Director for Adults, Health Partnerships and Housing (and Children’s Services – Interim) and the Executive Director of Finance and Performance (Section 151 Officer) to approve North Northamptonshire’s Schools Funding Formula and to finalise the funding allocation for schools, in line with North Northamptonshire’s Schools Funding Formula;  

 

j)      delegated authority to the Executive Member for Finance and Transformation in consultation with the Executive Director of Finance and Performance (Section 151 Officer) to draft the recommended budget resolution for Council in accordance with the necessary legal requirements and to take into account the decisions of the Executive and any final changes and other technical adjustments that may be required;

 

 

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 – The budgets have been subject to a formal budget consultation and scrutiny and the feedback has been considered as part of this process.

 

Supporting documents: