|
People Overview
& Scrutiny Committee
Place Overview
& Scrutiny Committee
|
Agenda Item
20
|
Subject:
General Fund Budget Update
2025/26 to 2028/29
Date of
meeting: 28 November 2024
Report
of:
Cabinet Member for Finance & Regeneration
Contact
Officers: Name:
Nigel Manvell, CFO
Haley Woollard, Deputy CFO
Email:
Nigel.Manvell@brighton-hove.gov.uk
Haley.Woollard@brighton-hove.gov.uk
Ward(s)
affected: (All Wards)
Key
Decision: No
FOR
GENERAL RELEASE
1
PURPOSE OF REPORT AND POLICY CONTEXT:
1.1
This report provides an update to the General Fund Budget position
reported to September Cabinet as part of the lead-up to the
setting of the annual revenue and capital budget, and Council Tax
at Budget Council on 27 February 2024.
1.2
The report also provides information on the implications of the
Autumn Statement for the authority, so far as they can be
determined at this stage and provides information on potential
areas for budget savings proposals together with expected timelines
for finalising the proposals.
2
RECOMMENDATIONS:
The Overview & Scrutiny Place and
Overview & Scrutiny People Committees are recommended to:
2.1
Note the updated position on the General Fund budget as set out in
the report.
2.2
Provide comment and any recommendations to Cabinet in relation to
potential areas for budget savings proposals and feedback on
the planned Budget Development timetable and approach.
3
BUDGET SETTING AND MEDIUM TERM FINANCIAL PLANNING
3.1
The council’s budget includes capital and revenue resources
from a wide range of funding resources including government grants,
local taxation and fees & charges. These resources are key to
delivering Council Plan priorities and statutory duties, however,
there are limitations applicable to all of these funding streams.
The ability to meet cost and demand pressures, particularly in
statutory areas, will therefore be key to determining the resources
available to transform and innovate and help to put the authority
on a more sustainable financial footing over the Medium Term
Financial Plan period.
3.2
The council’s budget includes areas where funding is
‘ring-fenced’ and must be spent according to relevant
government grant funding conditions and/or other statutory
regulations. These include the funding of schools and special
educational needs provision through the Dedicated Schools Grant
(DSG), Housing Benefits, Public Health services, and council
housing (Housing Revenue Account) funded primarily by
tenants’ rents. All other unringfenced funding is used to
provide the majority of council services for the city and is
provided for in the ‘General Fund’ Revenue Budget.
3.4
The report highlighted the need to work on the twin objectives of
addressing budget shortfalls while aiming to prudently invest in
sustainable change and transformation to improve financial
resilience and sustainability for the future. The
authority’s reserves position is also low relative to most
authorities and a further objective should therefore be to build
greater resilience and increase overall reserves. The process of
making sustainable change has started with a far-reaching
Organisational Redesign aimed at not only streamlining senior
management but realigning the organisation to ensure that all areas
of the council can work together to achieve the Council Plan
outcomes for the city.
3.5
The report advised that there are four primary components of the
General Fund budget as follows:
·
The Medium Term Financial Plan (MTFP) – this provides
high-level spending and funding estimates and proposals over a
4-year planning period at a strategic or programme level;
·
The Annual Budget and Council Tax – it is a legal
requirement to set a balanced budget and Council Tax each year,
funded by taxation, government grants, retained business rates and
fees, charges and commercial rents;
·
The Capital Investment Programme – this is a rolling
5-year investment programme for the construction, acquisition or
improvement of capital assets in support of Council Plan
priorities, primarily funded by capital grants, capital receipts,
or borrowing;
·
The Transformation Fund – a fund that utilises capital
receipts from the disposal of capital assets to fund one-off
revenue costs to support change and transformation. Using capital
receipt proceeds to fund revenue costs (e.g. staffing) is not
normally allowable but the government have provided ‘capital
receipt flexibilities’ until 2030 provided the use of any
capital receipts underpins efficiencies and future revenue
savings.
Local Financial Planning Context
·
Addressing the External Auditor’s
concerns in their previous two Annual Reports, which identify the
council’s financial sustainability as a ‘significant
weakness’, by demonstrating that the council is setting its
annual budget and Council Tax in the context of understanding its
longer term financial sustainability;
·
Demonstrating that any use of reserves or
balances in the short-term to support the budget is financially
sustainable (i.e. repayable) in the medium term;
·
Ensuring that the delivery of Council
Plan priorities and associated service planning is aligned with and
reflected in medium-term financial planning, and;
·
Ensuring that any budget shortfalls
(gaps) in future years are identified early to enable longer term
programmes of change and transformation to be instigated as soon as
possible to generate the necessary savings, efficiencies or
income.
Autumn Statement
2024
3.7
The very challenging financial position of Local Government as a
sector meant that the government’s Autumn Statement
announcement on 30 October was much awaited. The statement provided
some additional funding but was again restricted to a one-year
settlement although a multi-year announcement is expected in the
Spring. The key elements of the Autumn Statement of relevance to
councils were:
·
Additional new grant funding of
£1.3 billion for Local Authority Services for 2025/26. Of
this, at least £600 million will be for funding social care
and £233 million for tackling homelessness and rough
sleeping;
·
Referenced “council tax
flexibilities” for local authorities which has now been
confirmed to mean continuation of an allowable 2.99% increase plus
a 2% Adult Social Care precept. It is unclear if this will continue
beyond 2025/26;
·
Expectation of a Local Government Finance
Policy Statement ahead of the Local Government Financial Settlement
which is expected to set out the position on the Emergency
Financial Support (EFS) regime, New Homes Bonus, Business Rate
Relief protections, National Insurance increase protection and
other policy matters;
·
An increase in Employers National
Insurance contribution from 13.8% to 15.0%, and a reduction of the
Employer NI threshold from £9,100 to £5,000. The
government has stated that the public sector will be protected from
this increase but it is unclear how this is intended to be
achieved. It is also acknowledged that this may have an impact on
private and independent sector care providers and other externally
commissioned services;
·
Local Authorities should expect to
receive £1.1 billion nationally through the Extended Producer
Responsibility Scheme;
·
The extension of the Household Support
Fund (HSF) at £1 billion for 2025/26 including Discretionary
Housing Payments (DHPs). This should provide broadly the same level
of funding for both HSF and DHP;
·
An additional £2.3 billion increase
to the core schools budget by increasing per pupil funding, of
which £1 billion will go towards supporting Special
Educational Needs & Disability support (SEND);
·
Additional £6.7 billion new capital
investment for schools including schools maintenance;
·
Additional funding of £44 million
for children’s kinship allowances and to create thousands of
Foster placements nationally;
·
A boost to the Affordable Homes programme
of £500 million;
·
A reduction in Right to Buy (RTB)
discounts (to £38,000 for BHCC), and an extension of the
ability for councils to retain and reinvest full RTB
receipts;
·
An increase in funding for road
maintenance of £500 million;
·
Allocating £3.4 billion nationally
towards the Warm Homes Plan for decarbonisation and household
energy efficiency;
·
The statement also set out a £22.6
billion increase in funding for the NHS;
·
The National Living wage was confirmed to
increase by 6.7% in April 2025 to £12.21 per hour. This does
not affect the council’s payroll where the lowest pay rate is
£13.26 per hour (which will also increase further in
accordance with the nationally agreed NJC pay award for 2025/26 yet
to be negotiated). However, it is a significant uplift for many of
the council’s providers, particularly social care
providers.
Impact of the
Autumn Statement Locally
3.8
The Autumn Statement provides some welcome additional funding and
investment but falls some way short of resolving the short and
longer term funding pressures facing Brighton & Hove City
Council and all councils, particularly across social care,
homelessness and SEN. The current planning assumption locally is
for a 5% Council Tax increase, including a 2% Adult Social Care
precept, which has now been confirmed as the maximum allowable
increase by the government.
3.9
Assumptions around pay and prices for next year and beyond are
linked primarily to Office of Budget Regulation (OBR) inflation
forecasts but local market factors are also taken into account,
particularly for procured social care and temporary accommodation
provision. Although September 2024 CPI was 1.7%, commissioned
provider costs are likely to significantly exceed this level next
year due to National Living Wage increases and employer National
Insurance increases. Similarly, local government pay awards are
assumed at 2.75% as these will take into account labour market
factors (i.e. recruitment shortages) as well as cost of living
increases.
3.10
In relation to the General Fund budget, the funding announced in
the Autumn Statement may provide resources or flexibilities as
indicated below but many of these are uncertain as noted:
·
The additional new grant funding of
£1.3 billion for Local Authority Services for 2025/26 could
provide between £5.0m and £6.5m or more to BHCC subject
to the distribution methodology adopted by the government. The
government have indicated that distribution will focus on need but
it is unclear what this means in practice. For example,
distribution that takes into account more favourable Council Tax
and Business Rate taxbases tends to result in a lower distribution
for BHCC.
·
The flexibility and distribution of the
£1.1 billion funding for the Extended Producer Responsibility
Scheme is unclear. This funding is principally to address new
statutory responsibilities within the Environment Act 2021, many of
which are not due for implementation until 2026. This includes Food
Waste collection. It is not clear if this funding can be applied to
the latter, for which the council has a £1.4 million pressure
next year, or whether the majority will need to be paid over to
producers to implement changes.
·
The extension of the Household Support
Fund (HSF) is important to help alleviate other demands that may
otherwise impact the council arising from increased poverty and
hardship, notably additional homelessness. However, a key area to
consider is whether or not there is potential flexibility to use
the Household Support Fund in a more preventive way that directly
alleviates budget pressures such as homelessness. HSF flexibilities
are being explored by the Poverty Reduction Steering
Group.
·
The additional funding of £1
billion for Special Educational Needs & Disability support
(SEND) may provide some flexibility however, it is unclear if this
funding is all within the Dedicated Schools Grant (i.e. DSG High
Needs Block) or if some is available to support General Fund
services and thereby alleviate budget pressures. The £1
billion funding is also significantly below the level of High Needs
Block SEND deficits of £4 billion already built up by local
authorities nationally.
·
Additional funding of £44 million
for children’s kinship allowances and to create thousands of
Foster placements nationally could help reduce the costs of
providing for children in care but it is unknown how this funding
or programme will be distributed.
·
The boost to the Affordable Homes
programme of £500 million, reduction of Right to Buy (RTB)
discounts (to £38,000 for BHCC), and an extension of the
ability for councils to retain and reinvest full RTB receipts could
all help to increase or sustain housing supply with positive
implications for homelessness costs over the medium term but
impacts locally are difficult to quantify with
accuracy.
·
The increase in funding for road
maintenance of £500 million will help to alleviate pressures
but is very significantly short of the estimated cost of repairs
nationally. This could provide one-off additional resources of
circa £1.5 million locally but estimated maintenance
requirements are at least £6 million per annum.
·
The substantial funding increase for the
NHS will primarily meet the substantial pay rises agreed in the
sector as well as addressing large budget deficits across the acute
hospital sector. However, the funding may provide some additional
flexibility for the NHS to support the local health and social care
system (ICS), particularly in respect of hospital
discharge.
3.11
In summary, there are many ‘moving parts’ and still a
significant number of uncertainties with regard to the financial
impact of the Autumn Statement on local government and this
council. At the upper end, the funding announcements above may
reduce identified pressures next year by up to £10 million,
leaving a significant shortfall of £26.7 million to be
addressed. The conclusion is that the authority will therefore need
to deliver significant savings next year and over the medium-term
through investment in spend-to-save and transformation programmes
to seek to achieve Council Plan aims and financial
sustainability.
Addressing Projected Budget Shortfalls
·
Working now to mitigate cost and demand
pressures in-year, particularly across demand-led areas such as
social care, to bring down the forecast trend and reduce the
projected budget shortfall next year and beyond;
·
Similarly, consulting on and implementing
savings in the current financial year, where these are supported by
members, to provide more headroom and reduce the budget shortfall
next year;
·
Working with key partners such as the NHS
to jointly address funding and demand challenges;
·
Reviewing the Capital Programme,
including de-committing some schemes, to reduce associated revenue
commitments (capital financing repayments);
·
Reviewing taxbases (Council Tax and
Business Rates) to ensure expected taxbase growth is properly
accounted for;
·
Reduction, cessation or closure of
non-priority, discretionary services;
·
Developing savings proposals including
cost/demand reduction measures, efficiency and productivity
savings, digital and technological efficiencies, commissioning and
procurement savings, delivery model (insourcing or outsourcing)
savings, and income generation.
3.13
Any or all of the above can be supported through releasing capital
receipts to enable investment in spend-to-save and transformation
programmes that can reduce future annual revenue costs.
3.15
A number of potential service changes or delivery model changes
have been identified for exploration as part of the budget process.
These may have long lead-in times and therefore, if ultimately
supported, consultation and engagement would need to start well in
advance of next financial year. Potential areas for exploration
include:
·
Potential
development of in-house residential provision for children with
complex disabilities by April 2025 to provide better value for
money delivery options;
·
During 2025,
exploring in-sourcing of the highest cost Home-to-School Transport
routes (minibuses) to provide better value for money;
·
Exploring AI
technologies, including predictive analytics, to focus the right
support at the right time for Children & Families and reduce
administrative support costs;
·
Potential use of
technology-enabled care across Adult Social Care to maintain
independence;
·
Managing Adult
Social Care demands at the Front Door with improved information and
self-assessment options;
·
Exploring
alternative delivery models for in-house Adult Social Care
provision to ensure best value for money;
·
Use
of tools which support Adult Social Care brokerage for achieving
best market value;
·
Exploring
creation of a wholly-owned Housing Company to acquire housing and
attract higher rates of welfare benefit (Local Housing
Allowance);
·
Further review of
the delivery model for the Schools IT&D traded
service.
·
Consideration
will also be given to discontinuation of, or alternative delivery
of, non-statutory activities, particularly where these are not
directly supporting Council Plan priorities.
3.16
The above will be supported by Outline Business Cases (OBC’s)
which will set out the temporary staffing and other resources, if
any, required in order to deliver these projects and proposals. If
agreed, these will be supported by the Transformation Fund
utilising the government’s capital receipt flexibilities
which allow capital receipts to be used for one-off revenue
expenses where these will generate future efficiencies and revenue
savings. The September Cabinet report identified a minimum
investment requirement of £16 million over the medium-term,
including provision for staffing changes through voluntary
severance. This, however, requires identification and realisation
of significant capital asset disposals in order to provide
Transformation Funding.
3.17
Budget Savings proposals and options are currently being considered
ahead of consultation and development of Equality Impact
Assessments (where appropriate). However, as noted, much more
information is required from government on the various elements of
the Autumn Statement before a final budget gap for 2025/26 can be
determined. However, the government has announced that the Local
Government Financial Settlement will not be issued until 19
December 2024 which will again leave local authorities with limited
time to react to the settlement, particularly if a worst-case
scenario results.
4
ANNUAL BUDGET AND MEDIUM TERM FINANCIAL PLAN ESTIMATES
Medium Term
Financial Projections 2025/26 to 2028/29
·
Demographic (demand) pressures and above-inflation cost pressures
are based on current (TBM) trends for 2025/26 and moderated trends
for 2026/27 and later years;
·
2.99% Council Tax increases over the 4-year period plus a 2.00%
Adult Social Care precept for 2025/26, reverting to 0%
thereafter;
·
(Average) Pay award of 2.75% in 2025/26 and then 2.5%
thereafter;
·
3% annual income target/generation uplifts over the period (except
2.5% in 2028/29);
·
Average 3.0% social care third party provider payment increases for
2025/26 reducing to 2.5% thereafter;
·
Variable 1.00% to 3.00% cash limits on non-pay budgets over the
4-year period;
·
Business Rate uplifts to follow OBR September CPI inflation
forecasts;
·
Council Tax taxbase growth of 1.50% (including Second Homes
premium) in 2025/26, 0.75% in 2026/27 and 2027/28, and 0.50% in
2028/29.
4.2
In effect, any costs that can be brought in lower than the
assumptions above will generate a cost saving and reduce the budget
gap whilst any income that achieves greater than a 3% increase will
also result in a saving.
4.3
The projections are periodically reviewed and updated, particularly
in relation to the cost and demand (demographic) pressures related
to priority, demand-led services, which are a key driver of budget
shortfalls. Estimates for next year are driven significantly by
current trends which are therefore informed by in-year budget
monitoring of trends through TBM reports. The latest update (TBM
Month 5) indicates a downward movement of only £0.031m in
pressures, however, this does mask significant movements as
follows:
|
Directorate
|
Original
Reported
|
TBM
Month 5 Review
|
Change in
Pressures
|
|
|
£m
|
£m
|
£m
|
|
Families,
Children & Learning
|
8.713
|
7.588
|
(1.125)
|
|
Housing, Care
& Wellbeing ASC
|
9.575
|
8.482
|
(1.093)
|
|
Housing, Care
& Wellbeing (Homelessness)
|
2.493
|
4.239
|
1.746
|
|
City
Services
|
9.896
|
9.896
|
0
|
|
Corporate
Services
|
956
|
1.397
|
441
|
|
Centrally-held
Budgets
|
300
|
300
|
0
|
|
Grand Total Cost
& Demand Pressures
|
31.933
|
31.902
|
(0.031)
|
4.4
The table above shows that improvements and mitigations have been
seen across Families, Children & Learning and Adult Social Care
but that Homelessness is under increasing pressure. Compared to the
September Cabinet Report the Medium Term Financial Projections
therefore look as follows:
Table: Indicative
Medium Term Financial Projections
|
Summary
Projections and
Budget
Gaps
|
2025/26
|
2026/27
|
2027/28
|
2028/29
|
|
|
£m
|
£m
|
£m
|
£m
|
|
Commitments
(incl. previous decisions)
|
7.972
|
2.053
|
(0.970)
|
1.195
|
|
Net Inflation (on
Pay, Prices, Income, Pensions)
|
9.810
|
8.548
|
8.732
|
9.551
|
|
Subtotal
|
17.782
|
10.601
|
7.762
|
10.746
|
|
Original Cost and
Demand Pressures
|
31.933
|
22.577
|
23.356
|
22.205
|
|
Projected Net Tax
Base changes
|
(12.985)
|
(9.250)
|
(9.575)
|
(9.704)
|
|
Predicted Budget
Gaps
|
36.730
|
23.928
|
21.543
|
23.247
|
|
Change in Cost
and Demand Pressures (Month 5 Review)
|
(0.031)
|
0
|
0
|
0
|
|
Latest Budget
Gaps
|
36.699
|
23.928
|
21.543
|
23.247
|
4.5
The gap in 2025/26 is projected to be significantly higher than
later years because it includes ‘catch-up’ inflation
and pay award costs from 2024/25 as well as a large increase in
capital financing costs arising from decisions made in previous
years but where capital schemes have had long lead times or have
been delayed. This results in a higher level of
‘Commitments’ and cost pressures than those expected in
future years, particularly as inflation becomes more stable.
4.6
The Autumn Statement could provide additional resources of between
£5 million (worst case) and £10 million (upper end)
leaving a budget gap of between £27 million to £32
million to be addressed. These are clearly substantial shortfalls
to manage - among the highest experienced by the authority - given
the large savings requirements experienced in recent years due to a
range of factors including the indirect impact of the pandemic, the
cost of living and high inflation, Brexit impacts on supply chains,
labour markets and provider costs, and the impact of high interest
rates on homelessness (higher private rental costs). Other demands
and prevalence have also increased including mental health
illnesses and SEN caseload (increased Education, Health & Care
Plans). Some of these are improving or subsiding but the new,
higher cost base now experienced by local authorities has far
outstripped the increases in national and local funding over the
last few years.
4.7
One-off resources may be needed in 2025/26 for a wide range of
reasons which could present additional financial challenges as
these would require identification of resources to meet any
commitments. One-off resources may be required to cover the
following:
·
Any Collection Fund deficits (TBM Month 5 monitoring indicated a
£3.156m net deficit) *;
·
Any General Fund outturn overspend (i.e. TBM overspend – TBM
Month 5 indicated a £7.329m forecast overspend risk) *;
·
Any increase to provisions or reserves required *;
·
Any unavoidable/unexpected one-off expenditure or commitments;
·
Any one-off allocations for priorities (subject to availability of
resources).
*
The reverse is also true whereby surpluses or underspends could
increase the availability of one-off resources or, at least, reduce
the call on one-off resources.
5
BUDGET DEVELOPMENT TIMETABLE
5.1
The indicative timetable for developing and approving the 2025/26
budget and MTFP is given below. The timetable is in outline only
and does not include all aspects of member involvement or wider
consultation that will normally need to be undertaken with staff,
unions, partners, service users and residents.
Table: Outline General Fund Budget
Planning Timetable
|
Date
|
Who
|
What
|
|
26 Sept
2024
|
Cabinet
|
General Fund
Budget Planning & Resources Update 2025/26 to
2028/29
|
|
17 Oct
2024
|
Cabinet
|
TBM month 5
(August)
|
|
30 Oct
2024
|
Government
|
Autumn Statement
announcement (1 year only)
|
|
Nov
2024
|
Government
|
Allocation of the
£1 billion Extended Producer Responsibility funding
expected
|
|
End Nov
2024
|
Government
|
Local Government
Finance Policy Statement
|
|
Dec to
Mar
|
CLT
|
The majority of
consultation processes are expected to start in December and
continue through to conclusion, usually no later than March.
However, consultation can start earlier if
appropriate/necessary.
|
|
5 Dec
2024
|
Cabinet
|
TBM month 7
(October)
|
|
19 Dec
2024
|
Government
|
Provisional Local
Government Finance Settlement 2025/26
|
|
23 Jan
2025
|
Cabinet
|
Council Tax and
Business Rates Tax Base report
[Legal
requirement] and Council Tax Reduction Scheme Review
2025/26
|
|
Jan/Feb
2025
|
Overview &
Scrutiny
|
A further joint
meeting of the Overview & Scrutiny People and Place committees
will be diarised to review draft budget proposals
|
|
Feb
2025
|
Government
|
Final Local
Government Financial Settlement 2025/26
|
|
13 Feb
2025
|
Cabinet
|
2025/26 General
Fund and HRA Revenue & Capital Budget reports including the
Capital and Treasury Management strategies.
TBM month 9
(December).
|
|
27 Feb
2025
|
Budget
Council
|
Approval of the
2025/26 General Fund and HRA Revenue & Capital Budget including
the Capital and Treasury Management strategies.
|
|
Late Spring
2025
|
Government
|
Spring Budget
including multi-year Local Government Funding
announcements
|
6
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
6.1
The setting of the General Fund budget in February allows all
parties to engage in the examination of budget proposals and put
forward viable alternative budget and council tax proposals to
Budget Council on 27 February 2025. Budget Council has the
opportunity to debate the proposals put forward by the Cabinet at
the same time as any viable alternative proposals.
7
COMMUNITY ENGAGEMENT AND CONSULTATION
7.1
Detailed consultation and engagement plans will be put in place
over coming weeks and months, in advance of proposals coming
forward in February 2025 for full Council approval. However,
consultation and engagement are expected to include the
following:
General Information
7.2
General information and advice about the council’s budget
will continue to be provided through the council’s web site
which provides information and infographics on how money is spent
on services, where the money comes from, the council’s
capital and transformation investment plans, and a summary of the
financial challenges ahead. These materials will continue to be
promoted through various media and communications throughout the
budget setting period. Frequently asked questions and common themes
have previously emerged through the development of the annual
budget and have been responded to in our ‘Behind the
Budget’ web page:
Behind the budget
(brighton-hove.gov.uk).
Community and Resident Engagement
7.3
It is also planned to undertake a resident survey to understand
residents’ priorities for spending the council’s budget
within the challenging resource limitations experienced by local
government for many years. The council will use its ‘Your
Voice’ on-line engagement platform and a ‘budget
simulator’ to both communicate the scale of the financial
challenge and gather views from residents, partners, staff and
businesses on how they would address the challenge.
7.4
An open access event is also planned for 12 December 2024 at Hove
Town Hall for residents to come and hear about the budget and the
challenges and restrictions facing the council in determining how
the budget is spent. The event will discuss the little understood
but key difference between capital expenditure and funding compared
to revenue expenditure and funding which supports day-to-day
services. This can help to explain how it is that with the latter
being under very severe pressure, the council is still able to
undertake significant and important capital investments such as
replacing the King Alfred Leisure Complex or renovating Madeira
Terraces. This event will also seek to capture feedback and views
from residents.
7.5
Consultation with disadvantaged groups and representatives is also
planned and appropriate meetings and venues will be provided
including a facilitated event at Jubilee Library.
City Partners
7.6
Information will also be shared with City Partners through the City
Management Board and other channels. In particular, the council
continues to engage fully with the NHS Sussex Integrated Care
System to ensure that the budget processes of the two organisations
are aligned and communicated as far as practicably possible
although this presents challenges as NHS funding announcements are
normally announced much later than Local Government, often close to
or even after the start of the next financial year.
Business
Engagement
7.7
There is ongoing liaison and discussion with the Economic
Partnership that covers potential funding sources and bids, city
regeneration, economic growth, employment and apprenticeship
strategies. Officers of the council and members of the
Administration meet periodically with representatives of the
Chamber of Commerce and B&H Economic Partnership to discuss the
council’s high-level plans and over-arching budget
situation.
Schools Community
7.8
The Schools Forum, a consultative body attended by representatives
of all school phases, will primarily focus on the allocation of the
ring-fenced Dedicated Schools Grant (DSG) funding across the
relevant budget ‘blocks’ but will also be periodically
informed about the General Fund budget position and proposed
changes to council services where these may have implications for
schools.
Third Sector
Engagement
7.9
A key stakeholder is the Community & Voluntary Sector, and
communications and meetings with representatives of the sector will
therefore be planned to provide them with an opportunity to
feedback their views to the council and members as budget proposals
develop.
Staff and Union
Engagement
7.10
Consultation and engagement with staff and unions is also very
important. The scale of financial challenge indicates further
significant impacts on the configuration and/or provision of
services which will inevitably entail staffing changes. Meetings
with the council's recognised unions, including appropriate
officers and members of the Administration, will be scheduled
regularly to keep unions abreast of developing proposals and to
ensure they have sight of where support to their memberships may be
required. The council’s Joint Staff Consultation Forum will
continue to provide a formal setting for sharing and raising
matters relating to the overall budget process and
development.
7.11
Later in the process, detailed proposals will be shared with
affected staff ahead of formal publication of budget proposals
through Departmental Consultative Groups (DCGs) and through line
management. Formal consultation and engagement with directly
affected staff will be undertaken as normal, including relevant
union representation, under the council’s Organisation Change
Management Framework.
7.12
Wider staff engagement will be provided through ‘In
conversation’ sessions with the Chief Executive and through
directorate consultation and engagement event. Further updates and
communications for staff will be provided via the council’s
intranet, corporate email broadcasts and the Chief
Executive’s communications.
Member
Engagement
7.13
As noted in Section 6, the budget process allows all Political
Groups to submit viable alternative budget proposals. The Executive
governance system (Cabinet System) also provides for overview and
scrutiny of the budget process and proposals through appropriate
briefings and/or meetings.
8
Financial Implications:
8.1
These are contained in the body and appendices of the report.
Finance Officer
Consulted: Haley Woollard
Date: 14/11/24
9
Legal Implications:
9.1
Section 9F of the Local Government Act 2000 sets out the statutory
functions of Overview and Scrutiny Committees, which includes the
power ‘to make
reports or recommendations to the authority or the executive with
respect to the discharge of any functions which are the
responsibility of the executive’. This includes the budget
setting process, where the role of Overview & Scrutiny
Committees is envisaged by
Statutory Overview and Scrutiny
Guidance (April 2024) to include providing constructive
‘critical friend’ challenge, amplifying the voices and
concerns of the public and driving improved strategic decision
making.
Lawyer
consulted: Elizabeth
Culbert
Date: 19/11/24
10
Equalities Implications:
10.1
For any significant budget changes proposed in 2025/26, it is
proposed to use the council’s well-established screening
process to develop Equality Impact Assessments (EIAs). Key
stakeholders and groups will be engaged in developing EIAs but it
will also be important to consider how members, partners, staff and
unions can be kept informed of EIA development and the screening
process. In addition, where possible and proportionate to the
decision being taken, there may be a need to assess the cumulative
impact of the council’s decision-making on individuals and
groups affected in the light of funding pressures across the public
and/or third sectors. The process will ensure that consideration is
given to the economic impact of proposals.
11
Sustainability Implications
11.1
The council’s revenue and capital budgets will be developed
with sustainability as an important consideration to ensure that,
wherever possible, proposals can contribute to reducing
environmental impacts and support progress toward a carbon-neutral
city.
12
Health and Well-being Implications
12.1
The council’s budget includes very substantial provision for
expenditure on Adult and Children’s Social Care, Public
Health, Housing and Homelessness, Welfare Assistance (for example
the Council Tax Reduction Scheme), Education and Skills, and many
other essential services that support vulnerable people and
children, and households on low incomes or experiencing
homelessness. These services contribute significantly to the health
and well-being of thousands of residents and the wider population,
upholding the council’s priority to support ‘A healthy
city where people thrive’ and engender ‘A fair and
inclusive city’.
13
Other Implications
Risk and
Opportunity Management Implications:
13.1
There are a range of risks relating to the council’s short
and medium term budget strategy including the ongoing economic
impact of the uncertain inflationary environment, the impact of the
cost of living crisis, further potential reductions in grant
funding, the impact of legislative changes, and/or other changes in
demands. The budget process will normally include recognition of
these risks and identify potential options for their mitigation. In
the current financial climate, the level of risk that the council
may be prepared to carry is likely to be higher than in normal
circumstances. An indication of potential risks and sensitivities
was appended to the Budget Update report to September Cabinet.
14
CONCLUSION
14.1
The council is under a statutory duty to set its budget and council
tax before 11 March each year. This report sets out information on
projected costs, investments and resources for 2025/26 to 2028/29.
It also provides an outline timetable for considering options to
develop the 2025/26 annual budget and address future budget
shortfalls identified in the current MTFP.
SUPPORTING DOCUMENTATION
Appendices:
1.
Updated
Medium Term Financial Assumptions and Projections
2.
Components
of the Medium Term Financial Planning Process
3.
Schedule
of Cost and Demand Pressures (based on current trends at TBM Month
5)