Agenda item

RESOLVED: That

1.  The initial draft 2024/25 Budget detailed in Appendix 7 of the report be agreed.

2.  The initial draft 2024/25 Budget for each portfolio be referred to the relevant PDS Committees for consideration.

3.  The financial projections for 2025/26 to 2027/28 be noted.

4.  It be noted that there are still areas of financial uncertainty which will impact on the final 2024/25 Budget.

5.  Given the scale of financial challenges, a one off Transformation Fund 2024-2028 earmarked reserve of £1m be approved to resource the next phase of Transformation Programme to assist in delivery of significant future year savings. This will be funded from the Growth and Investment Fund earmarked reserve and the final allocation of these resources will be delegated to the Chief Executive in consultation with the Resources, Commissioning and Contract Management Resources Portfolio Holder (See Section 6.8 of the report).

6.  It be agreed to increase rent levels for London Affordable Rents and Social (Formula) Rents by 7.7% from April 2024 as set out in Section 9.8 of the report.

7.  The setting of the schools’ budget, mainly met through Dedicated Schools Grant, be delegated to the Education, Children and Families Portfolio Holder, allowing for consultation with the Schools Forum (see section 10 of the report).

8.  It be noted that the Dedicated Schools Grant Deficit Recovery Plan will be reviewed and updated for future reporting to Members (see paragraph 10.18 of the report).

9.  The proposed contribution of £247,872 in 2024/25 to the London Boroughs Grant Committee (see section 12 of the report) be agreed.

10.  It be noted that the outcome of consultation with PDS Committees will be reported to the next meeting of the Executive (See paragraph 15.4 of the report).

11.  The outcome of the Provisional Local Government Financial Settlement 2024/25 as detailed in the report be noted.

12.  The budget gap remaining of an estimated £38.7m per annum by 2027/28 and that any decisions made for the 2024/25 Budget will have an impact on the future year projections be noted.

13.  It be noted that any final decision by Executive on recommended Council Tax and Adult Social Care Precept levels to Council will normally be undertaken at the next meeting of Executive.

Report FSD24001

The report sought approval of the initial draft 2024/25 Budget including the full year effect of changes agreed as part of the 2023/24 Council Tax report and savings approved during the year with the resultant impact on the Council’s medium term ‘budget gap’.

A key part of the financial strategy was to highlight the budget issues that would need to be addressed by the Council over the coming financial years, by forecasting the level of available resources from all sources and budget pressures relating to revenue spending. More details of the capital programme and the impact on the revenue budget would be reported to the next meeting of the Executive.

PDS Committees views would also be sought and reported back to the next meeting of the Executive, prior to the Executive making recommendations to Council on the 2024/25 Council Tax and Adult Social Care precept levels.

The report provided details of the Provisional Local Government Finance Settlement 2024/25 which was published on 18th December 2023 and represented a one-year settlement only. The awaited Fair Funding Review and changes relating to the devolution of business rates, which could have a significant impact on future funding, had been delayed and were unlikely to be implemented until at least 2026/27.

There were increasing challenges facing the Council as identified in the report. These included the need to address the ongoing Dedicated Schools Grant (DSG) funding deficits, the medium-term risk of depletion of reserves and the resultant impact, funding the future capital programme and progressing to the next steps for the Transformation Programme. The report provided an update on the local authority landscape and the implications on a deteriorating financial position for many local authorities. As indicated later in the report there was no significant additional new funding announced in the Autumn Statement or Provisional Local Government Finance Settlement 2024/25 to address the significant cost pressures facing the Council.

There were still outstanding issues and areas of uncertainty remaining, including various grant allocations and associated grant conditions, which could impact on the final revenue budget. Any significant changes would be reported at the meeting and further updates would be included in the 2024/25 Council Tax report to the next meeting of the Executive.

The report had been scrutinised by the Executive, Resources and Contracts PDS Committee on 16th January 2024 and the Leader reported that there had been a discussion concerning the proposed 7.7% increase in rents following concerns raised by the Leader of the Opposition that a smaller rise should be considered,  the rationale for the £1m earmarked reserve for the Transformation Programme and whether it was possible to withhold the increase scheduled to be paid to the London Boroughs Grant Committee.

The Leader explained that to the best of his awareness the vast majority of London Boroughs, of all political persuasions, were regrettably having to raise rates by the maximum 7.7% permitted this year not  least to ensure the viability of future housing projects, expanded on the reason for the proposed  £1m earmarked fund to assist understanding of its purpose and that his advice from the Director of Corporate Services and Governance was emphatic that withholding funding from the London Borough Grants Committee was not permissible, and that on that basis, the recommendations listed below should be approved unchanged.

Cllr Connelly then placed his Group’s objection to the proposed 7.7% Rent rise on the record and after further discussion led by the Chairman of ERC PDS concerning legal advice relating to the Grants Committee, the Executive moved to consider the recommendations.

The Portfolio Holder for Resources, Commissioning and Contracts Management later announced that the proposed staff pay award for 2024/25 would be 3%.  There would also be an increase in the merit payment scheme of 3% to reward outstanding performance in service. Furthermore, the decision had been taken to delete the old BR3 salary scale meaning that the lowest paid staff would receive an increase of around 6% and it was within the Council’s financial envelope to do this.

RESOLVED: That

1. The initial draft 2024/25 Budget detailed in Appendix 7 of the report be agreed.

2. The initial draft 2024/25 Budget for each portfolio be referred to the relevant PDS Committees for consideration.

3. The financial projections for 2025/26 to 2027/28 be noted.

4. It be noted that there are still areas of financial uncertainty which will impact on the final 2024/25 Budget.

5. Given the scale of financial challenges, a one off Transformation Fund 2024-2028 earmarked reserve of £1m be approved to resource the next phase of Transformation Programme to assist in delivery of significant future year savings. This will be funded from the Growth and Investment Fund earmarked reserve and the final allocation of these resources will be delegated to the Chief Executive in consultation with the Resources, Commissioning and Contract Management Resources Portfolio Holder (See Section 6.8 of the report).

6. It be agreed to increase rent levels for London Affordable Rents and Social (Formula) Rents by 7.7% from April 2024 as set out in Section 9.8 of the report.

7. The setting of the schools’ budget, mainly met through Dedicated Schools Grant, be delegated to the Education, Children and Families Portfolio Holder, allowing for consultation with the Schools Forum (see section 10 of the report).

8. It be noted that the Dedicated Schools Grant Deficit Recovery Plan will be reviewed and updated for future reporting to Members (see paragraph 10.18 of the report).

9. The proposed contribution of £247,872 in 2024/25 to the London Boroughs Grant Committee be agreed (see section 12 of the report).

10. It be noted that the outcome of consultation with PDS Committees will be reported to the next meeting of the Executive (See paragraph 15.4 of the report).

11. The outcome of the Provisional Local Government Financial Settlement 2024/25 as detailed in the report be noted.

12. The budget gap remaining of an estimated £38.7m per annum by 2027/28 and that any decisions made for the 2024/25 Budget will have an impact on the future year projections be noted.

13. It be noted that any final decision by Executive on recommended Council Tax and Adult Social Care Precept levels to Council will normally be undertaken at the next meeting of Executive.