The Lead Member for Resources and Commercialisation introduced the report to Council.

 

Councillor Clayton, Leader of the Council thanked the Lead Member for Resources and Commercialisation for her work with the Director of Resources and Deputy Chief Executive.

 

Council received a presentation by the Director of Resources and Deputy Chief Executive on the Revenue Budget 2025-26, Capital Programme and Medium Term Financial Strategy 2025-26 to 2030-31 (circulated previously) as follows:

 

·       The Core Spending Power total for England was 6%. By region, the South West Core Spending Power was 5.4% and by authority type North Devon Council, being a Shire District, the Core Spending Power was however only 0.3%. In comparison, the CPI (Consumer Price Index) inflation to November 2024 was 2.6%.

·       A Shire Districts referendum would be required if the Council set an increase of 3% or more than £5 for Council Tax, whichever was the greater.

·       Following the draft finance settlement in December 2024,the draft budget has assumed an increase on Council Tax of 2.99%. The overall Council Tax Increase of £708,000 was broken down as £223,000 from the 2.99% increase and £485,000 from increase in tax base (of which £353,000 came from the second homes premium and £132,000 tax base).

·       The Business Rates draft budget figure came from the Retained Growth (made up of £2m North Devon Business rates growth, £680,000 Renewable Energy Schemes and £350,000 Devon pool retained income).

·       Giving an overall figure of £3.090m factored into the draft budget.

·       Revenue Support Grant and Baseline Funding – additional £49,000.

·       New Homes Bonus – actual award £705,000 (£355,000 more than 2024-25).

·       Rural Services Delivery Grant had been removed (£421,000 less than 2024-25).

·       Services Grant – had been removed (£21,000 less than 2024-25).

·       Funding Guarantee – had been removed (£1,507,000 less than 2024-25).

·       New Recovery Grant – an additional £267,000

·       New Funding Floor Grant – an additional £988,000.

·       The overall net impact of less Government funding was £290,000 reduction.

·       The Government’s consultation on the Finance Settlement ended 15 January 2025.

·       North Devon Council’s consultation response could be seen in Appendix F of the agenda report.

·       There was an increase in the gap of Government funding per head of population between rural and urban authorities of £166.19.

·       The Extended Producer Responsibility aimed to make ‘producers’ responsible for the cost of collection, managing and recycling of packaging and incentivise them to make their products recyclable by modulating fees based on the recyclability of products. It also aimed to reduce unnecessary packaging, increase quality and reduce litter.

·       The Government had made an announcement on ‘Simpler Recycling’ services due to start March 2026.

·       New burdens funding to be provided for food waste collections.

·       The provisional Extended Producer Responsibility payment allocation for North Devon was £1,178,000. There was improved capacity with the investment that had been made at Brynsworthy Environment Centre and the vehicles types that had been acquired and operated put the Council in a strong position to implement the “simpler recycling requirements”.

·       The Medium Term Financial Strategy (2024-2030) showed a budget gap year on year:

 

Years	2024-25 £m	2025-26 £m	2026-27 £m	2027-28 £m	2028-29 £m	2029-30 £m
Budget gap/(surplus)	0	0.487	2.945	3.306	3.044	3.263

 

·       Key elements already factored into the above forecasts were:

 

·       Pay increases for 2025-26 at 3% and 2026-27 2% and ongoing.

·       Ongoing 2.99% increase in council tax level.

·       2025-26 inclusion of 100% premium on second homes.

·       Review of fees and charges on car parks in 2025-26 and 2028-29.

·       Assumed transfer of all public conveniences to town and parishes by the end of 2025-26.

·       Government funding review assumed for 2026-27.

·       The summary position for 2025-26:

 

Medium Term Financial Gap (February 2024)	£487,000
Net impact Employers National insurance increase 25/26	£383,000
Employee costs (pay award 24/25,other NI changes 24/25)	£281,000
Increase in Finance Lease costs (vehicles)	£140,000
Increased Insurance costs	£257,000
Phased transfer of Public Conveniences to parishes	£155,000
Government funding changes	£164,000
Extended Producer Responsibility grant	(£1,178,000)
Revised 2025-26 Budget gap to bridge	£689,000
Additional Planning Fee income (price change)	(£120,000)
Growth in Recycling sales material income	(£54,000)
Proposed 3% increase on fees and charges	(£25,000)
Re-profiled Borrowing costs (timing of external borrowing and interest payments)	(£96,000)
Use of additional grant funding to offset revenue spend	(£115,000)
Additional Business Rates income	(£90,000)
Use of Budget Management reserve	(£164,000)
Other	(£25,000)
Budget gap for 2025-26	£0

 

·       Council Tax breakdown.  For 2024/25, Council Tax increased Band D by £6.11 (equivalent of 2.99%).  Rural Councils could increase by up to 3% or £5 (whichever was the higher).  £6.29 would increase the £210.39 to £216.68 (increase of 2.99%) for Band D properties.

·       Green Lanes shopping centre – 2021-22 net return (4.5 months) £243,600.  2022-23 net return £291,000. 2023-24 net return £237,000 which included £150,000 income volatility reserve.  2024-25 cash flow in line with the business case.

·       Appendix A: Detailed the breakdown of the North Devon net budget of £18.073m for 2025-26.   Assumptions had been made for 3% increase on salary costs, 2.99% increase on Band D Council Tax, fees and charges general uplift by 3% and garden waste subscription frozen at £60.

·       Appendix B: Detailed the breakdown of Grants. New for 2024-25 was the North Devon Council central fund from the Community Lottery of £12,000.  It was proposed to be placed into a reserve for spend in 2025/26.  There had been a steer from the Councillor budget workshop that £3,000 of the funds be allocated to the North Devon Records Office.  There was an option to top up the existing strategic grant recipients with the remaining £9,000.  Contact had been made with Age Concern, Mid Devon Mobility and North Devon Voluntary Service.  No response had been received from Mid Devon Mobility. The Policy Development Committee at its meeting on 13 February 2025 had received a presentation from Citizens Advice and had recommended that pending further information from North Devon Voluntary Services and Mid Devon Mobility Ring and Ride bus service that the Council allocates an additional £7,000 to Citizens Advice and £2,000 to Age Concern. The presentation received from Citizens Advice together with further information received from North Devon Voluntary Service and Age Concern had been circulated to all Councillor in advance of the meeting.  It was recommended that the £9,000 be allocated proportionality to Citizens Advice (£6,000), North Devon Voluntary Services (£2,300) and Age Concern (shop mobility) £700.

·       Appendix C: Detailed the breakdown of Reserves.

·       The General Fund balance forecast at 31^st March 2026 was £1.238m, which equated to 7% of the net budget. The recommended level was 5% -10%.

·       Earmarked reserves were forecast at 31 March 2026 at £5.727m.

·       In compliance with Local Government Act 2003, the Chief Financial Officer assured Members of:

 

·       The robustness of the estimates; and

·       The adequacy of the proposed financial reserves.

·       Appendix D: Detailed the refreshed Medium Term Financial Strategy for the period 2025-2031:

 

Years	2025-26 £m	2026-27 £m	2027-28 £m	2028-29 £m	2029-30 £m	2030-31 £m
Budget gap/(surplus)	0	1.558	2.804	3.074	3.629	4.161

 

·       Key factors assumed included the recent decisions not to fully compensate local councils for the increased National Insurance contributions and the cumulative impact of a 0% future Core Spending Power continuing. 

·       The refreshed Medium Term Financial Strategy for 2025-2031 period included:

·       Fair Funding Review – planned for 2024/25 (now assumed for 2026/27)

·       Pay increases – 2026/27 and ongoing at 2%

·       Ongoing 2.99% increase in Council Tax level

·       Budget gap as detailed in paragraph 4.1.5.7 and what had not been included as detailed 4.1.5.16 of the report.

·       Fundamental to bridging future year budget gaps would be further income generation and net revenue gains through the Commercialisation Strategy.

·       Appendix E: Detailed the Draft Capital Programme for the years 2024-25 to 2026-27 of £35.841m. This was funded by:

·       External and Internal Borrowing (£13.991m).

·       Capital receipts (£0.320m).

·       External grants and Contributions (£19.546m).

·       Reserves (£1.984m).

·       Total funding (£35.841m).

·       Projected borrowing need included within the 10 year Capital Strategy.

·       The following areas of risk could affect the financial plans:

Ø  Government Grants.

Ø  Key areas of income.

Ø  Capital receipts

Ø  Savings plans.

Ø  Increase in demand for services.

Ø  Localisation council tax support.

Ø  Business rates retention.

Ø  Welfare reform.

Ø  Devolution, this was a newly added risk.

 

In response to questions, the Director of Resources and Deputy Chief Executive advised the following:

 

·       The Council could set an increase of up to 3% or £5 for Council Tax, whichever was the greater.

·       As part of the Finance Policy Statement it had been indicated that Councils would be fully compensated for the increase in National Insurance. However, the Council had not been fully compensated and had only been awarded £65,000.  In relation to the care sector, the national insurance compensation grant was for staff directly employed and not for those staff who were outsourced.

 

Councillor York declared an other registerable interest as a Trustee of Age Concern and left the room.

 

It was moved by Councillor Clayton and seconded by Councillor Prowse “that £3,000 of the North Devon Community Lottery Central fund be allocated as a strategic grant to the North Devon Records Office and the remaining £9,000 be allocated proportionality as a top up to the existing strategic grants for 2025/26 as follows: Citizens Advice Torridge, North, Mid and West Devon £6,000, North Devon Voluntary Services £2,300 and Age Concern (shop mobility) £700.”

 

RESOLVED that £3,000 of the North Devon Community Lottery Central fund be allocated as a strategic grant to the North Devon Records Office and the remaining £9,000 be allocated proportionality as a top up to the existing strategic grants for 2025/26 as follows:

 

Citizens Advice Torridge, North, Mid and West Devon £6,000

North Devon Voluntary Services £2,300

Age Concern (shop mobility) £700.