Agenda item

Report by the Director of Resources and Deputy Chief Executive (attached).

The Lead Member for Resources and Commercialisation addressed Council gave a brief introduction:

 

·       The Council had a legal duty to prepare a balanced budget.

·       This had been achieved despite the unforeseen pressures on Councils due to higher than expected pay awards, ever decreasing central Government funding and the high rise in inflation.

·       The budget process began in the summer of 2023 with a cross party workshop in the autumn of 2023.

·       The Council had responded to the Government’s consultation on the Provisional Local Government Finance Settlement.

·       Rural authorities were still seen as the ‘poor relation’ compared to urban authorities. With an average, per head, of £142 less awarded to rural authorities.

·       Council tax had to be increased to help bridge the gap in funding.

·       The purchase of Green Lanes was seen as a strategic decision proving to be a beneficial revenue stream.

·       £200,000 had been earmarked for the continuation of the much-valued Street Marshal scheme.

·       The demand on Temporary Accommodation was an ever growing burden but somewhat mitigated by the purchase of properties, by the Council, to help offer a cheaper alternative to expensive Bed and Breakfast placements.

·       The delay in the fair funding review, which was now expected in two years’ time, meant predicting the Medium term finance strategy was challenging.

·       She thanked the Director of Resources and Deputy Chief Executive and his team for producing a balanced budget without the need to cut services but increasing services with the continuation of the Street Marshal scheme.

 

Council received a presentation by the Director of Resources and Deputy Chief Executive on the Revenue Budget 2024-25, Capital Programme and Medium Term Financial Strategy 2024-25 to 2029-30 (circulated previously) as follows:

 

·       The provisional Local Government finance settlement was announced in December 2023 and confirmed a 3% funding guarantee for all authorities and Council Tax Referendum limit principles of 3% or £5 (whichever was the highest).

·       The final Local Government finance settlement figure had been announced last week.

·       Members had previously received the detailed budget book early, normally circulated ahead of the February Council meeting.  This information looked in detail at funding each service area of the Council.

·       Nationally the total funding settlement stood at just over £64 billion with a core spending power of 6.5%.  This included council tax setting.

·       The allocation of the finance settlement depended on the type of authority.  North Devon Council was a Shire District authority. 

·       Nationally a Shire District authority received 4.9% Core Spending Power share but our allocation was lower still at 4.7%.

·       The level of CPI inflation at October 2023 was 4.6%.

·       For 2024-25 the Revenue and Support Grant and Baseline Funding increased by £119,000.

·       The Rural Services Delivery grant saw an increase of £57,000.

·       The New Homes Bonus award of £351,000 was £97,000 less than 2023-24.  This was a reduction in the grant not the Council’s lack of new homes.

·       Services grant provided was £21,000 that was £100,000 less than 2023-24.

·       The 3% Funding Guarantee of £1,507,000 gave an increase of £354,000 more than 2023-24.

·       The Net impact of the changes above gives the Council an additional £333,000 funding.  Just for context, the pay award last year cost the Council an additional £436,000 over the original budgeted forecast.

·       The final settlement resulted in an additional £131,000 to that announced in the provisional settlement in December 2023 and had removed the reliance on the budget management reserve and enabled additional investment into the planning team resources.

·       The Government Finance Settlement review consultation closed on the 15 January 2024 and the Council’s response was detailed in Appendix F of the report.

·       Income that could be raised over and above the finance settlement came from Council Tax and Business rates.

·       As a Shire District a referendum would be required if the authority wanted to increase council tax above 3%.  The draft budget, therefore, assumed an increase of 2.99% or £6.11 on a Band D.

·       The overall Council tax increase of £287,000 was broken down to £214,000 (as a result of the 2.99% uplift) and £73,000 from an increase in the tax base.

·       Business rates income came from ‘retained growth’ made up of £2 million from growth, as well as £680,000 from renewable energy schemes and the Devon-wide pool share of £325,000.

·       £3 million overall growth had been assumed for the 2024-25 budget.

·       The Fair funding review unlikely to happen now until 2026 with any changes not being felt until 2026-2027.

·       There was a zero budget gap for the 2024-25 year, but moving forwards a budget gap was being forecast.

·       The summary position for 2024-25:

Medium Term Financial Gap 2024-25 (November 2023)	£475,000
Higher than forecast impact from pay award	£126,000
Phased transfer of Public Conveniences to parishes	£150,000
Increase in External Audit fees	£90,000
Increased Insurance costs	£87,000
Increased Utility costs	£131,000
Reduced subsidy on Benefit Payments	£121,000
Reduced parking fine income	£98,000
Other smaller budget areas (net)	£50,000
Government funding over and above original forecast	(£428,000)
Revised 2024-25 Budget gap to bridge	£900,000
Challenge & revised assumptions to draft budget proposals	(£331,000)
Additional growth in Business Rates income	(£250,000)
Re-profiled Borrowing costs (timing of external borrowing and interest payments)	(£272,000)
Increased contribution from Treasury Management reserve	(£47,000)
Use of Budget Management reserve	(£0)
Budget gap for 2024-25	£0

·       A breakdown of the draft revenue budget for 2024-25 could be seen at Appendix A of the report, in summary the balanced net budget of £16.433 million was funded by:

Ø  Council Tax                                            (£7.678m)

Ø  Business rates retention (baseline)         (£3.207m)

Ø  Business rates retention (growth)           (£3.000m)

Ø  New Homes Bonus                                 (£0.351m)

Ø  Rural services delivery grant                   (£0.421m)

Ø  Revenue support grant                           (£0.248m)

Ø  Services grant                                        (£0.021m)

Ø  Funding guarantee grant                        (£1.507m)

Ø  Total funding                                          (£16.433m)

·       The details of strategic grants to be paid out could be seen at Appendix B of the report.  No reduction to the levels of grants awarded were being planned.

·       The only minor change being made was to the Go North Devon grant that was being redirected to Mid-Devon Mobility and Age Concern.

·       The Council were looking to support organisations such as Citizens Advice and the Voluntary Services in other ways.

·       The launch of the North Devon Community Lottery would provide organisations a chance of an additional income source.  There were currently 42 good causes that were live, 9 applications pending approval and 6 incomplete applications. £4,000 had already been raised for good causes, which was positive,

·       Appendix C of the report showed the details of the Earmarked reserves.

·       The General Fund forecast level as at 31 March 2025 was £1.238m; this was 7.6% of the net budget with the recommended level being between 5-10%.

·       Earmarked reserves forecast level as at 31 March 2025 was £6.276m

·       Assurance was given that the budget was robust and in accordance with the Local Government Act 2003.

·       Appendix D of the report showed the refreshed Medium Term Financial Strategy for 2024-2030.  The forecast cumulative budget gap/(surplus) was show as:

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

·       Section 4.1.5.16 of the report detailed what had not been included in the model.

·       It was fundamental that bridging future year budget gaps would be by creating further income generation and net revenue gains through the Commercialisation Strategy.

·       The Capital programme included investment plans for the 2023-24 to 2025-26 of £36.826m and was broken down as follows:

Ø  2023-24        £12.711m

Ø  2024-25        £20.259m

Ø  2025-26        £3.856m

·       Appendix E of the report detailed individual project detail of the Capital programme for 2023-24 to 2025-26.

·       The programme would be funded by:

Ø  Capital receipts / borrowing                    (£15.018m)

Ø  External grants and contributions            (£18.923m)

Ø  Reserves                                               (£2.885m)

Ø  Total Funding                                         (£36.826m)

·       Section 4.3.1 to 4.3.9 of the report detailed the risks that could affect financial plans, a summary of those risks are as follows:

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 rate retention; and

Ø  Welfare reform

·       Going forwards options to be considered included:

Ø  Commercial ventures – for additional income opportunities

Ø  Acquisition of further properties – reduction in cost of Temporary accommodation costs; and

Ø  Housing opportunities – explore alternative delivery models

Ø  Refresh the Commercialisation Strategy (last approved November 2020).

 

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

 

·            That the issue regarding community offices located at South Molton and Ilfracombe and the reduction in hours had also been raised at the last Policy Development Committee meeting. The decision to review the services provided at both offices had been based on customer demand.  The level of demand for face to face services at South Molton had decreased and therefore the hours that NDC customer services officer was available had reduced to Thursdays. The Council had undertaken a review of its customer service face to face service to align it to the demands of customers. The offices located at both Ilfracombe and South Molton were owned by the Town Council who were responsible for reviewing the demand and resources for their own services that they provided and to match the demand.

·            A report would be presented to the next meeting of the Strategy and Resources Committee regarding the extension of the Street Marshal scheme and the future delivery of the service medium to long term.

 

Council congratulated the Director of Resources and Deputy Chief Executive and his team for producing a balanced budget in difficult financial times.