Agenda item

Report of the Director for Finance. Introduced by the Cabinet Member for Finance and Corporate Services.

The main purpose of this report is to specifically update on the budget preparations for 2025/26 and with a focus on the General Fund. Further updates on the Housing Revenue Account and Dedicated Schools Budget will be presented to Cabinet in December 2024.

It sets out the latest information and based on the most up to date assumptions that underpin the budget and sets out the details of the draft revenue and capital proposals for balancing the budget and Capital Programme for 2025/26. Proposed budget reductions are being launched for consultation and scrutiny. The feedback from the consultation will be considered in developing the final draft budget that will be presented to Cabinet in February 2025.  

The Cabinet Member for Finance and Corporate Services introduced the report which updated the Cabinet on the budget preparations for 2025/26 with a focus on the General Fund. Further updates on the Housing Revenue Account and Dedicated Schools Budget would be presented to Cabinet in December 2024.The report further set out:

-           The latest financial information and was based on the most up to date assumptions that underpinned the budget,

-           Details of the draft revenue and capital proposals for balancing the budget and capital programme for 2025/26.

-           Proposed budget reductions being launched for consultation and scrutiny.

The feedback from the consultation would be considered in the final draft budget, along with further proposals put forward in December that would be scrutinised and be presented to Cabinet in February 2025 as a final budget package. 

The Cabinet Member continued to highlight the underpinning objectives of budget and the medium-term financial strategy, which was a fairer and greener borough. She further outlined the local priorities being worked to, which included: building new Council homes, helping people into work, fixing roads and pavements, and planting more trees.

The Cabinet Member also expressed that within these priorities the Council were working in a stark economic backdrop as a result of years of reduced public sector funding, and rapidly increasing cost for services. This was illustrated by sharp cost rise of temporary accommodation which was up 68% across London. The cost of Adult’s Social Care in Haringey was up 10%. At the same time, Haringey’s core government funding was £143m a year less in real terms than it was in 2010.

Further issues highlighted were:

-           Significant changes in the demographic of the borough including increase in the number of older people and this coupled with an out-of-date government funding formula which designated the borough as an outer London borough meant less funding to respond to the borough’s needs. The Council would be working with fellow boroughs to press for change in this area and seek rightful resource to rebuild public services and get the growth needed

-           This was the first step in producing a balanced budget and there would need to be further proposals to bridge identified budget gap of £32m for 2025/25 financial year.

-           This current budget was put forward for resident, partner and scrutiny consultation.

In response to questions from Cllr Hakata and Cllr Connor, the following information was noted:

-           Regarding clarification, to aid public understanding, about the reserves position, it was noted that this was low in comparison to other boroughs. Some of the reserves were earmarked for spend on schools and insurance purposes. Those reserves not listed as allocated were needed for any unforeseen issues. This message aligned with the quarter one budget report, considered in September by Cabinet, which had also reiterated that the levels of reserves were not sustainable and needed to increase in value over the coming years.

-           Regarding the £32million budget gap and potential for writing to the government to seek a capitalisation direction or exceptional financial support, it was noted that this would be a very last option for the Council. It was noted that the organisation was considering expenditure around every single pound to make sure that it was spent wisely and that this spend was absolutely required whilst trying to avoid frontline reductions.

-           The Director for Finance added that it was not unusual to have a budget gap at this position in November, but the scale and the size of the gap was significantly more than what the Council would ideally want it to be. It was explained that this budget position had been reached after extensive work completed over the summer to fully understand the budget pressures, find savings and understand the impact of increased demand on services, now and in the future. This culminated in the proposed savings put forward with more work to be completed over the next 3 months before the final budget was put to Full Council for approval.

-           Assurance was further given that the Council had a better grip on the pressures impacting on the budget and MTFS with monthly monitoring of high-risk pressures. Work was progressing on a further savings update to the December Cabinet and further review by Overview and Scrutiny.

-           In terms of seeking exceptional financial support by government, this process had not changed from previous years and therefore would be an absolute last resort. The focus remained setting a balanced budget in the next three months.

-           Responding to the question on improving the void position to enable housing to be quickly added to the Council’s supply and respond to the increasing pressures in temporary accommodation costs and overall housing demand, it was noted that the level of voids was unusually high at the moment. This was due to factoring in the number of new developments completed which were added to the system and also subject to the neighbourhood moves scheme. The Council would be considering the capacity of the housing team to ensure quicker movement of families into these new homes. The Council had a homelessness reduction plan and met regularly with partners, including a productive meeting last week. Other strategic actions being worked to were building more homes in the borough and acquiring properties to meet the demand for housing. However, the high cost of TA was an issue faced by many other Councils.

RESOLVED:

1.         To note the Council’s current financial position as set out in this report which sets the foundations for the full draft budget for 2025/26 that will be presented to Cabinet in February 2025.

2.         To note the budget pressures that have been identified for 2025/26 and across the medium term as set out in Section 12 and Appendix 1.

3.         To note the draft revenue savings proposals summarised in Section 12 and Appendix 2.

4.         To note the proposed changes to the General Fund Capital Programme for 2025/26 to 2029/30 as set out in Section 15 and Appendix 3.

5.         To agree to commence consultation on the 2025/26 Budget and MTFS

2029/30 revenue and capital proposals. This includes with residents, partners and business and with Scrutiny Panels between November 2024 and January 2025 as set out in Section 19.

6.         To note that the final draft General Fund Revenue Budget, Capital Programme, HRA 2025/26 Budget and Business Plan and Treasury Management Strategy Statement will be presented to Cabinet on 11 February 2025 to be recommended for approval to the Full Council meeting taking place on 3 March 2025.

7.         To delegate the final decision on whether or not to participate in the 8 Authority borough business rates pool from 1 April 2025 to the Director of Finance following consultation with the Lead Member for Finance and Local Investment as set out in Section 10.7.

Reasons for decision

The Council has a statutory obligation to set a balanced budget for 2025/26

and this report forms a key part of the budget setting process by setting out

the forecast funding and expenditure for 2025/26 at this point and options for

setting a balanced budget. In order to ensure the Council’s finances for the

medium terms are maintained on a sound basis, this report also sets out the

funding and expenditure assumptions for the following four years in the form

of a Medium-Term Financial Strategy. The final budget for 2025/26, Council

Tax levels, Capital Programme, Treasury Management Strategy, Housing

Revenue Account (HRA) budget and Business Plan will be presented to

Cabinet in February 2025 for recommending to Full Council on 3 March 2025

Alternative options considered

The Cabinet must consider how to deliver a balanced 2025/26 Budget and

sustainable MTFS over the five-year period 2025/30, to be reviewed and

adopted at the meeting of Full Council on 3 March 2025.

The Council has developed the proposals contained in this report in light of

its current forecasts for future income levels and service demand. These

take account of the Council’s priorities, the extent of the estimated funding

shortfall; the estimated impact of wider environmental factors such as inflation, interest rates, household incomes and, in some service areas, the legacy of the Covid-19 pandemic. It is this appraisal that has led to these options being presented in this report. These will be reviewed and, where necessary, updated in advance of the final Budget report being presented.

These proposals will be subject to consultation, both externally and through

the Overview and Scrutiny process, and the outcomes of these will inform

the final budget proposals.