Agenda item

Purpose of Report

To recommend to Executive the draft Medium-Term Financial Strategy (MTFS) for the period 2025 ? 2030; the draft budget and Council Tax proposal for 2025 - 26; and the draft Capital Strategy 2025 - 2030.

Decision

13.1   That Executive agreed, for further consultation and scrutiny:

·       The Draft Medium Term Financial Strategy 2025 ? 2030, and

·       The Draft Capital Strategy 2025 - 2030.

     Including the following specific elements:

·       A proposed Council Tax increase of 2.95% for 2025/26.

·       A proposed housing rent increase of 2.7% for 2025/26.

·       The Council’s membership of the Lincolnshire Business Rates Pool in 2025/26.

·       The Draft General Fund Revenue Forecast 2025/26 - 2029/30, as shown in Appendix 1 of the officer’s report, and the main basis on which this budget had been calculated, as set out in paragraph 4 of the report.

·       The Draft Housing Revenue Account Forecast 2025/26 - 2029/30, as shown in Appendix 2 of the officer’s report, and the main basis on which this budget had been calculated, as set out in paragraph 5 of the report.

·       The Draft General Investment Programme 2025/26 - 2029/30, as shown in Appendix 3 of the officer’s report, and the main basis on which the programme had been calculated, as set out in paragraph 6 of the report.

·       The Draft Housing Investment Programme 2025/26 - 2029/30, as shown in Appendix 4 of the officer’s report, and the main basis on which the programme had been calculated, as set out in paragraph 7 of the report.

13.2  That delegated authority be given by Executive to the Chief Finance Officer to approve the final Business Rates Base for the financial year commencing on 1 April 2025 and ending 31 March 2026 and submission of the base (via the NNDR1 return) to the Ministry of Housing, Communities and Local Government (MHCLG) by 31 January 2025, with changes to the base estimated in the Draft Medium Term Financial Strategy 2025/30 being reported to the Executive as part of the Final MTFS 2025-30 on 24 February 2025.

Alternative Options Considered and Rejected

As detailed throughout the report.

Reasons for the Decision

The refresh of the MTFS needed to be seen in the context of a high level of financial uncertainty for the Council in relation to future Government funding levels. Significant changes to future public sector departmental spending through the Spending Review 2025, the allocation of this funding to local government through reforms to the distribution methodologies, and the implementation of a Business Rates Reset, were as yet unknown but all of which had the potential; to fundamentally affect the Council’s funding trajectory and MTFS.

In addition, the announcement of the English Devolution White Paper, which set out the Government’s plans to widen and deepen devolution in England and reform local government structures, could have fundamental implications for all tiers of local government.

Furthermore, the Council continued to face cost and demand pressures, along with pressures on income streams and new statutory requirements. Inflation, pay awards, national insurance contribution increases, higher maintenance and construction costs, higher borrowing costs and reductions in local income streams all had a significant impact on the Council’s cost base. The Council also continued to see increased demand for services, by those who relied on the safety net provided by local government, driven in part by the cost-of-living crisis and a housing shortfall. In addition, new regulatory and statutory requirements added further cost pressures particularly in relation to recycling and housing standards/building safety.

As a result of these factors, the Council, and local government as a whole, were yet again having to update their medium-term financial strategies in an uncertain environment. It was a long time since the Council had any stability and certainty beyond a one-year timeframe, which made financial planning, and the subsequent impact on service delivery, in this climate extremely challenging.

The target savings were smaller in the first two years, then increased longer-term to address the underlying shortfalls between costs and targets.

The Council would continue to build on its successful financial planning to date, driving down the net cost of services by implementing changes in the way in which it operated and delivered services, while continuing to prioritise investment in the City and its economy to grow future tax bases. Adopting this approach would ensure that the Council carefully balanced the allocation of resources to its vision and strategic priorities, whilst ensuring it maintained a sustainable financial position and delivered the required reductions in its net cost base.

Prior to submission of the final MTFS 2025-2030 and the budget and Council Tax proposal for 2025/26 to Full Council on 4 March 2025, the budget proposals would be subject to further consultation and scrutiny.