Decision details

The Director of Resources and Deputy Chief Executive submitted a report asking Committee to approve the revised Revenue Budget for 2023/24 and to recommend a revenue budget and council tax requirement for 2024/25 to Council on 5 March 2024.

The report noted that when setting the revised budget for 2023/24, records levels of inflation were being seen along with significantly higher utility costs. Committee expenditure had fallen significantly by £1.470m and a number of one-of windfall savings totalling £1.9m had also occurred including:

·       Investment income was up by £896k due to higher interest rates and higher than expected available cash balances to invest;

·       Business Rate refunds for the Clitheroe Castle Museum and also some car parks totalling £508k; and

·       Utility costs were £496k lower than anticipated.

A significant element of the Council’s income was Business Rate Growth and the report outlined the latest estimate of Ribble Valley’s share of business rate income for the current year. When setting the original budget, it had been agreed to significantly increase the amount of Business Rate Growth used to fund the revenue budget to £2m. In addition, an amount of £1.173m would be transferred to a capital reserve fund to be used to fund future capital schemes.

The report detailed the forecasted transfers to and from earmarked reserves compared with the original estimate, and in summary, the net position was that the Council anticipated adding £90k instead of taking £459k from earmarked reserves in the current year.

The overall summary showed that the Council was £1.805m better off when compared with the original estimate, therefore instead of taking £300k from general fund balances at the end of the year, based on the revised estimates the amount would be £1.505m.

The report went onto highlight the key elements of the Provisional Local Government Finance Settlement 2024/25 and total Government funding of £3.001m in 2024/25. This was set be increase by and additional £73k in funding following the Final Local Government Finance Settlement. The funding guarantee would also increase Ribble Valley’s core spending power by 5.7%. It was noted that whilst the New Homes Bonus was an element of the Council’s Core Spending power, Business Rates Growth income was not, therefore this income would not be protected if baselines were reset in the future.

The Director of Resources reported that the Collection Fund was likely to produce an overall surplus of £1,311,620 for 2024/25, which would consist of a surplus for council tax of £821,668 and a surplus in respect of business rates of £489,952. The council tax surplus would be shared amongst all the major precepting authorities with the Council’s share being £73,966 and the Council’s business rate share being £195,981.

Regarding the revenue budget for 2024/25, the report outlined the provisional base position as agreed by Service Committees. Committee expenditure was set to fall by £248k, the reasons for which were set out for each Committee in the annex to the report. Capital adjustments and movements of other items were also reported, and the most significant movement was the increase in investment interest, however it was difficult to predict when interest rates would fall.

The future budget forecasts for 2025/26 to 2028/29 were also estimated based upon latest budget predictions, potential Government Funding, and spending power assumptions. It was noted that these were difficult to predict in the absence of any firm information from the Government, along with the expected general election in 2024. The report summarised the annual budget shortfalls for each year, with the total shortfall to be funded being £5,926,819. This took into account the assumption that £1m would be taken from general fund balances over the forthcoming 4 years. Members were informed that if assumptions in the forecast were correct, although the Council were close to a balanced budget position for 2025/26, significant budget gaps were predicted from 2026/27 onwards. This was largely due to assumptions that interest rates would fall, core government funding would fall, and that business rates would be reset.

The Council’s external auditors had recommended that the Council put in place a savings plan and a transformation plan, if required, to address the estimated budget gaps that were forecast.. The current Government had also issued, alongside the Final Grant Settlement for 2024/25, a requirement for local authorities to produce and submit a ‘productivity plan’ before Parliament’s summer recess, elements of which may well be duplicated in the savings plan.

The Budget Working Group had considered the Council’s financial position and overall budget positions for 2023/24 and 2024/25, and had made the following recommendations for approval by Committee:

·       £500k to be added to the 2024/25 capital programme to fund improvement works in the Castle Grounds, and £1m be set aside to fund one-off items to be considered by the Budget Working Group/Policy and Finance Committee. These would be funded by the windfall savings expected on the revised estimate for 2023/24 which totalled £1.505m. The Budget Working Group stressed that as the savings/extra income were of a one-off nature and should not be used to fund on-going expenditure.

·       Further Budget Considerations for 2024/25, which had been identified since Service Committees had considered their base budgets, should be added to the 2024/25 budget, totalling £146,100.

·       That a £200k contingency for potential pay increases above the 4% allowed for, and a £200k contingency for utility and fuel increases above the amounts allowed for in the base Committee estimates, should be added to the 2024/25 budget.

·       A £5 increase in the Band D Council Tax to £170.69 for 2024/25.

·       That the Council monitor closely interest rate changes during the year.

·       That £82,853 is taken from general fund balances in 2024/25 to balance the budget, however, Members were updated at the meeting that this was now reduced to £8,925 following the Final Local Government Finance Settlement 2024/25.

·       That given the significant forecast deficit for future years, the financial pressures and remaining uncertainties, the Budget Working Group should continue to meet on a regular basis to review the budget position and consider ways in which a sustainable budget could be set. This would include the preparation of a savings plan.

Committee were asked to consider the recommendations which would result in a balanced budget for 2024/25, as set out in the report.

The Director of Resources and Deputy Chief Executive, as the Section 151 Officer, presented her report set out in Annex 8 which was required under Section 25 of the Local Government Finance Act 2003 to consider the robustness of the budget and the adequacy of the Council’s balances and reserves.  She concluded that the budget estimates for 2024/25 are robust, and the level of reserves adequate.  She recommended that the Budget Working Group consider a savings and transformation plan to address how a balanced budget could be set beyond 2025/26.

RESOLVED THAT COMMITTEE:

1.     Approve the revised budget for 2023/24.

2.     Approve the Budget Working Group’s recommendations set out in Section 9 and set a budget and council tax requirement for 2024/25 as set out in Section 12 of the report.

3.     Recommend the budget and council tax requirement to the Full Council meeting on 5 March 2024.

4.     Ask the Budget Working Group to formulate the preparation of a savings plan to address the forecasted future budget deficits and report back to this Committee.