Agenda item

Budget Forecast 2023/24 - 2025/26

Report of Director of Resources enclosed.


The Director of Resources submitted a report for members to consider the Council’s latest budget forecast and decide what action needs to be taken to meet the financial challenges that lie ahead.


In preparing the budget forecast both national and local circumstances are considered. The forecast would be particularly challenging because of major issues such as the Covid pandemic, a new Prime Minister and team, changes to Government and major funding streams, cost-of-living impact on demand for services, fast moving inflation and the potential recession and impact on income.


The Director of Resources reminded members that the forecast was based on many assumptions that were difficult to predict. Though expected, no information had been made regarding a two year finance settlement and it was highlighted that almost half the budget was funded from uncertain streams, namely Business Rate Retention, New Homes Bonus and other Government grants.


The election of Liz Truss to Prime Minister and changes to her team had already produced a mini budget with tax cuts, a turnaround on National Insurance payments, and changes to stamp duty. Since the mini budget there had been much volatility with the value of the pound falling significantly against the dollar and an increase in interest rates, with further increases mooted.


There is also to be a re-evaluation of all Business Rated premises from April 2023, the outcome of which is currently unknown.


She informed members that the impact of inflation was already having a serious impact on the current year’s budget with a significant increase in council expenditure. This was currently projected to be £737k over the base budget which included the impact of the pay award offer which adds £370k to the base budget. After allowing for the contingency of £140k which had been added to our budget at the beginning of the year the net impact of inflation so far was £600k. However, the Director of Resources stressed that the position was fast moving and had just been notified of higher gas cost which would push this figure even higher.


As part of the process to prepare our budget for next year an exercise to review each budget head was currently being undertaken.


The Director of Resources reminded members that we currently rely on £795k from Business Rate Growth to fund the revenue budget plus £296k this year to fund the cost of the new pay-line. Some was also used to finance the capital programme. The Council had recently been asked by DHLUC to inform them of its preferred pooling preferences for next year. 


She informed members of the New Homes Bonus allocation in 2022/23 of £1.2m, however the future of the scheme was under consultation, although the assumption was that it would continue for 2023/24 and 2024/25 but with no legacy payments for previous years so £420k had been included for those years.


An assumption had also been made that core government funding would continue for the next 2 years with a 5% increase to reflect inflation along with a transition grant in some form to reflect reduced New Homes Bonus.


Other assumptions made in the latest forecast included the use of balances and the Government raising the cap on Council Tax increases to £10 in 2023/24 and thereafter £5pa.


Based on all the assumptions the budget shortfall would be as shown:











The Director of Resources informed committee that the Budget Working Group had met to consider the latest forecast in detail and recognised that it needed to be kept under close review. They had made a number of recommendations for the committee to consider.


Members thanked the Director for her report and recognised that careful monitoring would be required. They supported the move to remain in the Lancashire Business Rate Pool.




1.    Agree the Budget working groups recommendations to


·         Council tax - increase the council tax by the maximum permissible

·         Expenditure - advise committees to examine their budgets carefully to see if any savings can be identified

·         Income - increase fees and charges by the rate of CPI in September and present reports to service committees alongside their budget reports in January

·         Capital – recommend that the Council prepares a 5-year capital programme that asks committees to review their existing approved capital schemes in line with inflation; review the capital bids put on hold last year in line with inflation and analyse between essential and other categories; ask committees to identify any new bids and analyse between essential and other categories

·         Reserves – recognise that it was likely that reserves would be needed to fund the budget shortfall next year before decisions could be made to produce a sustainable base budget going forward based on projected inflation etc


2.    Agree that the pooling preference for 2023/24 was to remain a member of the Lancashire Business Rate Pool.


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