Agenda item

Report of the Director of Finance and Resources

Cabinet considered a report of the Director of Finance and Resources, that outlined as a basis for consultation a set of new revenue budget proposals for 2025/26 to 2027/28, which represented changes to the Council’s existing Budget. Consultation views were also sought on the potential level of Council Tax and Adult Social Care Precept increases for 2025/26. The final Budget proposals and the Council Tax and Adult Social Care Precept increases would be subject to Council approval in February 2025. Appendices to the report provided: the Pre-Budget Proposals and Financial Position; the Consultation on proposed changes to the Council Tax Support Scheme; the Cumulative Equality Impact Assessment; and the EIA Council Tax Support Scheme.

The ambition to deliver the Council’s overall future strategy continued to be the focus of the Pre-Budget proposals. The strategy was contained within the “One Coventry Plan” which set out key priorities including: improving the economic prosperity of the city and region; improving outcomes and tackling inequalities within communities; and tackling the causes and consequences of climate change. Implicit within the plan was the Council’s commitment to delivering a range of core services to everyone in the city. The Council had sought stakeholder views on these priorities ahead of the pre-budget report, in order to inform the budget consultation process.

The Council’s financial plans were heavily dependent on both the allocation of Government grant resources and Government decisions which dictated councils’ tax-based income streams. It continued to be the case that it was difficult to anticipate the final decisions that the Government would make on these matters and as a result, a number of key elements of the Council’s financial plans were subject to some uncertainty with a degree of risk that the position presented in the report could be subject to change once the details of the local government financial settlement were published. The Provisional Local Government Settlement for 2025/26 was again expected to be published in late December 2024, which continued to be a very late point in the financial planning cycle. Once received, it would provide a stronger indication of the likely position.

The Chancellor of the Exchequer set out the Government’s Autumn Statement on 30th October 2024. The Statement provided a one-year Department Expenditure Limit position for the Ministry of Housing, Communities and Local Government (MHCLG). The Chancellor’s statement recognised the need for additional funding in Local Government and also indicated that ahead of more holistic funding reform from 2026/27, the settlement for next year would start to reflect ‘need’ to a greater degree than current allocations. The Chancellor committed £1.3 billion of additional funding for Local Government nationally, of which at least £600m would be targeted towards Adult Social Care. Whilst some initial assumptions had been made of the financial benefit for Coventry to inform the report, the Council would need to assess the provisional local government finance settlement expected late December 2024 to confirm the position.

The £1.3bn allocation was contributing to a Local Government Core Spending Power (CSP) real terms increase (announced in the Autumn Statement) of 3.2% nationally, which also assumed that all Local Authorities would increase the Adult Social Care Precept by 2% and raise their Council Tax by 3% (the maximum permitted without a referendum). As a result, the report recommended that the Council should consult on the basis of increasing Council Tax on this basis, an overall combined rise of 5%.

The financial gap identified in the report required considerable service savings or additional income proposals to address it, some of which would affect services to the public. The report included proposals on which to consult, which collectively could form the basis of a balanced budget in 2025/26, albeit with financial gaps in future years. The outcome of the final Local Government Settlement would determine the extent of the options required to deliver a balanced budget. The Council was keen to avoid the need to reduce vital services and would seek to explore all possible avenues to do this, however there was currently a strong expectation that some difficult decisions would need to be included as part of the final budget proposals.

A Medium-Term Financial Strategy was intended to be presented alongside the final Budget Report in February 2025. This would include the current financial context facing the Council in relation to a continued impact of the previous high inflation environment and difficult market conditions faced within both adults and children’s social care, and pressures on temporary accommodation costs to meet statutory duties in relation to preventing homelessness. It may not at the point of reporting, however, reflect the Government’s stated intentions to reform Local Government finances which was expected could impact subsequent years.

The proposals in the report were made as a basis for public consultation and the results of the consultation would be reflected in the final Budget Report in February 2025 and considered as part of the final decisions recommended in that report. Further work would be undertaken to confirm all the financial assumptions included, between now and the final Budget Report in February.

An outline of the resources and the spending and savings proposals were summarised in Section 2, within Table 1, of the report and detailed on a line-by-line basis in Appendix 1 to the report. The financial proposals assumed that the Council would approve an increase in Council Tax and Adult Social Care Precept by the maximum allowed.

Appendix 2 to the report contained details of proposed changes to the Council Tax Support Scheme. The report requested approval to conduct a public consultation on the proposed Council Tax scheme. The budgetary challenges faced by the Council for 2025/26 required the Council to review all areas of discretionary expenditure and potentially the option to reduce the amount of support provided through the CTS Scheme for working age households.

The report also included an indicative outline of the Council’s prospective Capital Programme for 2025/26 based on current knowledge. This would be updated in the February 2025 Budget Report, reflecting the most up to date programme information available. The draft programme was based overwhelmingly on pre-existing decisions and patterns of expenditure.

Cabinet noted that the Finance and Corporate Services Scrutiny Board (1) would consider the revenue spending and savings proposals for 2025/26 together with the approach in relation to Council Tax, as part of the consultation process, at their meeting on 8th January 2025.

RESOLVED that Cabinet:

1)  Approves as a basis of consultation: the revenue spending and savings options set out in Appendix 1 of the report and the broad Capital Programme proposals in Sections 2.8 to 2.10 of the report.

2)  Approves as a basis of consultation: the approach in relation to Council Tax and the Adult Social Care Precept in Section 1.10 of the report, including a Council Tax rise of just under 3% and an Adult Social Care Precept of 2%.

3)  Agrees a seven-week public consultation on the 2025/26 budget proposals set out in this report to commence on 11th December 2024 and conclude on 28th January 2025. This includes consultation with residents, partners and business.

4)  Approves as a basis of consultation the draft council tax support scheme based on the preferred option detailed in Appendix 2 to the report in accordance with The Local Government Finance Act 1992 (as substituted by the 2012 Act).