Agenda item

This report:

·       Aims to ensure the council continues to maintain a balanced 2025/26 budget forecast by considering the impact that changes to the previous assumptions will have on the underlying approved position and taking mitigating action where necessary. 

·       Present an update on the 22 May 2024 letter submitted by the Director of Finance to Department Levelling Up Housing and Communities (DLUHC) and Department for Education (DfE) outlining concerns regarding the impact the deficit on the Dedicated Schools Grant (DSG) is having on the financial sustainability of the Council.

Provides details of the council’s responses to the government’s consultation supporting the 30 October 2024 national Budget.

The Deputy Leader and Portfolio Holder for Finance presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'A' to these Minutes in the Minute Book. The Board was advised that the Council aimed to ensure that it continued to maintain a balanced 2025/26 budget forecast by considering the impact that changes to the previous assumptions would have on the underlying approved position and taking mitigating action where necessary.  The report presented an update on the 22 May 2024 letter submitted by the Director of Finance to Department for Levelling Up Housing and Communities (DLUHC) and Department for Education (DfE) outlining concerns regarding the impact the deficit on the Dedicated Schools Grant (DSG) was having on the financial sustainability of the Council. Provides details of the council’s r The report also provided details of the Council’s responses to the government’s consultation supporting the 30 October 2024 national Budget. A number of issues were raised and responded to during the discussion on this item, including:

Voluntary redundancies - That these needed to be targeted to appropriate areas. It was noted that the last time this process had been used there were areas from which voluntary redundancies were not accepted. The payback period would also be considered to see if this should be extended. It was commented that there were often unintended consequences of voluntary redundancy leaving areas short staffed. It was hoped that the scheme would negate the need for compulsory redundancies but this would depend upon the outcome of the voluntary scheme

·     Online reporting – It was suggested that Overview and Scrutiny should be involved with improvements to this and perhaps should look to a working group on this issue.

·     Dedicated School Grant High Needs Budget – Report advised of the commissioning of a review but there were concerns on the effectiveness of this. The review was being undertaken by Chris West, Advisor to Department of Education. This took place during September and was now in a place where the report was being finalised and the report going back to the DfE. There was a need to receive advice from central government in order for advice to be given to Council on how a balance budget can be set for 2025/26.

·     Impact of High Needs Budget – The Council budget was approximately £357m, the high needs budget government grant was £63.2m, the anticipated overspend was £28m.  However, the updated overspend increased to £44.5m in the quarter one budget monitoring. Spending was approximately 77 percent more than the grant. In the first quarter of 2025/26 the budget would run out of headroom to cashflow the DSG deficit. Cash flowing the deficit costs approximately £5m per year. The budget for 2024/25 included £38 million of savings which could have been reduced if it wasn’t for this need. The Portfolio Holder commented that the current scheme was unsustainable and needed a full review.

·     Local MP Letter to government - Issues were raised regarding support from all local MPs for the letter drafted to government regarding the Impact of the High Needs Budget deficit. It was hoped that everyone could be onboard with the issues around this moving forward. Councillors would follow up on this issue.

·     Carters Quay – The accumulated interest costs were questioned. There was not currently any further update on this site.

·     Stakeholder representation letter to new government regarding the Council Tax Framework Reform. The Portfolio Holder advised that they preferred to have more flexibility around setting council tax in order not to make savage cuts to services. It was confirmed that it was preferred to have ultimate control over all the various Council Tax discounts including Single Person Discount.

The Board noted the report and recommendations to Cabinet.