Agenda item

The Council has a statutory duty to set a balanced budget in advance of each financial year.  The Final Budget for 2025/26 will be presented to Cabinet in January 2025 and Full Council in February 2025. This report and the attached 2025/26 Draft Budget and Medium-Term Financial Strategy to 2029/30 sets out progress towards delivering a balanced budget.

(The decisions on this item can be called-in by the Resources and Performance Select Committee)

RESOLVED:

1.    That Cabinet notes the 2025/26 Draft Budget and Medium-Term Financial Strategy to 2029/30, including progress to date in setting out spending pressures and efficiencies, as set out in Annex A.

2.    That Cabinet notes the provisional budget gap of £17.4mfor 2025/26 and the next steps required to close the gap.

3.    That Cabinet notes the proposed Draft Capital Programme for 2025/26 to 2029/30 of £1.4bn set out in Section 6 of the report and Annex B.

4.    That Cabinet notes the summary of Resident Engagement and next steps set out in Section 9 of the report.

Reasons for Decisions:

In January 2025, Cabinet will be asked to recommend a Final Budget for 2025/26 to full Council for approval in February. The draft budget sets out proposals to direct available resources to support the achievement of the Council’s corporate priorities, balanced against a challenging financial environment, giving Cabinet the opportunity to comment on the proposals and next steps.

(The decisions on this item can be called-in by the Resources and Performance Select Committee)

The item was introduced by the Leader of the Council who reminded everyone of the four priority objectives of the council which were all encapsulated in the Community Vision 2023 and ensuring nobody was left behind. A survey had been undertaken with residents around the budget which informs the budget setting process. The Leader explained that this year was probably more difficult than most in that there was a new government with a new agenda. A number of messages needed to be relayed to the new government. The NHS had been awarded £22.6b and adult social care only £600m. The council would lobby the government to review this and award more funding to adult social care. There needed to be a reform of the SEND system as the current system did not work for families, schools and councils. One of the biggest challenges for the council was the cost of placements for children. It was positive to see the Secretary of State announce measures to cap and contain placement costs particularly for non-maintained placements. The council would continue to lobby the government on the formula for highways funding especially as Surrey has some of the busiest roads in the country. The issue around costs of home to school transport would also be raised. The council spends over £70m a year on this service.

In the current financial year the budget requires the delivery of £54m of efficiencies and while the council was making good progress against this target, in-year pressures, specifically in relation to adult’s and children’s social care placements and Home to School Travel Assistance, means we are currently forecasting an overspend for 2024/25. Recruiting to key front line roles was essential but equally it was important the organisation was the right size. The increase in National Insurance contributions and the national living wage will have an impact on next years budget and on residents. The Chancellor had announced £1.3b additional funding for councils, £600m of which would be distributed under the adult social care formula. The remaining £700m had been ring fenced and the expectation was that this would be distributed on a deprivation formula or enhanced deprivation formula. From 2026 onwards there would be a funding review with multi year settlements. If the council was to go on previous modelling, the council would be a significant loser in terms of government funding. The council had built up its reserves but reserves can only be used once and were not intended to be used to supplement revenue on a on a daily basis.

The Leader explained that the council had a gross budget of £1.2b and £74m efficiencies need to be found. £54m of efficiencies had been found leaving a gap of £17.4m this assumes a 2.99% Council tax increase. The local government finance settlement would be announced just before Christmas. The current draft budget assumes a council tax increase of 2.99%. The council would continue to look for further savings and efficiencies where those were appropriate. The council’s capital programme would be geared towards longer term revenue savings. A number of the programmes had been reviewed in light of increasing inflation and costs. The council was focused on investing in prevention and early intervention. The final budget would come back to Cabinet in January and then Full Council in February. The Leader confirmed that £18m funding had been committed to Farnham for improvement works to start in January 2025.

The Cabinet Member for Finance and Resources explained the work that had gone into the budget setting process and next steps moving forward. It was explained that Members had been fully engaged with the budget setting process via the Select Committees and member development sessions. The Select Committees would be reviewing the draft budgets again next week. The next stage of the public consultation would also start after the Cabinet has approved the draft budget. The council had continues to use its budget envelope approach where directorates have identified the pressures that they face and then try and balance those pressures by developing efficiency proposals. Officers were thanked for getting the draft budget to its current stage.

RESOLVED:

1.    That Cabinet notes the 2025/26 Draft Budget and Medium-Term Financial Strategy to 2029/30, including progress to date in setting out spending pressures and efficiencies, as set out in Annex A.

2.    That Cabinet notes the provisional budget gap of £17.4mfor 2025/26 and the next steps required to close the gap.

3.    That Cabinet notes the proposed Draft Capital Programme for 2025/26 to 2029/30 of £1.4bn set out in Section 6 of the report and Annex B.

4.    That Cabinet notes the summary of Resident Engagement and next steps set out in Section 9 of the report.

Reasons for Decisions:

In January 2025, Cabinet will be asked to recommend a Final Budget for 2025/26 to full Council for approval in February. The draft budget sets out proposals to direct available resources to support the achievement of the Council’s corporate priorities, balanced against a challenging financial environment, giving Cabinet the opportunity to comment on the proposals and next steps.

(The decisions on this item can be called-in by the Resources and Performance Select Committee)