Agenda item

To provide a general update and overview of the Council’s financial position against the 2024/25 budget as at the end of September 2024 and looking ahead to 2025/26 and beyond.

RESOLVED that Cabinet:-

(a)  notes the Council’s in-year financial position at the end September 2024;

(b)  approves the proposed adjustments to the 2024/25 budget, as set out in Appendix 1H and requests Officers to review the potential on-going impact in 2025/26 and beyond where necessary as part of developing the forecast and detailed estimates for further consideration by Cabinet later in the year;

(c)   in respect of the additional sum of £0.040m made available to support North Essex Councils collaborative activities and Joint Health Post with Health Partners that is set out in Appendix 1H, authorises the Chief Executive, in consultation with the Portfolio Holder for Corporate Finance and Governance and the Portfolio Holder for Partnerships, to utilise this funding to support any associated work; 

(d)  in respect of the additional £1.200m set aside to support the cost of homelessness, requests Officers to present a report to a future meeting of Cabinet setting out further details relating to the current challenges faced by the Council along with potential actions / proposed activities to support the Council going forwards;

(e)  in respect of the Project Delivery Unit budget:

(i)      authorises the Director for Governance and the Director for Finance & IT, in consultation with the Corporate Director (Place and Economy), to enter into an agreement with Essex County Council (ECC) to increase existing procurement capacity for Tendring District Council;

(ii)     agrees a sum of up to the value of £120,000 over two years from the associated approved budget to fund the additional procurement capacity from ECC;

(iii)   authorises the Chief Executive, in consultation with the Portfolio Holder for Economic Growth, Regeneration and Tourism, to agree further expenditure where capacity is procured from external bodies / organisations / individuals as an alternative to recruitment.  

(f)    notes the updated financial forecast set out in this report and requests Officers, in consultation with Portfolio Holders, to further develop the financial forecast proposals alongside the development of the Council’s priorities; and

(g)  invites the views of the Resources and Service Overview and Scrutiny Committee on the information set out in this report along with the Council’s wider financial position as part of its work programme for the year.

Cabinet considered a detailed report of the Corporate Finance and Governance Portfolio Holder (A.8), which provided it with a general update and overview of the Council’s financial position against the 2024/25 budget as at the end of September 2024 and looking ahead to 2025/26 and beyond.

SECTION 1 - In respect of the in-year financial position at the end of September 2024:

It was reported that the position to the end of September 2024, as set out in more detail within the appendices, showed that overall, the General Fund Revenue Account was overspent against the profiled budget by £0.724m (£0.480m at the end of July 2024). However, it was important to highlight that this position continued to primarily reflect the timing of when the Government reimbursed the Council for the cost of meeting housing benefit claims and Parliamentary Election expenses incurred earlier in the year.

Appendix 1H set out a number of unavoidable cost pressures or where a timely opportunity for investment / expenditure had arisen. The cost of responding to homelessness within the District continued to present a significant financial challenge with £1.200m proposed to be set aside to support the estimated additional costs for the year. It was also proposed to request a more detailed report on the associated challenges faced by the homelessness service for consideration at a future meeting of Cabinet.

Appendix 1H also set out a proposed sum of £0.040m to explore collaborative opportunities with the Council’s partners with an associated recommendation included below.

It was acknowledged that other expenditure or income trends might still emerge / develop over the remainder of the year, which would be included in future financial performance reports as necessary.

In respect of other areas of the budget such as the Housing Revenue Account, capital programme, collection performance and treasury activity, apart from additional details set out in the report, there were no other major issues that had been identified to date.

The Portfolio Holder’s recommendations also proposed delegations to enable the flexible use of funding previously set aside to support the development of the Council’s Project Delivery Unit along with a contribution to ECC for procurement support.

SECTION 2 - In respect of the updated long-term financial forecast;

It was reported that the forecast had been reviewed and updated at the end of September 2024 and was set out in Appendix 2A. It continued to reflect the very challenging financial position faced by Local Authorities, which included on-going inflationary pressures along with the recently announced increase in employer’s national insurance rates from April 2025.

As highlighted in an earlier report, the forecast period had been extended out to 2033/34 in order to support the Council in managing its budget sustainability and to support financial resilience over a longer term period. Although further information was set out in Section 2 of this report, including the potential impact from the Government’s recent Autumn Budget Statement, there remained some tough decisions ahead. It would therefore remain important that the on-going development of the forecast was based on engagement with as many stakeholders as possible, including Members and residents to support the Council in balancing the provision of services with the need to deliver long-term financial sustainability. 

Work remained ongoing within Departments and with Portfolio Holders to identify the longer-term impact of issues emerging to date, along with remaining sighted on potential future cost pressures. With this in mind, it was important to highlight that the long-term forecast did not currently reflect the potential increase in costs expected from the retender of the Council’s waste, recycling and street cleansing contract. This could place a significant level of additional financial burden on the financial forecast.

However, the long-term approach, alongside the Forecast Risk Fund remained a key element of providing additional flexibility and time to make better-informed decisions. Significant on-going savings were still required, with the latest iteration of the Council’s savings plan set out in Appendix 2B. There had only been one change from the plan reported to Cabinet in October 2024, which reflected the Government’s commitment to ‘protect’ the local government sector that had been set out within their recent Autumn Budget Statement, which had resulted in additional grant income now being expected when compared to earlier forecasts.

It was important to highlight that the savings did not necessarily have to accrue from 1 April 2025, given the flexibility provided by the Forecast Risk Fund, but the earlier they could be delivered would be helpful in terms of supporting the later years of the plan.

A structural budget deficit was forecast to remain across the forecast period, even after the delivery of the savings mentioned earlier. This presented further significant challenges as this had to be addressed via the identification of additional on-going savings across later years of the forecast. As set out in the forecast, this remained the case until such time as the Council delivered an underlying annual balanced budget. In terms of this latter point, the forecast continued to show that the level of inflation, especially pay inflation, outstripped the estimated level of forecast increases in income from council tax and business rates, which was clearly not sustainable without significant ‘corrections’ to the budget in future years.

The above remained subject to any intervention from the Government, who had signalled its intention to reform the local government funding system after 2025/26 and would carry out a broader redistribution of funding to better reflect local need (previously known as Fair Funding) through a multi-year settlement from 2026/27.

The challenges faced by the Housing Revenue Account were also significant and included increased expectations and requirements that continued to emerge from the Social Housing Regulation Act and associated enhanced powers of the Housing Regulator. The HRA 30 Year Business Plan would be developed over the coming weeks alongside a review of the announcements included within the Government’s recent Autumn Budget Statement, with the aim of responding to such challenges set against the wider context of continuing to provide a financially sustainable position in the long term.

In order to set out the latest financial position for the Council and to respond to emerging issues in 2024/25 and to develop the budget and long-term forecast from 2025/26:-

It was moved by Councillor M E Stephenson, seconded by Councillor Kotz and:-

RESOLVED that Cabinet:-

(a)  notes the Council’s in-year financial position at the end September 2024;

(b)  approves the proposed adjustments to the 2024/25 budget, as set out in Appendix 1H and requests Officers to review the potential on-going impact in 2025/26 and beyond where necessary as part of developing the forecast and detailed estimates for further consideration by Cabinet later in the year;

(c)   in respect of the additional sum of £0.040m made available to support North Essex Councils collaborative activities and Joint Health Post with Health Partners that is set out in Appendix 1H, authorises the Chief Executive, in consultation with the Portfolio Holder for Corporate Finance and Governance and the Portfolio Holder for Partnerships, to utilise this funding to support any associated work; 

(d)  in respect of the additional £1.200m set aside to support the cost of homelessness, requests Officers to present a report to a future meeting of Cabinet setting out further details relating to the current challenges faced by the Council along with potential actions / proposed activities to support the Council going forwards;

(e)  in respect of the Project Delivery Unit budget:

(i)      authorises the Director for Governance and the Director for Finance & IT, in consultation with the Corporate Director (Place and Economy), to enter into an agreement with Essex County Council (ECC) to increase existing procurement capacity for Tendring District Council;

(ii)     agrees a sum of up to the value of £120,000 over two years from the associated approved budget to fund the additional procurement capacity from ECC;

(iii)   authorises the Chief Executive, in consultation with the Portfolio Holder for Economic Growth, Regeneration and Tourism, to agree further expenditure where capacity is procured from external bodies / organisations / individuals as an alternative to recruitment.  

(f)    notes the updated financial forecast set out in this report and requests Officers, in consultation with Portfolio Holders, to further develop the financial forecast proposals alongside the development of the Council’s priorities; and

(g)  invites the views of the Resources and Service Overview and Scrutiny Committee on the information set out in this report along with the Council’s wider financial position as part of its work programme for the year.