Agenda item

The Cabinet Member for Adult Social Care and Health Integration introduced the Council’s proposed budget framework for 2024/25 which incorporated the following:

·  Proposed General Fund revenue budget for 2024/25;

·  Proposed level of Council Tax for 2024/25;

·  Medium Term Financial Strategy (MTFS) 2024/25 to 2026/27;

·  Draft Capital Budget for 2024/25 and revised Capital Programme 2024/25 to 2026/27;

·  Strategy for the Flexible Use of Capital Receipts 2024/25;

·  Chief Financial Officer’s Statutory Finance Report (Section 25 Statement)

The proposed General Fund net budget for 2024/25 was £221.745m, which incorporated a drawdown from reserves of £8.809m to balance the 2024/25 budget after the inclusion of £15.595m of savings and £54.129m of growth from the 2023/24 revised budget.  In order to achieve that budget, it would be necessary for the Council to increase its element of the Council Tax by 4.99%, made up of 2.99% for general spending and 2% that would be ringfenced as an adult social care precept.  The Greater London Authority element of the Council Tax would increase by 8.6%.

The Cabinet Member referred to the steps taken by the Council to achieve a balanced budget for 2024/25 in the context of high inflation, the cost-of-living crisis, increasing pressures and demand for social care services and the continued uncertainty around local government finances.  The Government’s delay in introducing Fair Funding reforms meant that Barking and Dagenham continued to be significantly disadvantaged due to its population increase and high levels of deprivation which were not being properly funded by the Government.

The Cabinet Member commented specifically on the Council’s debt levels which had been highlighted in the press, primarily as a consequence of the problems being experienced at a number of other local authorities, several of whom had issued Section 114 notices in view of their inability to achieve and/or set a balanced budget.  Those local authorities had arrived at that position for various reasons, some due to poor investment decisions, yet the position at Barking and Dagenham was substantially different as its debt had arisen from sound investment decisions to achieve growth in the Borough.  Since 2016, the Council and its subsidiary, Be First, had delivered 1,465 new homes with a further 2,336 under construction and the borrowing that had been secured to deliver that investment was at low interest rates, typically below 2%, and based on a return to the Investment and Acquisition Strategy (IAS) of at least 5% in the longer term.

The Cabinet Member also highlighted a number of other important aspects within the report, which included:

·  The key principles that underpinned the Council’s Medium Term Financial Strategy, as set out under paragraph 4.14 of the report;

·  The key financial risks for both the local government sector as a whole and those specific to Barking and Dagenham, as detailed in section 18 of the report;

·  The key implications of the Local Government Finance Settlement for 2024/25, as set out under paragraph 7.7 of the report, and the continued failure of the Government to provide local authorities with any confidence to plan for the future;

·  The service budgets for 2024/25, which included details of the growth, inflation and savings to be achieved in each area, as set out under paragraph 12.1 of the report;

·  The Council’s reserves position for 2024/25, which meant that the main budget reserve would remain above the £12m minimum level previously set even after the drawdown to achieve a balanced budget for 2023/24; and

·  The outcome of the budget consultation exercise recently undertaken which reflected the local community’s acknowledgement of the need for the Council to increase Council Tax by the maximum amount allowed in order to deliver its aspirations and the priorities that were most important to residents.

The Cabinet Member stressed that the savings for 2024/25 which had been identified through the Star Chamber process and other means must be achieved in order to help avoid overspends in the years ahead, a view which was reinforced by the Strategic Director, Resources, during the meeting and in her Section 25 Statement.

Cabinet colleagues raised several questions and observations which the Cabinet Member for Adult Social Care and Health Integration responded to.  Further clarification was also sought on Barking and Dagenham’s position regarding the possibility of having to issue a Section 114 notice.  The Cabinet Member for Adult Social Care and Health Integration offered her view that the Council was as far away as possible to having to issue such a notice for the reasons discussed.  The Strategic Director, Resources, as the statutory Chief Financial Officer, also commented that the Council was in a relatively strong position given all of the issues it faced, although she was very robust in the view that the risks highlighted in the report, the delivery of the proposed savings and the implementation of new service delivery models were fundamental aspects for the Council to avoid being brought into Section 114 territory.

In concluding the discussions, the Leader placed on record the Cabinet’s appreciation to senior management and other officers for their efforts in helping to present a balanced budget.

Cabinet resolved to recommend the Assembly to:

(i)  Agree that the basic amount of Council Tax (Band D equivalent) shall increase by 2.99%, and by a further 2% for the Adult Social Care precept, bringing the total increase to 4.99%;

(ii)  Agree that the Council Tax to be set for 2024/25 shall be £1,531.35 for a Band D property, comprising £1,310.70 for core Council Tax and £220.65 for the Adult Social Care precept, an increase of £43.61 and £29.17 per year respectively;

(iii)  Note that the Council shall levy an additional £471.40 on the Band D amount above on behalf of the Greater London Authority which represented an increase of 8.6%;

(iv)  Note the amount of 54,916.54 as the Council Tax Base for Barking and Dagenham for 2024/25, an increase of 1,589.69 on the previous year, in accordance with Regulation 3 of the Local Authorities (Calculation of Council Tax Base) Regulations 1992 made under the Local Government Finance Act 1992 (as amended);

(v)  Agree, in setting the Council’s General Fund revenue budget, to set the Council Tax requirement at £84.096m for 2024/25;

(vi)  Consider and have due regard to budget consultation feedback with residents and businesses as set out in Section 20 to the report and note that no changes were recommended as a result;

(vii)  Agree the Statutory Budget Determination for 2024/25 as set out at Appendix D to the report;

(viii)  Approve the proposed General Fund Revenue Budget for 2024/25 as set out in Appendix A to the report, subject to any changes required from the final Local Government Finance Settlement;

(ix)  Delegate authority to the Strategic Director, Resources, in consultation with the Cabinet Member for Finance, Growth and Core Services, to make further changes to the 2024/25 budget proposals prior to the Assembly meeting up to a maximum amount of £1.0m or as determined by the final Local Government Finance Settlement;

(x)  Agree the new savings and growth proposals as set out in Appendix B to the report;

(xi)  Agree that the current budget gap of £8.809m shall be funded from use of reserves for 2024/25 and to note that additional permanent savings proposals shall need to be identified;

(xii)  Approve the latest General Fund Medium Term Financial Strategy 2024/25 to 2026/27 as set out in section 4 and Appendix A to the report;

(xiii)  Note that the proposals maintain a General Fund balance of £12m in line with the Council’s approved Reserves Policy (July 2023);

(xiv)  Note the projected reserve balances at 31 March 2025 following the planned use of £8.809m to achieve a balanced budget, as set out in Section 19 of the report;

(xv)  Approve the Council’s provisional Capital Programme, including Investment and Acquisition Strategy (IAS) schemes, for 2024/25 to 2026/27 as detailed in section 8 and Appendix G to the report;

(xvi)  Agree to set a Capital Budget for 2024/25 at £209.462m, as detailed in Appendix G to the report;

(xvii)  Approve the Strategy for the Flexible Use of Capital Receipts 2024/25 at Appendix I to the report, in line with the regulatory requirements to facilitate the delivery of efficiency savings including capitalisation of redundancy costs; and

(xviii)  Note the Chief Financial Officer’s Statutory Finance Report (Section 25 Statement) as set out in Appendix H to the report and, in particular, their determination of “the robustness of the estimates made for the purposes of the calculations, and the adequacy of the proposed financial reserves”.