URL: https://modgov.hillingdon.gov.uk/ieDecisionDetails.aspx?ID=3270

Decision Maker:

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: No

Purpose:

Content: RESOLVED:   That the Cabinet:   1)    Approve the draft General Fund and Housing Revenue Account budgets and Capital Programme proposals for 2025/26 (as detailed in Appendices A and B) and beyond as the basis for consultation with Select Committees and other stakeholders subject to incorporating changes set out on the addendum sheet; 2)    Approve the proposed amendments to fees and charges to take effect in 2025/26 included in Appendix C, as the basis for consultation with Select Committees and other stakeholders subject to incorporating changes set out on the addendum sheet; 3)    Request the comments of individual Select Committees on the draft budget proposals relating to their areas of responsibility; 4)    Note that the Provisional Local Government Finance Settlement is awaited from HM Government and the output from these will be factored into the final 2025/26 budget proposals to be considered by Cabinet in February 2025; 5)    Authorise the Corporate Director of Finance, in consultation with the Cabinet Member for Finance & Transformation, to respond on behalf of the Council to the consultation on the provisional Local Government Finance Settlement and to the Mayor of London’s budget consultation; 6)    Authorise the Chief Executive, in consultation with the Corporate Director of Finance and the Chief Operating Officer, the Leader of the Council and Cabinet Member for Finance and Transformation to develop specific savings proposals to meet (as a minimum) the savings currently identified as Target Operating Model savings; 7)    Note the significant risks associated with this budget strategy in relation to the forecast level of reserves as set out in this report; and 8)    Note the budget monitoring position and treasury management update as at October 2024 (Month 7), noting the actions proposed by officers as outlined in Section 3 of this report. 9)    Delegate authority to the Cabinet Member for Finance and Transformation (in consultation with the Corporate Director of Finance) to approve the purchase of grounds maintenance equipment to be funded from this year’s budgeted capital contingency. 10)Approve the revision to the Council’s leisure Fees & Charges for 2024/25 as set out in Appendix C on the addendum effective from 1 December 2024. 11)Approve the revision to the Council’s Filming Fees & Charges for 2024/25 as set out in Appendix D on the addendum effective from 1 January 2025.   Reasons for decision   The Cabinet Member for Finance and Transformation introduced a report on the Cabinet’s budget proposals for 2025/26 for consultation and provided an update on the latest budget monitoring position. The report addressed the financial budget for the upcoming financial year 2025/26 and outlined the medium-term financial strategy for a five-year period. This report was to be submitted for public consultation and to select committees for their comments, subject to Cabinet approval.   The Cabinet Member highlighted the challenges in formulating the budget due to several factors, including a 70% decrease in central government funding since 2011, population growth in Hillingdon exceeding the national average without corresponding funding increases, and static levels of business rates income. The Chancellor's autumn budget statement had added further pressure with announced increases in employers' National Insurance and the national minimum wage, which were expected to increase costs for outsourced contracts. Legacy inflation and sustained higher interest rates continued to depress economic confidence, leading to increased demand for frontline services, particularly in social care, housing, homelessness, and asylum seekers.   The Cabinet Member noted that the provisional local government finance settlement for 2025/26 had not yet been received, creating uncertainty regarding government grant funding, business rates, and the details of the autumn budget statement. It was reported that budget overspends among councils in England were expected to amount to £6.2 billion over the next two financial years, with many authorities seeking exceptional financial support from central government.   Regarding the budget monitoring position for month 7, the Cabinet Member advised that this had indicated a further overspend of £2 million, bringing the total overspend for the 2024/25 financial year to £8.9 million and a fuller analysis would be provided at a future Cabinet meeting.   For the next year's budget and the forecast for the following four years, the Cabinet Member explained that it was necessary to create a strategy to absorb cost pressures while rebuilding reserves. Two viable options were considered: increasing income or reducing expenditure. Given the stagnation of government grant and business rates income, the only material driver for income was Council Tax. However, any proposals for a substantial increase in Council tax were not proposed, because of the Council’s policy of low taxation. Instead, a fundamental remodelling of the Council's operating model was selected, aiming to deliver £25 million worth of savings across the term of the medium-term financial strategy (MTFS). The proposals, therefore, included a 2.99% increase in core Council Tax and a 2% increase in the social care precept for 2025/26, while maintaining one of the lowest levels of Council tax in London. Fees and charges were proposed to be increased by 5% to catch up on underlying delivery costs, keeping them modest compared to neighbouring authorities.   The Cabinet Member explained that the budget forecast was cautious regarding changes in government grant funding and business rates. Inflation was expected to add significantly to the Council’s cost base, with demand-led growth, primarily in waste, adult social care, homeless prevention, special education needs, transport, and looked-after children.   It was noted that the proposed savings programme, comprising outputs from zero-based budgeting and the reform of the target operating model, was expected to yield £65.2 million across the five-year term. Proposed capital expenditure programme amounted to £342 million across the five-year term. Regarding the housing revenue account, the Cabinet Member advised that rents were proposed to be increased by 2.7%. Furthermore, that proposed capital expenditure on the housing stock was set at £745 million across the five-year term.   The Cabinet Member moved an addendum with some minor changes to the report, along with updated fees and charges for consideration as part of the public consultation, along with in-year charges to be agreed by Cabinet that evening on film local services and leisure services.   For full transparency, the Leader of the Council emphasised that whilst fees and charges were generally proposed to be uplifted by 5%, parking fees and charges were proposed to be raised above that level, yet that despite that proposed increase, the parking charge per hour would remain lower than in neighbouring boroughs, keeping the rates competitive in London.   Cabinet considered the Council’s proposed budget for 2025/26, including Council Tax, housing rents, and fees and charges and agreed for the proposals to be issued for consultation, before returning in February for final consideration and determination by the Full Council. Cabinet agreed other matters in relation to the Council’s in-year budget.   Alternative options considered / risk management   The Cabinet could have decided to vary the proposals set out in the report.   Relevant Select Committee All Expiry date for any scrutiny call-in / date decision can be implemented (if no call-in) Cabinet’s decisions in relation to the proposed 2025/26 consultation budget CANNOT be called-in and are referred immediately for consultation purposes.   Other decisions can be called in by the relevant select committee by 5pm, Friday 20 December 2024. If not called-in, Cabinet’s decisions can then be implemented. Officer(s) to action Richard Ennis / Andy Goodwin Directorate Finance Classification Public - The report and any background papers relating to this decision by the Cabinet are available to view on the Council's website or by visiting the Civic Centre, Uxbridge.      

Date of Decision: December 12, 2024