Agenda item

The Select Committee were provided with an update on the financial position at 30 September for the current year (2024/25) and outline plans for the 2025/26 Budget and the Medium Term Financial Plan (MTFP).

There were financial challenges facing Councils across the country, and particular challenges faced locally within Stockton-on-Tees. Significant work was underway to address the financial pressures faced by the Council through the Powering our Futures Programme alongside additional mitigating actions. Progress from the transformation reviews and the first phase of savings had been presented to Cabinet in November.

The cost pressures and demand for Council services continued to grow resulting in an updated projected overspend of £6.6m for the financial year 2024/25. If this materialised, it would need to be funded from earmarked reserves or any one-off funding. 

The report also included an update on the projected Medium Term Financial Plan. This incorporated some of the expenditure pressures as well as early announcements from the Budget on 30 October 2024. There was still significant uncertainty around funding with more detail on the funding announcements expected to follow in the Local Government Provisional Settlement expected week commencing 16 December. This would, however, be a one-year settlement and therefore the information in respect of future years was indicative and subject to a fundamental review by the Government of Local Government Funding.

The report identified a potential further pressures across the MTFP and highlighted potential options for addressing this. This would be considered in the budget report in February.

Key issues highlighted and discussed were as follows:-

·         Savings had been approved through the Powering our Futures programme to address the estimated budget gap across the MTFP. Further savings were expected; however, the implementation dates might mean there was a shortfall in 2025/26. If this materialised, this would have to be funded

·         With regard to the £90 million funding available to support capital investment in children’s homes, it was anticipated that that this would be allocated to individual Councils following a bidding process, however, confirmation of the approach was yet to be announced

·         The Extended Producer Responsibility Scheme would allocate funding directly to Local Authorities as they had responsibility for dealing with waste plastic and cardboard. The Council’s estimated allocation was £3.5m however this had not been confirmed. The scheme was guaranteed for one year with more information expected about how the scheme would operate in the future

·         Ongoing costs of funding Community Safety Officers were £250,000 per year

·         Clarification was sought as to whether the £3.25m for Thornaby Cycleways was additional funding or part of the pot of money already secured through City Region Sustainable Transport

·         Clarification was sought as to whether there was continued allocation of funding in the Capital Programme for the Norton to Stockton Cycle Scheme

·         Whilst every effort was made to predict demand for services, demand for Adult Social Care Services had continued to increase with a higher number of young people having transitioned from Children’s Services in Adult Services over recent months. This was due to some children coming into the care system just before transition and changes to care packages. More work in this area would be carried out as part of the Transformation Programme

·         The Council was expecting to be fully compensated for the increase in National Insurance contributions and was awaiting confirmation of this in the budget announcement. The impact of the National Insurance increase on commissioned services was a greater concern as it was unclear whether any funding would be available for this. This included services such as Tees Active Leisure

·         Local Authorities would continue to receive grant funding to fully compensate for the loss of income from the relief on business rates for retail, hospitality and leisure

·         It would be impossible to predict the impact of businesses folding on business rates

·         Increases in grounds maintenance costs were due to fixed contract prices coming to an end and higher inflation causing increases in prices

·         Further details were requested on the movements in the projected position for Corporate Services

AGREED

(1)  that the financial position for 2024/25, the revised Capital Programme and the emerging issues for the MTFP be noted.

(2)  That the information requested above be circulated to the Committee.

(3)  That details of the Local Government Provisional Settlement and its impact on Council finances be shared with the Committee as soon as possible.