To recommend to Council the proposed 2025/26 revenue budget, Medium Term Financial Strategy and the Treasury Management Strategy.

Appendix C is to follow 

The member for finance and corporate services introduced the report.  The cabinet member highlighted that since the draft budget report presented on 13 January 2025, the budget consultation took place.  However, engagement with the budget consultation was low.  It was highlighted that respondents who did participate confirmed support for key areas of the proposed additions to the capital programme.

It was confirmed that the provisional settlement announced by central government on 18^th of December 2024 confirmed the abolition of the Rural Services Delivery Grant, it confirmed that Herefordshire would receive zero funds under the New Recovery Grants and only £369k under the new Children's Social Care Prevention Grants.  This provided a net loss of £6.766m against the previous year’s income. It was noted that despite lobbying the Ministry of Housing Communities, local government had not provided any additional funding to rural counties including Herefordshire. However, final confirmation of final allocations in the final settlement was awaited later this month.

It was noted that the council expected to receive £29.2m from central government grant funding, representing a reduction of £3m from the previous year.

It was highlighted that despite challenges the council had achieved a balanced budget for financial year 2025/26.  The revenue budget for 25/26 totalled £231.5m.  It was noted that the draft budget totalled £232m and the movement was due to the additional homelessness and rough sleeping grant being presented within the community well-being budget, where the corresponding expenditure was included.

It was confirmed that there will be an increase to 4.99% in council tax for 2025/26 due to the impact of central governments reduction in funding.

Regarding each directorate it was highlighted that Community Well-Being base budget increased to £90.677m. Children and Young People’s base budget reduced to £59.063m due to the continuous savings in that directorate.  Economy and Environment base budget increased to £42.415m. Corporate services base budget increased to £22.852m and Central Services base budget reduced to £16.5m.

The proposed revenue budget of £231.508m would be funded by council tax at £146.451m, business rates at £47.567m, social care support grant at £20.336m, extended producer responsibility grant at £3.538m and the other smaller grants would make up the remaining £13.9m. 

It was confirmed that each directorate faced several unfunded pressures totalling £27.6m which had been factored into their base budgets for 2025/26.  Notably, the pay award, National Insurance, inflation and demand pressures for services.  It was highlighted that the final settlement from government was awaited and the budget assumed changes to employers’ national insurance of £1.5m would be funded by central government. 

It was confirmed that if the final settlement included funding above the revenue budget it would firstly be used to make additional provision to support development of the Local Plan and secondly, and secondly to make a transfer to the financial resilience reserve to mitigate the potential unfavourable outcome of the fair funding review which is planned in 2025. It was confirmed that this will be added as a further recommendation to the report.  ...  view the full minutes text for item 60