To receive any apologies for absence.

There were apologies from Councillors Dan Hurcomb and Nick Mason

To receive declarations of interests in respect of Table A, Table B or Other Interests from members of the committee in respect of items on the agenda.

None.

To approve and sign the minutes of the meeting held on 13 January 2025.

Minutes to follow. 

Resolved:       That the minutes of the meeting held on 13 January 2025 be approved as a correct record and signed by the Chairperson.

Clarification regarding Public Question 3 on 13 January 2025:

Since the meeting on 13 January 2025 cabinet are providing further clarification on the public record regarding Councillor Price’s response to Mrs Protherough’s supplementary question and confirm that:

‘These schemes are not comparable as they are at very different stages of their development.  The Hereford Western Bypass is at full business case development stage whereas a potential station at Pontrilas is only at Strategic Outline Business Case (SOBC) development, considering where a scheme is viable.  Regardless, a new station between Abergavenny and Hereford would be delivered by Network Rail and requires their agreement and funding as well as other third-party approvals; whereas the bypass is being delivered by the Council and within the Council’s powers as the Highway Authority’.

To receive questions from members of the public.

Questions received and responses given are attached as appendix 1 to the minutes.

To receive questions from councillors.

Questions received and responses given are attached as appendix 2 to the minutes.

To receive reports from the Council’s scrutiny committees on any recommendations to the Cabinet arising from recent scrutiny committee meetings.

One report from the Scrutiny Management Board:

(1)   2025-26 budget – recommendations from Scrutiny Management Board

The chairperson of the Scrutiny Management Board presented the recommendations on the 2025/26 budget.  Cabinet responded to the recommendations which had been published (Supplement 1).

The committee noted that recommendation one regarding revenue pressures within adult social care was accepted by cabinet.  Regarding recommendation two the committee noted that the capital programme for 2025/26 was significant, and concerns were expressed that the capital spend budgeted was unrealistic. It was noted cabinet had not accepted this recommendation.  Cabinet’s response to recommendation three regarding the estimate of interest was noted.  The committee noted the reprofiling of savings targets in children’s services indicated an improved grip and understanding of cost pressures in the service.  The committee agreed it was prudent for the medium-term financial strategy to be potentially reviewed in-year in light of the uncertainty from the government.  Regarding recommendations four and five the committee advised a draft Delivery Plan would have been beneficial to see the links between the revenue and capital budgets with the Council Plan. 

The cabinet thanked the committee for their work.  Councillor Stoddart confirmed that the S151 officer had provided a detailed written response.

It was unanimously agreed that the recommendations on the 2025-26 Budget, made by the Scrutiny Management at its meeting on 14 January 2025 had been addressed and responded to. 

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.

To recommend to Council for approval the revised capital investment budget and capital strategy for 2025/26 onwards.

The member for finance and corporate services introduced the report.  It was highlighted there had been two changes to the report since the draft was presented on 13 January 2025.  The first was at paragraph 15 which now stated that the council aims to start construction of the scheme to the south of the city within the period 2026/27.  The second was in appendix E and each outline business case now included a link to the four aspects of the Council Plan.  It was raised that inclusion in the capital programme was not approval to proceed and that each project would be subject to its own governance.  A full business case would be presented for approval where required and in full compliance with the council’s contract procedures and rules as applicable.  

It was highlighted that the public consultation showed strong support across the key areas of the proposed additions to the capital programme.   The additions were included in Appendix A alongside the outline strategic business cases in Appendix E.  The additions would; mitigate key revenue budget pressures; improve the use of technology to deliver efficiencies and innovation in services to residents; deliver new infrastructure to support growth opportunities for housing and businesses; encourage active lifestyles for children and young people; investment in play areas to develop cultural and creative spaces for residents and visitors; reduce the impact of flooding; improve road safety across the county and continued investment in the county’s road network.  

It was confirmed that Appendix A set out the proposed additions to the existing capital programme and the impact of approving those. It was confirmed that 18 capital investment budget proposals had been identified totalling £58.15m. It was highlighted that the capital strategy in Appendix D had been developed in accordance with the CIFA guidelines and was an accessible single source for the reader. 

It was noted that the capital investment proposals supported the County Plan and the Delivery Plan.  The overall aim of capital expenditure is to benefit the community to improve facilities and promote economic growth.

It was confirmed that a specific community impact assessment, which would include any health and safety implications, or corporate parenting responsibilities would be included in the decision report for any new capital scheme commencing an incurring spend.  Whilst the budget setting document would not detail specific environmental impact considerations, these would be considered in line with the council's environmental policy. 

Comments from cabinet members.  It was positively noted by the cabinet member for transport and infrastructure that the capital funding for the Road Safety scheme of £3m was included. The issue of visibility on the roads was also raised and it was commented whether this was due to too much traffic, brighter car lights or poor roads and this should be considered for future funding. 

Group leaders gave the views of their groups. There was support for the capital programme and the additions to the capital programme. 

Mixed comments were provided regarding the Southern Link Road, stating it was  ...  view the full minutes text for item 61.

To note and review the earmarked reserves held by the council. 

The member for finance and corporate services introduced the report.  It was confirmed that Appendix 1 contained the rationale for each earmarked reserve alongside the context regarding why it was maintained at a particular level. 

It was confirmed that a review of the reserves was undertaken annually by the S151 officer as part of the budget setting process.  The review confirmed that the reserve balances were commensurate with risk, that they were adequate and robust. 

It was highlighted that the council’s usable revenue reserves were split between the general reserve ‘the general fund’ and earmarked reserves that are held for specific purposes. The general fund reserves are maintained at a minimum level of between 3 and 5% of the net revenue budget.  As of 31 March 2024, the general reserve balance totalled £9.6m which was 4.5% of the council’s 2023/24 net revenue budget.  Appendix 1 also set out the categorisation of the council’s earmarked reserves for 2025/26. 

The reserve balance on 31 March 2024 totalled £73.2m.  This included £17.3m of grant funding carried forward to 2024/25 and represented grant funding that was received with no outstanding grant conditions attached but hadn’t been applied to relevant expenditure.  It was confirmed these amounts are treated as earmarked reserves which will be carried forward for application in future accounting periods.

Annex A, Appendix 1 showed the forecast earmarked reserve balances for 2024/25 and 2025/26 financial years.  At 31 March 2025 the forecast earmarked reserve balance will be £65.5m and £55.6m at 31 March 2026. It was noted that the Quarter 2 2024/25 budget report presented at cabinet in November 2024 reported a forecast overspend of £10.2m before management action, estimated at £8.2m, reducing the forecast overspend to £2m. It was confirmed that any overspend in 2024/25 would be funded using the council’s available reserves and a review of the reserve balances will be undertaken when finalising the out turn position for the year. 

The risk assessment for 2025/26 determined that a general fund balance of £9.6m (which was unchanged from 2024/25) should be maintained.  This is equivalent to 4.1% of the proposed operating budget of £231.5m for 2025/26. 

It was noted that cabinet approved the transfer of £11m from the business rates risk reserve to establish a budget resilient reserve or contingency reserve to mitigate against in year cost pressures and volatility in demand across social care budgets in 2024/25.  The remaining balance will be carried forward on 31 March 2025 in the budget resilience reserve to manage future emerging risks and in year budgetary pressures over the medium term.

It was confirmed that allocation of reserve funding in each financial year will require applications to the council's S151 officer and cabinet approval.  This will ensure the appropriate measures have been taken within each directorate.   Any unused balance will be considered as part of the annual review of earmarked reserves.

It was noted, that excluding schools’ balances, earmarked reserves were forecast to be £55.6m on 31 March 2025 and £45.7m on 31 March  ...  view the full minutes text for item 62.

To recommend to Council the 2025/26 local Council Tax Reduction (CTR) scheme. 

ChildrenCHTHE MEMBER the The member for finance and corporate services introduced the report.  It was confirmed that eligible households would receive the maximum level of discount for a further year.  This would be available to working age and pensioner claimants, the pensioner Council Tax Reduction (CTR) scheme is set nationally however the working age CTR is set locally by Herefordshire council.

It was confirmed that a 100% discount is awarded under CTR unless their income reaches the threshold irrespective of the council tax band that the property falls into. The consultation confirmed continuing support for this discount for those most in need.

It was highlighted that in addition to the CTR scheme the council also provides other discounts and these are listed on the council's website.

It was commented that maintaining the maximum discount in 2025/26 will have a positive impact on the community by minimising the debt burden on residents who struggle to pay their council tax charge.

Comments from cabinet members.  It was confirmed there was a discretionary hardship fund as well as the CTR and other grants that can be applied for. 

Group leaders gave the views of their groups. There was support for the continuation of the 100% Council Tax Reduction and it was raised that increased publication around the funds that are available would be beneficial.  It was raised there was no additional scheme that allowed greater discretion for officers to exercise their judgement, outside the set criteria for the CTR, to respond to individual cases. 

In response to queries it was confirmed there was the discretionary hardship fund as well as the Council Tax Reduction fund.  The Talk Community Hub team also highlight the other grants that are available to parish councils and other groups.  It was also noted that the council had raised the issue of rural deprivation to central government. 

Councillor Stoddart proposed the recommendations, and it was unanimously resolved that the following be recommended to Council

That:

a)    The Council Tax Reduction Scheme for 2025/26, with the same parameters as the existing scheme, be recommended to Council for approval