To present the draft 2025/26 revenue budget, Medium Term Financial Strategy and the Treasury Management Strategy. 

The Council has a statutory responsibility to set a Budget and Council Tax in advance of the new financial year.  The 2025/26 Revenue Budget and Medium Term Financial Strategy 2025/26 to 2028/29 will be recommended to Council in February 2025

The member for finance and corporate services introduced the report.  It was confirmed that despite the challenges and reduction in grant funding the council had achieved a balanced budget for 2025/26. 

It was noted that in 2024/25 the council received £6.9m in Rural Services Delivery Grant funding and £0.2m in Services Grant, totalling £7.1m. The November 2024 policy statement confirmed the introduction of £1.53 billion in new grant funding for local government across 3 priority grants; recovery fund of £600m; a social care grant of £680m and children services prevention grant of £250m.  It was noted that these grants would be funded, in part, by the abolition of the Rural Services Delivery Grant of £110m and the Services Grant of £87m.  It was noted that the Rural Services Delivery Grant recognised the increased financial pressures in delivering services in a rural county.  

It was highlighted that the council is committed to ensuring that funding appropriately reflects rural needs and the additional cost pressures of service delivery and demand in rural areas.  It was confirmed that responses on the provisional settlement and local authority funding reform had been made and the council will also actively engage in the fair funding review in March 2025. 

The provisional settlement announced by Central Government on the 19th of December 2024 confirmed that Hereford would receive zero funds under the new recovery grants and a total of £369k under the new children's social care prevention grant.  This resulted in a net loss of £6.766m against the previous year.  It was highlighted that rural authorities only received £22.8m (3.8% of the available from the recovery grant) and there was a significant gap in the position of rural counties compared with urban authorities.  It was also noted that there was a £2.5m reduction in Central Government grant funding since 2024/25.  The reduction in Central Government grants results in less funding per head than urban areas despite the increased cost of service delivery to rural communities.

It was confirmed that the provisional revenue budget for 25/26 totalled £232m and the revenue budget proposal for 2025/26 was highlighted at Appendix C. It was noted that the Medium-Term Financial Strategy (MTFS) had a 3.99% increase in council tax planned.  However, due to the impact of central government’s reduction in the council’s preliminary settlement the council have had to accept a 4.99% increase in council tax was needed.  

It was highlighted that in February 2024 the council unanimously approved the implementation of council tax premiums for empty properties and second homes in line with regulation and guidance issued by the Secretary of State. The total council tax income of £146.5m in the 2025/26 draft revenue budget includes estimated income of £3.1m in premiums which apply to second homes and empty properties.

It was noted that the 2025/26 revenue budget included additional business rate income retained from the Hereford Enterprise Zone of £1.3m.  It was confirmed that any additional rate income retained above the budgeted income of £1.3m will be transferred to  ...  view the full minutes text for item 52