Decision details

(Councillors Brazil, Leaver and Whitton attended in accordance with Standing Order 25(2) and spoke to this item).

The Cabinet considered the Report of the Director of Finance and Public Value (DFP/25/02), which presented the budget targets for 2025/2026, circulated prior to the meeting in accordance with regulation 7(4) of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012.

The Cabinet noted that the budget process continued to build on the Financial Sustainability Programme undertaken towards the preparation of the 2023/24 budget and the Working Well Together for a Sustainable and Stronger Council objectives and action areas as agreed by Cabinet in September 2023. The approach aimed to secure Best Value and ensure ongoing financial sustainability.

The proposed service budget targets for 2025/26 totalled £784.1 million, a net increase of £44 million or 5.9% compared to the 2024/25 adjusted base budget.

The preparation of the Budget for 2025/26 recognised that inflationary pressures continued to be felt across the economy, local government and partners. Social care was particularly impacted by increases to the national living wage and the increases to National Insurance. The Ministry of Housing, Communities and Local Government (MHCLG) was due to provide additional funding towards national insurance costs but details are yet to be confirmed. Within the Target Budgets for services it was proposed to allow for £14.2 million for inflationary pressures. The Target Budgets for services reflected an estimated inflationary pressure of £17.7 million due to National Living Wage impacts.

The proposed service revenue budget targets for the 2025/26 financial year were as follows:

Table 1 – Service Target Budgets 2025/26

The Report detailed the impacts of the new Government’s first Autumn Statement on 30 October 2024 and the Local Government Finance Policy Statement on 28 November 2024. Of particular importance to the Council’s financial planning, was the Government’s plans to repurpose existing funding, for the extra costs of delivering services in rural areas, to support a change in funding distribution based on deprivation as a proxy for need. This resulted in the discontinuation of the Rural Services Delivery Grant (RSDG) funding of £110 million, of which the Council currently received £10.124 million. This repurposing also affected funding of other public services in Devon, with £3.255 million lost across 7 district councils in Devon (not Exeter City) and £575,000 from Devon and Somerset Fire Authority in 2024/25.

Whilst there was a new Recovery Grant, the Council had been advised not to expect any of this additional funding to be allocated to Devon, and this had since been confirmed through the Provisional Settlement.

Details of the Provisional Local Government Finance Settlement 2025/26 were published on 18 December 2024, which provided a one year settlement only. The Final Settlement would follow in late January/early February.

For Devon, the core spending power was set to increase by 4.66% and the Government assumes the Authority would implement the full allowed increase in Council Tax up to the referendum threshold of 5%.

The tables in section 5 provided a breakdown of the funding included in Core Spending Power calculations and other grant income included in the settlement such as New Homes Bonus Grant, Social Care Grant, Children’s Social Care Prevention Grant and Adult Social Care Market Sustainability & Improvement Fund

As summarised in the tables in the Report, the Government’s calculations for the Provisional Settlement assumed an increase in Core Spending Power from £794 million in 2024/25 to £831 million in 2025/26 – an increase of 4.66% assuming the full increase in Council Tax was agreed locally.

The Core Spending Power increase at 4.66% meant that Devon had the lowest increase out of all 21 county councils in England.

The matter having been debated and the options and alternatives and other relevant factors (e.g. financial, sustainability and carbon impact, risk management, equality and legal considerations and alignment with the Council’s Strategic Plan) set out in the Director’s Report having been considered:

it was MOVED by Councillor Twiss, SECONDED by Councillor McInnes, and

RESOLVED

(a) that the revenue budget targets as set out in Table 1 to be incorporated in the Draft Budget for 2025/26 be approved;

(b) that the capital programme be determined by Cabinet on 14th February 2025; and

(c) that the information relating to the Local Government’s Finance Settlement for 2025/26 be noted.