Agenda item

The Report of the Director of Finance and Public Value (DFP/24/15) on the Council’s Budget and Service Budgets for 2024/25 will follow.

Cabinet is also asked to note the role of the Corporate Infrastructure and Regulatory Services Scrutiny Committee on 25^th January 2024 (Minute *151) in reviewing and endorsing the Report of the Director of Finance and Public Value (DFP/24/06) on the Treasury Management and Investment Strategy for 2024/25 and commending it to the Cabinet, alongside the recognition of the significant work of the Treasury Team.

The Cabinet will accordingly also consider:

(a) Budget 2024/25 Impact Assessment’ – previously circulated and available at Budget 2024-2025 - Impact Assessment (devon.gov.uk) / https://www.devon.gov.uk/impact/budget-2024-2025/, attached.

(b) Outcomes of the Budget Consultation Meetings with representatives of the Devon Business Community, the Voluntary Sector and Trade Unions (LDS/24/11), attached.

(c) Overview and Scrutiny Budget Recommendations (LDS/24/10), attached.

(d) Minute 118(e) of the Devon Education (Schools) Forum, held on 24 January 2024. The Cabinet is asked to note that the transfer of 0.25% (£1.3 million) between blocks for 2024-25, to support the Safety Valve plans to manage the high needs funding sustainably and meet the needs of children and young people earlier was approved.

RESOLVED

that Cabinet:

(i) has given full regard to the responsibilities placed upon the Authority in the exercise of its Public Sector Equality Duty under s149 of the Equality Act 2010 (as set out in the ‘Budget 2024/25 Impact Assessment’ circulated previously for the purposes of this meeting, and specific impact assessments undertaken as part of the budget’s preparation) in considering the proposals and their impact, before making a decision;

(ii) has given due regard to the views of the Authority's Scrutiny Committees, the Devon Education Forum, the Business Community, the Voluntary Sector, and the Trades Unions and other consultees on the budget (set out elsewhere on the agenda);

(iii) that the Provisional Finance Settlement Funding of £111.1 million be noted, and that the Final Finance Settlement is anticipated to be confirmed on 7 February 2024;

(iv) that the Revenue Budgets, (pages 44 to 92), be approved;

(v) recommends to the Authority the Net budget of £637.5 million as set out in Key Table 1 on page 13, and gives delegated authority to the Director of Finance and Public Value to reflect any changes to the Net Budget resulting from the Final Settlement, in consultation with the Leader and Lead Member for Finance;

(vi) recommends to the Authority that the Council Tax requirement be set at £523,974,264.98 as set out in Key Table 2 page 14, and that the Council approves a tax rate increase of 4.99% comprising 2.99% increase for the general rate and 2% increase for the Adult Social Care Precept, as set out in Key Table 2 (page 14).

(vii) recommends to the Authority the precepts required from each District Council and the levels of county Council Tax for each of the eight property valuation bands consequent upon the budget as amended by adjustments in collection in the current year, as set out in Key Table 2 (page 14);

(viii) notes there are no new Fees & Charges proposed for 2024/25;

(ix) notes that in line with the Authority's Financial Regulations, changes to existing fees and charges will be agreed by the appropriate Cabinet Member and Chief Finance Officer via a Delegated Decision;

(x) notes the Medium Term Financial Plan 2024/25 – 2027/28 as summarised in Key Table 4 (page 16) and set out in detail on pages 96 to 123;

(xi) takes account of the risks outlined on pages 166 to 189 in determining the final service budgets, levels of reserves and Council Tax figure to be recommended to the Authority;

(xii) notes the County Fund Balance and Earmarked Reserves 2024/25, as set out on pages 124 to 130;

(xiii) recommends to the Authority the Capital Programme Overview 2024/25 - 2028/29, set out on pages 25 to 42;

(xix) recommends to the Authority the Capital Programme for 2024/25 of £155.2 million and how it is financed as shown in Summary Table D on page 34;

(xv) approves, for planning purposes, the indicative Capital Programmes for, 2025/26, 2026/27, 2028/29 and 2029/30 shown in summary Table D on page 34 and agrees these levels will be reviewed in the light of the overall level of revenue and capital resources available to the Authority for each year.

(xvi) recommends to the Authority that it adopts the Treasury Management Strategy 2024/25 - 2027/28, as set out on pages 131 to 153;

(xvii) recommends to the Authority the Prudential Indicators for 2024/25 to 2028/29, contained on pages 135 to 140;

(xviii) gives delegated authority to the Director of Finance and Public Value to effect movements between the separately agreed limits for borrowing and other long term liabilities;

(xix) recommends to the Authority the Capital Strategy 2024/25 – 2028/29 contained on pages 154-164, as amended by the Addendum for the Flexible Use of Capital Receipts Strategy; and

(xx) recommends the Authority gives delegated authority to the Director of Finance and Public Value to agree in principle to the application of Flexible Use of Capital Receipts, if required, in concluding a SEND Safety Valve agreement with Government, with specific details to be subsequently presented to Council to update the Flexible Use of Capital Receipts Strategy as required by statutory guidance.

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

The Cabinet considered and had regard to:

· a 2024/25 Budget Impact Assessment, which had been circulated to all Members of the Council prior to the meeting and was available at https://www.devon.gov.uk/impact/budget-2024-2025 undertaken as part of the budget’s preparation;

· the Report of the Director of Legal and Democratic Services (LDS/24/11) summarising the outcomes of, and comments/observations made at consultation meetings with representatives of Devon’s Business Community, Trades Unions and Representatives of the Voluntary Sector;

· the discussions of the Council’s Scrutiny Committees (LDS/24/10) held on 18th January 2024, 24th January 2024 and 25th January 2024, the recommendations being summarised and attached to the agenda;

· The Cabinet also noted Minute 118(e) of the Devon Education (Schools) Forum, held on 24 January 2024, that the transfer of 0.25% (£1.3 million) between blocks for 2024-25, to support the Safety Valve plans to manage the high needs funding sustainably and meet the needs of children and young people earlier had been approved by the Forum; and

· the Report of the Director of Finance and Public Value (DFP/24/15) on the Revenue Budget for 2024/25, Medium Term Financial Plan to 2027/28 and Capital Strategy 2024/25 to 2028/29. This included a statement on the robustness of the budget estimates, an assessment of the adequacy of reserves, the affordability of the Capital Strategy, the Treasury Management Strategy 2024/25, a range of prudential indicators concerning the financial implications of the capital programme and an assessment that identified risks associated with the budget strategy, together with how the risks would be managed.

The Cabinet noted that the budget book contained details of the County Council’s revenue and capital budgets together with associated financial and operational information. The Leadership commentary highlighted this was a time of significant challenge for local government as a whole and preparing for the financial year 2024/25 had meant a continuation of plans to make savings by getting best value from all contracts, maximising income, reducing the number of employees, and selling Council owned property.

The overriding focus was to meet the needs of the young, old and most vulnerable across Devon, working closely with NHS partners to support and develop the local health and care system. Work would also continue with Team Devon to help support the local economy, improve job prospects and housing opportunities for local people, respond to climate change, champion opportunities for young people, and address the impacts of the rising cost of living for those hardest hit.

The detail of the budget book included:

• Strategic Leadership Team Introduction

• Revenue Budget Overview;

• Statement on the Robustness of the Budget Estimates, the Adequacy of Reserves and Affordability of the Capital Strategy;

• Capital Programme Overview 2024/25 - 2028/29;

• Service Budgets;

• Fees & Charges;

• Medium Term Financial Strategy 2024/25 - 2027/28;

• County Fund Balance and Earmarked Reserves;

• Treasury Management Strategy 2024/25 - 2027/28 and Prudential Indicators 2024/25 - 2028/29;

• Capital Strategy 2024/25 - 2028/29;

• Risk Analysis of Volatile Budgets; and

• Abbreviations.

The Director also highlighted an amendment to Key Table 1 (Council Tax Requirement) in the Budget Book, following its publication arising from workforce inflation and savings contingency. The final budget book would be amended prior to publication for the Council meeting.

The Cabinet then noted the role of the Corporate Infrastructure and Regulatory Services Scrutiny Committee on 25th January 2024 (Minute *151) in reviewing and endorsing the Report of the Director of Finance and Public Value (DFP/24/06) on the Treasury Management and Investment Strategy for 2024/25. The Treasury Management and Investment Strategy had been prepared in accordance with the revised Treasury Management Policy Statement. The Treasury Management and Investment Strategy set out the minimum revenue provision (MRP) policy, capital expenditure funding, prudential indicators, the current treasury position, debt and investments; prospects for interest rates; the borrowing strategy; and the investment strategy.

The Corporate Infrastructure and Regulatory Services Scrutiny Committee had endorsed and commended the Treasury Management and Investment Strategy 2024/25 to the Cabinet, also recognising the significant work of the Treasury Team.

By way of an introduction, the Autumn Statement of 22 November 2023 and the Provisional Local Government Finance Settlement that followed on 18 December 2023 indicated an increase in overall funding and confirmed the council tax referendum principles for 2024/25. The Core Spending Power, that included general grants and the Government assumption that full council tax increases would be applied, provides for an average 6.5% increase in funding in 2024/25. Whilst the favourable Settlement was welcomed, it was not enough to set a balanced budget for 2024/25 without making significant budget savings and generating additional income. Building on the Financial Sustainability Programme, a further focus on costs and income was embedded in the Stronger and Sustainable Council Strategy and savings and new income of £49.6 million were reflected within service budgets to ensure services remained affordable.

The Local Government Finance Settlement for 2024/25 represented the final year of the Government’s current 3-year Spending Review, despite local authorities having only received a one-year settlement each year for 2022/23, 2023/24, and 2024/25. Whilst the Provisional Local Government Finance Settlement for 2024/25 was issued on the 18th December 2023, the Secretary of State issued a further Written Statement on 24 January 2024 indicating that a further £600 million of funding will be provided for local government, with details provided in the Final Settlement.

Key information provided in the Settlement included (outlined in full on pages 6 onwards):

a) Core Spending Power

b) Council Tax (County Councils could increase Council Tax up to the referendum limit at 2.99% and social care authorities could increase this by a further 2% specifically to fund adult social care costs, therefore 4.99% overall without a referendum being required)

c) Revenue Support Grant

d) Business Rates

e) New Homes Bonus

f) Rural Services Delivery Grant

g) Services Grant

h) Social Care Grant

i) Improved Better Care Fund

j) Adult Social Care Market Sustainability and Improvement Fund

k) Adult Social Care Discharge Fund

A breakdown of the key funding streams published within the Provisional Settlement were set out in the tables on page 9, setting out the Authority’s Core Funding of £111.1 million and showing the government grants that had been announced so far.

Scrutiny Committees had met during January to review the draft budget proposals, with Members recognising the scale of challenges faced and risks associated with budget assumptions, delivery of service redesign and achievement of budgeted savings.

The additional funding announced on 24 January 2024, provided the opportunity to further manage the risks and provide additional funding to invest in service delivery and improvement, for example, drainage, homelessness, redesign and contingency for the risks around the delivery of savings plans.

Directorate Budget Targets had been set by Cabinet on 10th January 2024, totalling £743.4 million, a net increase of £43.8 million or 6.3% compared to the 2023/24 adjusted budget. Details of the directorate budgets analysed by service was set out on pages 43 to 92. The targets set for each service area had been subject to different pressures and influences and the table on page 11 showed the 2024/25 Budget Targets by service area.

In addition to general Core Funding, the Authority received specific grants, detailed in Key Table 5 on pages 15 and 16, the most significant grant being the Dedicated Schools Grant which must be spent on schools and related expenditure. This Grant had increased by £38 million to £714 million.

Key Table 1 on page 11 showed the estimated level of total spending on services and other items such as capital financing, interest income, costs met centrally and funded from specific reserves, and contingencies and provisions for additional costs not included in service budgets. Capital Financing Charges were dependent on the Authority's Capital Programme explained in pages 25 to 42. Factors that influenced the income gained from investing cash balances were set out on pages 131 to 153 that explained the Authority's Treasury Management Strategy.

District Councils had reported their final tax base for 2024/25 and estimated surpluses on collection up to March 2024. Key Table 2 sets out the Council Tax Requirement, Tax Base, Council Tax by band and individual District Precepts. These assumed a 4.99% increase to Council Tax (yet to be determined).

Pages 124 to 130 explained the authority's strategy for its reserves and balances, and it was recommended that general balances were maintained at or above £15.8 million. Key Table 3 summarised the authority's Reserves and Balances and included planned use of reserves to meet costs for which the reserves were intended in 2024/25.

Key Table 7 provided a summary of the latest staffing estimates, which showed budgeted full-time equivalent staffing (excluding schools) reducing to just over 5,200 from 5,300.

The Authority's approach to the Medium Term Financial Plan (MTFP) was detailed on pages 95 to 123 and Key table 4 was the financial representation of the current MTFP for 2024/25.

The Capital Strategy was outlined at pages 154 to 164 in the Budget report, however, an addendum to this had been published to the website and circulated to Members regarding the flexible use of capital receipts. Government had introduced the scheme on 1 April 2016, with statutory guidance, which had been most recently updated in August 2022. It was noted that whilst the priority for capital receipts was to support SEND Safety Valve financing options, it could be advantageous for the Council to apply this flexibility with certain transformation costs, subject to the necessary approvals.

The Leader and Cabinet Members joined with other Members speaking under Standing Orders and paid tribute to the exceptional hard work of the Finance Team in putting together a budget, with added complexity in these challenging times.

In conclusion, it was a clear priority of both political and officer leadership that the Council must "live within its means" and in doing so include affordable expenditure plans that strike an appropriate balance of service delivery, risk management and financial sustainability.

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 Hart, and