Agenda item

To consider the report of the Strategic Director for Corporate Resources.

Agreed:

RECOMMENDED that Council note the contents of the report and approve the report proposals to establish a balanced Revenue Budget and Capital Programme.

Reason for Decision: As set out in the report.

The Executive received the report on the strategic overview of the budgetary position for the 2025/26 financial year and beyond, which included the likely level of available resources, the known demand for resources and proposals to ensure that a balanced budget could be achieved. It was noted that the Council was required to set a balanced budget and Council Tax prior to the start of the financial year.

Particular reference was made to:-

·         a local government finance policy was published in November 2024 which guaranteed all Council’s would receive, as a minimum, the same financial settlement as the previous year. There was a challenge for Exeter, having received the same financial settlement in terms of core spending power as the previous year;

·         core spending measured by central government had assumed that Councils would increase their Council Tax to the maximum available level;

·         the New Homes Bonus had been made available for another year, of which the Council received £872,000 but would be offset by the reduction of other grants;

·         National Insurance increases announced in the Government budget advised that all public sector bodies would be adequately compensated;

·         there would be National Insurance increases to the General Fund of £669,000 and £91,000 for the HRA;

·         grant figures would not be announced until the final settlement was released at the end of January, however indications from the Government calculation formula suggested Exeter would receive only £138,000 to compensate for these increases;

·         the opportunity to form a business rates pool with other Devon authorities had been extended for a further year, enabling around £10 million to be retained, rather than returned to central government;

·         the Council Tax Referendum threshold principles had been set at less than 3% or £5, (whichever was greater). Exeter could increase council tax by 2.99% without having to hold a referendum;

·         at the start of the financial year, the overall financial position required a £3.5 million saving to balance the budget, and a range of proposals had been provided to help Members in delivering a balanced budget in February;

·         the Government had introduced a new Extended Producer Responsibility Tax on manufacturer packaging and recycling costs, which would guarantee £1.410 million for one year only; and

·         the government were committed to a business rate reset next year, which could result in potential £3-4 million loss of income to the Council which had been built into the Medium-Term Financial Plan.

The Leader advised Members that a briefing on the budget was being held for all Members on 15 January 2025, which would provide detailed information on the forthcoming budget.

During the discussion, the following points and questions were made:

·         how would the Extended Producer Responsibility tax be collected?

·         could more information on the rates pool be provided?

·         the provisional settlement had benefits, but it underlined the current issues faced by local authorities;

·         council tax in Exeter remained one of the lowest in the country, which was beneficial to households but reduced the Councils spending power;

·         what was the impact of future business rate changes?

·         could further detail on the one-year settlement and the received £0.271 million recovery grant be provided?

·         would the guaranteed £1.410 million for the Extended Producer Responsibility tax offset the shortfall in the national insurance?

Opposition group leaders raised the following points and questions:-

·         enquired into the new Comms officer post outlined in Appendix 1 of the report;

·         what other principles would the Executive be looking to adopt in using the Extended Producer Responsibility tax and what community consultation will be undertaken?

The Leader advised that the Council would work with the information it has been provided with and would focus on ensuring a balanced budget.

In response to questions raised, the Strategic Director for Corporate Resources advised that:-

·         a central organisation would manage the Extended Producer Responsibility tax and it would be paid to the Council;

·         £1.410 million was guaranteed from the Extended Producer Responsibility tax, as a minimum that would be received, but had a potential to generate more;

·         the business rate retention scheme had a baseline figure based on the 2010 business rate valuation, which meant 40% stayed with District Councils, 9% to County Councils, 1% for fire services and 50% went back to central government;

·         the business rates pool allowed 50% of growth to stay within the Devon area rather than paid back to central government, equating to around £10 million across all the authorities. If the business rate reset came into effect, there would be no growth to share and the Pool would be redundant; and

·         the pool also had a risk factor in that if one Council went below its baseline, all the others in the pool would be required to bail them out.

The Leader moved the recommendations, which were seconded by Councillor Wright, voted upon, and CARRIED unanimously.

RECOMMENDED that Council note the contents of the report and approve the report proposals to establish a balanced Revenue Budget and Capital Programme.