Agenda item

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

The Strategic Director for Corporate Resources presented his report on the General Fund HRA Estimates 2025/26 making the following points:

·         this report had been based on provisional figures but the final announcement had been received on 3 February therefore could be confirmed;

·         the General Fund’s Core Spending Power which Government used to assess levels of Revenue Support Grant, other grants, baseline Business Rates and Council Tax - provisional figures were the same as last year;

·         National Insurance compensation was expected at £138,000, but the final figure was £184,000.  However, costs were £750,000 higher for the coming year;

·         core spending power assumed that council tax was raised by 2.99% being the maximum the Council can increase by; and

·         there was a new manufacturers tax on packaging which in the first year Government would guarantee bringing £1.4million to the Council which would address the NI increase.

The Strategic Director responded to questions from Members in the following terms:

• the predicted shortfall as a result of NI was offset by EPR;
• the HRA element was additional but had a neutral impact on the general fund;
• the General Fund had a £2.4 million reduction instead of £3.5 million due to retaining the business rates pool, assumed at £900,000 income;
• £1.4million from new packaging tax was an estimate based on waste collection and disposal rates;
• Government would calculate and collect the new packaging tax and distribute in arrears in October and again six months later; and
• calculations would be built into the budget in future based on knowledge as with other fees and charges.

The Strategic Director continued to present his report making the following points:

• the pay bill stood at £30million;
• insurance had risen;
• it was intended to keep general inflation to zero with contracts to RPI or RPI+;
• utilities inflation was zero representing the best estimate of the Council’s broker;
• short-term borrowing was sometimes required therefore assumptions were made taking this into account;
• the New Homes Bonus was included in core spending power; and
• the Revised MTFP reflected the reset which had been due in 2018 and it was hoped that there would be transitional arrangements in place.

The Strategic Director responded to questions from Members in the following terms:

• it was understood that Government would undertake a comprehensive spending review in autumn this year;
• there was a national financial challenge within local government;
• a Member Briefing had been given detailing options to achieve a balanced budget with some being straightforward and others more challenging;
• the consultation results had been received;
• there was a requirement to consult and to consider the results but that a balanced budget must be delivered;
• the best forum for consideration of the budget consultation would be at the budget full council;
• a percentage decrease across services was not requested as it had been following service reviews in 2022, rather what could be safely be reduced was presented;
• the budget consultation had taken place later in the year due to the restructure and to allow the Residents consultation to take place;
• in future the budget consultation could be undertaken early in the year; and
• individual proposals may need consultation before implementation.

The Strategic Director continued to present his report making the following points:

• strains on HRA were not unique to Exeter but the Council was limited by Government policy and statute;
• there were challenges in the repairs and maintenance budget some of which was due to staff looking to address all jobs when on site to ensure least number of visits which was challenging in the short term but would pay off in the long term; and
• The Appendix showed the reduction in the capital programme reflecting reality.

The Strategic Director responded to questions from Members in the following terms:

• the Council worked closely with Homes England;
• high interest rates made new developments difficult given the need to ensure that rent covered borrowing costs;
• the Council Models viability on social and affordable rent, neither are viable at the moment but grants were attracted and market rents had been the idea behind ECL which proved impossible; and
• a group of local authorities, including ECC, had issued a report on the extreme challenges and presented it to Government.

The Strategic Director continued to present his report making the following points:

• the Section 25 statement seen at section 8.18 of the report was based on a risk approach;
• the ‘xxxx’ on page 18 were due to Devon County Council and the other preceptors not having met to agree their budgets which would be done by 20 February; and
• The Police and Crime Panel had met and agreed precept increase of £13.70 being just under their limit of £14.

The Strategic Director responded to questions from Members in the following terms:

• business rates were based on the ability to generate growth;
• the grant had reduced significantly but more could be generated from business rates;
• Council tax was expected to rise year on year; and
• Exeter had one of the lowest council taxes in the country therefore did not benefit as much as other areas from a percentage increase.