News-Councillors to agree budget for next four years

On Wednesday 12 February, our Cabinet will be asked to approve our final budget proposals for 2025/26 and the following three years.

Cabinet will hear that we continue to face significant financial challenges, with a budget gap of £45.536 million over the next four years, despite assumed increases in government funding and expected council tax increases across the same period.

Government funding

While we expect to receive £48.825 million in additional government funding and are able to raise a further £19.498 million through council tax and local business rates, we are facing additional unavoidable cost and budget pressures of £89.550 million which significantly exceed this extra revenue funding. We still have a funding shortfall of £21.227 million in 2025/26, which is based on a 4.99 per cent rise in council tax.

To respond to this shortfall, we have identified £18.036 million of further savings which would reduce the deficit for 2025/26 to £3.191 million - necessitating a use of our reserves to balance the budget next year.

Included in the additional government grant is an increase in the Social Care Grant of £11.979 million next year, which is being provided to help meet the increased costs of children and adult social care. However, Cabinet will be told this will cover only 35 per cent of the £34.486 million of unavoidable cost pressures we face for social care provision.

Cabinet will also hear that the government has outlined plans to reform the Local Government funding distribution system, to be implemented from 2026/27, which would see a greater proportion of funding going to local authorities with higher levels of deprivation and lower income-raising capacity. The government also committed to providing multi-year settlements from 2026/27. However, the extent to which these reforms will support our financial position remains uncertain, and we are carrying a budget deficit of £23.040 million into 2026/27.   

Challenging position

Cllr Richard Bell, deputy leader and Cabinet member for finance, said: "We are committed to strong financial governance and getting value for money and ensuring that we set a sustainable balanced budget.

"While we welcome additional government grant funding, our financial position remains very challenging. We face significant cost pressures in terms of the rising costs and demand pressures associated with social care, waste management and home to school transport and were very disappointed that the funding we will receive next year to offset the impact of the increases in Employers' National Insurance costs will cover only half of the increase in costs we will face as a result of these changes. 

"To balance the budget, we have identified savings which will reduce the shortfall we predicted in December. The vast majority of these savings proposals will not impact on frontline services, and we continue to ensure we deliver vital services.  However, the medium-term financial outlook remains very challenging, and we need to look at more transformative ways in which we deliver services."

Savings proposals

Included in the savings proposals presented to Cabinet is an increase in council tax of 4.99 per cent, which is made up of a 2.99 per cent council tax increase and a two per cent adult social care precept, in line with government expectations for local authorities to raise council tax to increase the funding available to meet rising cost pressures of delivering local services. 

The council tax increase proposed next year is expected to generate an additional £14.4 million in 2025/26, of which £5.8 million relates to adult social care.

Cabinet will hear there remains a significant revenue budget gap across the four-year planning period, of £45.536 million, which needs to be addressed, and planning of which has now started.

If approved by Cabinet next week, the agreed budget and Medium Term Financial

Plan will go to Full Council for approval on Wednesday 19 February.