Agenda item

As detailed in the recommendations.

Councillor Paul Johnson introduced the report which set out in detail the forecast cost pressures for 2025/26. 

            As part of budget setting for 2024/25 an initial additional budget requirement of

£28.251m was projected for 2025/26 which was based on broad assumptions for pay, social care commissioning and other known pressures at that time.  The forecast for the 2025/26 financial year had been updated to take into account the latest national position on public sector pay, the estimated impact of changes

to service demand and the ongoing impacts of inflation.  The revised forecast showed that, at this early stage, the Council was likely to have an additional budget requirement of £37.778m for 2025/26.

Appendix A of the report provided the detail of all the cost pressures for 2025/26 as well as early indications of pressures for 2026/27 and 2027/28.

Two budget briefings were held on 9 July to enable members tohave a better understanding of the financial position and a further briefing would bescheduled for September as an opportunity to contribute to a developing budgetstrategy.

            Councillor Johnson also advised that there was no feedback from the Corporate Resources Overview & Scrutiny Committee, which considered the report on the 19^th July, 2024.

            The Corporate Finance Manager outlined the summary of cost pressures for 2025/26, drawing attention to the National Funding Requirements (Pay Awards) and portfolio cost pressures for Social Care and Housing & Communities.  No estimated impact from the current pay offer was included in the forecast at this stage and would be refined once the final outcome was known, either positive or negative.  As inflation levels were now much more stable the assumptions for the 2025/26 pay award had been reduced to 4% from the 5% previously included in the forecast.  There continued to be a significant growth in numbers presenting as homeless and needing to be accommodated within temporary accommodation.  Due to the continued increase in demand, there was a projected overspend of £2.9m for 2024/25 and a potential additional budget requirement for 2025/26 of around £7.5m and this has been included in the forecast.   

To date Welsh Government had provided no indicative figures for the main budget stream - Aggregate External Finance (AEF) for 2025/26.  However, independent analysis of the Welsh Government budget advised that only a marginal uplift at best could be expected. Therefore, at this stage it was considered prudent to plan for a cash flat settlement. By way of context each 1% uplift to the AEF would

generate £2.585m of funding for the Council’s budget.

            Councillor Dave Healey commented on the pay awards that were nationally negotiated with no reference to the ability of Local Governments’ ability to fund them.  He hoped funding would be forthcoming to meet future requirements.

            Councillor Bithell spoke of the financial challenges which had impacted the Council for a number of years, with no indication of change in the future.  He supported the Cabinet Members’ comments on the new for a review of the Barnett Formula and hoped that this could be pursued with the new National Government.  He requested that all Members consider the financial position of the Council when pursuing policies, which may be desirable, but could not be financed.

RESOLVED:

(a)          That Cabinet receives the update on the additional budget requirement for the 2025/26 financial year; and

(b)          That Cabinet agrees the process and timeline for budget setting for 2025/26, as detailed in the report.