Agenda item

The Deputy Leader / Portfolio Holder for Finance, Town Centres and Growth introduced the refreshed Medium Term Financial Strategy including the First Draft Savings Plans considered to balance the 2026/27 revenue budget as well as the proposed Capital Programme covering the three years ahead.

The Chair invited members to comment and take the opportunity to suggest alternate or additional savings.

Cllr Stubbs asked how the projected income figures, e.g. the £10,000 for pet cremations and £19,000 for food waste transfer had been calculated and what assumptions underpinned their sustainability over the financial year.

The Service Director for Finance (S151 Officer) advised that some extra equipment had been installed at the crematorium for pet cremations and that net income for the first year would be of £10,000 after all of the costs had been taken into account, which was expected to increase over the next few years.

With regards to the food waste transfer station, other local authorities had expressed an interest in taking advantage of the facilities to meet with new legal requirements and a price had been agreed. The £19,000 income was a half year assumption which would likely be doubled by the close of the year.

Cllr Stubbs wondered about what actual assumptions had been made to meet the funding level pertaining to staffing efficiencies and the savings coming from reduced pension contributions as well as how sensitive to market volatility that figure was.

The Service Director for Finance (S151 Officer) responded that pension contributions had been reduced from 22% to 19% per employee which was where the majority of the saving came from. A lump sum contribution was also made to the pension fund to address historic deficits in relation to people having retired earlier than anticipated. It was expected that this amount would be staying very similar over the next three years.

Cllr Stubbs asked what evidence supported the tax base growth forecasts and assumed increase of both the Council tax and business rates as well as what contingency were in place given the reliance on housing supply and business growth forecasting.

The Service Director for Finance (S151 Officer) said that the Council tax base was calculated on the actual number of homes at the current time and assumptions involving current planning applications. The collection fund amounts over the past few years had demonstrated that forecasts based on these criteria were very closely met every year. Likewise forecasts relating to business rates and business rates appeals, had led to a surplus on the collection fund, part of which may be required to meet a corresponding deficit in the current financial year.

Cllr Stubbs enquired about the certainty level of the extended producer responsibility additional funding of £274,000 which assumed a national policy as well as how the budget would adjust would the policy be delayed or altered.

The Service Director for Finance (S151 Officer) advised that a letter confirming a grants allocation of £1.2 million had just been received, which covered the £900,000 allocation assumed in the budget and some extra. The first payment was expected to come the week after the meeting.

Cllr Stubbs asked how sensitive the MTFS funding gap figure was to inflation, interest rates and pay award assumptions as well as what scenario had been put in place in the event it had to be amended.

The Service Director for Finance (S151 Officer) responded that all budgets were sensitive to inflation and that a 3% pay award assumption had been factored in for the year ahead, which was above most of what other Staffordshire authorities were accounting for. The budgets for premises costs, transport costs and contract costs were increased accordingly in line with the CPI (Consumer Price Index). Risk assessments were also carried out and the general fund reserve was there to cover any extra costs.

Cllr Stubbs wondered about risk analysis that had been conducted in terms of delays, shortfalls and anticipated capital receipts.

The Service Director for Finance (S151 Officer) advised that there wasn’t a great reliance on capital receipts, the majority of which were for the regeneration projects. Capital receipts were being monitored and any need for further reduction would be reflected to Cabinet.

Cllr Stubbs asked what alternative strategies were in place if the fair funding review resulted in a greater than expected cut.

The Service Director for Finance (S151 Officer) responded that it was unlikely. A lot of modelling had been done with one of the Council’s partners who had a lot of insight into government policy and decisions and considered different scenarios. The status of the actual settlement would be known on the week commencing the 15th of December and while it would probably be a bit more or a bit less than anticipated the figures should be relatively close.

Cllr Stubbs enquired about the target reserve level for financial resilience and how this compared to the CIPFA benchmarks.

The Service Director for Finance (S151 Officer) stated that the recommendation was to have about 5% of the Council’s net budgets covered by the General Fund Reserve. There was about £2,000,000 in the general fund which corresponded to about 10% and efforts were put in towards continuing to bolster those reserves as a precaution and in anticipation of the uncertainty related to the local government reorganisation.

Cllr Stubbs thanked the Service Director for Finance (S151 Officer) and the rest of the team for the responses provided and the budget put forward.

The Deputy Leader / Portfolio Holder for Finance, Town Centres and Growth shared his trust for the work undertaken by officers and for the caution with which figures had been put together.

The Chair expressed his satisfaction at having heard more about the assumptions that underpinned the document.

Cllr Whieldon praised the thoroughness and exemplarity of the report and of the efforts put in by both officers and Cabinet members.

The Chair advised that there would be an opportunity for further scrutiny of the budget to be conducted before submission to Full Council.

The Chair also commented on the consistency of the format of the report and caution demonstrated which suggested the finances were very well managed.

The Deputy Leader / Portfolio Holder for Finance, Town Centres and Growth showed confidence that it was indeed the case, adding that information expected around 15^th December would confirm the accuracy of estimates.

Resolved:     1. That the first draft savings proposals as set out in Appendix A and Appendix B to the Report be noted.

2. That the revised Medium Term Financial Strategy (MTFS) funding gap (Appendix C) be noted.

3. That the commencement date of the Budget Consultation period as mid-November to mid-December 2025 be noted.

4. That the Mid-Year Capital Estimates for 2025/26 be noted.

5. That the proposed setting of Council Tax at 1.99 per cent for 2026/2027 be noted.

Watch the debate here