Agenda item

Section 106 of the Local Government Finance Act 1992 places a duty to declare an interest on any councillor who is two or more months in arrears with their Council Tax payments if they attend any meeting involved in setting the Council tax rate for the local authority. They must abstain from any vote involved in the setting of the Council tax rate until they are no longer in arrears.

A joint report of the Mayor, Executive Member for Finance and Director of Finance and Transformation (S151 Officer) was presented to seek Council approval of the proposed budget for 2025/26 and the Medium-Term Financial Plan (MTFP) to 2028/29, following on from the report presented to Executive on 5 February 2025.

 

The Mayor presented the report and thanked all Officers and Councillors for their involvement in crafting the budget.

 

The annual budget report and MTFP was a detailed and complex report which formed the basis of the Budget and Policy Framework.  Information presented in the main report highlighted the key issues for consideration and provided substantial detail in the supporting appendices.

 

The report incorporated the following sections following the conclusion of the recent budget consultation and the Final Local Government Finance Settlement (LGFS) for 2025/26 published on 3 February 2025:

 

•           Report of the Director of Finance (s151 Officer’s) in relation to the robustness of budget estimates and the adequacy of financial reserves under s25 of the Local Government Finance Act 2003 (Appendix 1).

•           Medium Term Financial Plan (MTFP) 2025/26 to 2028/29 (Appendix 2).

•           Proposed 2025/26 Net Revenue Budget of £143.304m (Appendix 2).

•           Council Tax setting including an increase of 4.99% for 2025/26 (Appendix 7).

•           Budget Consultation feedback (Paragraphs 4.8 to 4.16 and Appendix 3).

•           Reserves Policy (Appendix 4).

•           Fees and Charges Policy (Appendix 5).

•           Proposed Capital Programme and Capital Strategy Report for 2025/26 to 2028/29 totalling £170.290m (including £74.798m for 2025/26), and the associated financing (Appendix 6).

•           Schools Budgets (Appendix 8).

 

The report contained a number of issues for consideration and approval by Council, and also a number of issues to note which were detailed in Section 2.

 

The report reflected the Final Local Government Finance Settlement published on 3 February 2025, and updates on the minor changes from the report to Executive on 5 February 2025 which was based on the Provisional Local Government Finance Settlement published on 18 December 2024.

 

Council approval of the 2025/26 budget and proposed Council Tax was required by the statutory deadline of 11 March 2025.

 

The report was to be read in conjunction with the Prudential Indicators and Treasury Management Strategy 2025/26 report at Agenda Item 7 for the Council meeting.  The Prudential Indicators and Treasury Management Strategy 2025/2026 translated the Council’s revenue income and expenditure plans and capital investment plans for the purpose of the Council’s cash flow management, together with setting the framework within which the Council’s investment and borrowing activity was governed.

 

Councillor Mason raised a Point of Order under Council Procedure Rule No. 4.34.1 (e).

 

Consideration was given to a procedural motion moved by Councillor Mason and seconded by Councillor Smiles of which notice had been given in accordance with Council Procedure Rule No. 4.34.1 (e) as follows:

To adjourn the debate for a period of two weeks in order to allow Councillors more time to consider the proposed budget. 

 

On a vote being taken the motion was REJECTED.

 

The Chair invited Members to comment on the report.

 

Councillors Branson, Coupe, Morrish, Smiles, Hubbard, Walker, Kabuye, Mason, Henman, Banks, L Young, Clynch, Jones and J Platt spoke on the proposed budget.

 

The Chair invited the Monitoring Officer to conduct a recorded vote on the recommendations contained in paragraphs 2.1.1 to 2.1.8 of the report.

 

The result of the vote was as follows:

 

Votes for: (24)

C Cooke, (Elected Mayor), Councillors Banks, Blades, Branson, Clynch, Cooke, Ewan, Furness, Gavigan, Henman, Hussain, Kabuye, Lewis, Mohan, Nicholson, Nugent, Romaine, Rostron, Storey, Tranter, Uddin, Walker, J Young, L Young.

 

Votes against: (14)

Councillors Cooper, Coupe, Grainge, Hill, Hurst, Hubbard, Jackson, Jones, Mason, Morrish, J Platt, S Platt, Smiles, Wilson.

 

Abstentions: (1)

Councillor Livingstone.

 

Following the vote, it was ORDERED that:

 

1.         the following recommendations set out at 2.1.1 to 2.1.8 of the

submitted report were approved by Council:

 

•           Budget proposals for savings and income generation of £7.036m in 2025/26 rising to £8.686m in 2028/29, as set out in Appendix 2 (Annex 1 and 2).

 

•           Budget growth of £2.521m in 2025/26 rising to £2.918m in 2026/27 for re-investment in services aligned to the Recover, Reset, and Deliver plan.as set in Appendix 2 (Annex 4).

 

•           Budget provision of £0.311m in 2025/26 and a further £0.100m in 2026/27 to address the removal of previously approved savings in line with the priorities outlined in the Council Plan and after listening to residents’ views as set out in Appendix 2 (Annex 3).

 

•           An increase in Council Tax of 4.99% resulting in a Council Tax level (Band D) of £2,074.34 excluding parish, Fire, and Police precepts in line with both the Government’s referendum limits and the s151 Officer’s advice (paragraphs 4.29 to 4.32 and detailed in Appendix 7).

 

•           The proposed General Fund revenue budget for 2025/26 with a net budget requirement of £143.304m.

 

•           The Financial Reserves Policy for 2025/26 (Appendix 4) including the proposed contributions to reserves to strengthen the Council’s financial resilience, and which proposes:

 

            - a minimum General Fund Balance of least 7% of the Net Revenue budget over the MTFP period to 2028/29. In the 2025/26 proposed budget the level is 7.75% equivalent to £11.1m.

 

            - the building up of the Financial Resilience Reserve to at least £10m in 2025/26 and £20m by the end of 2028/29 to strengthen the Council’s financial resilience.

 

•           The proposed Fees & Charges Policy for 2025/26, and the schedule of fees and charges arising from the application of the approved policy for 2025/26 (Appendix 5).

 

•           The Capital Strategy 2025/26 and the proposed 2025/26 to 2028/29 Capital Programme totalling £170.290m which includes the addition of new Council funded schemes, and the associated financing statement (Appendix 6).

 

2.         The following key issues set out at 2.2.1 to 2.2.13 in the report were

noted:

 

•           The statutory s25 report of the Council’s Section 151 Officer in respect of the robustness of the estimates within the budget and the adequacy of reserves (Appendix 1).

 

•           The updated financial planning assumptions in the Council’s Medium Term Financial Plan following the publication of the Final Local Government Finance Settlement on 3 February 2025. These include some minor changes from those contained in the report to Executive on 5 February 2025 which was based on the Provisional Local Government Finance Settlement published on 18 December 2024. (Appendix 2).

 

•           The creation of a Delivery Risk Budget of £2m on a one-off basis in 2025/26 only to protect against unplanned use of reserves (Appendix 2).

 

•           The transfer of the estimated surplus on the Collection Fund for 2024/25 of £3.052m to a new Savings Delivery Risk Reserve to help provide against the risk of non-delivery or delay of savings and to rebuild reserves (Appendix 2).

 

•           The creation of a Middlesbrough Priorities Fund totalling £4.367m for 2025/26 only (Appendix 2).

 

•           Whilst the budget is balanced for 2025/26 and 2026/27 there will still be a budget gap of £2.726m in 2027/28 rising to £5.170m by 2028/29.  Further savings proposals arising from the Transformation Programme will be required as a minimum to meet these budget gaps (Appendix 2).

 

•           The feedback of the budget consultation exercise (paragraphs 4.8 to 4.16 and Appendix 3).

 

•           The estimated balances on unrestricted usable revenue reserves as at 1 April 2025 of:

 

-    General Fund balance - £11.100m.

-    Usable Earmarked reserves – unrestricted £10.269m.

 

•           The inclusion of transformation and redundancy expenditure which can be capitalised under the Flexible Use of Capital Receipts strategy (FUoCR) of £7.500m in 2025/26 (as part of planned £26.700m Transformation Programme from 2024/25 to 2028/29), and that the annual Flexible Use of Capital Receipts (FUoCR) Strategy will be presented to Council for consideration and approval in April 2025.

 

•           The Council’s estimated revenue cost of borrowing for 2025/26 is £12.060m which is equivalent to 8.4% of the Net Revenue Budget and is approaching the maximum affordable level (currently set at 10% over the MTFP period), therefore future capital investment will need to rely more heavily on external funding and capital receipts in order to maintain borrowing at affordable levels.

 

•           Details of the Dedicated Schools Grant (DSG) Grant for 2025/26 and the allocation to schools (detailed in Appendix 8).

 

•           The forecast total cumulative DSG deficit of £20.693m on 31 March  2025, including £21.281m relating to the High Needs Block (Appendix 8).

 

•           That a statutory override is in place which prevents the DSG deficit from being met from General Fund resources and the Government’s plan to deliver a funding solution is awaited. This presents a potential significant medium term financial risk to the Council in the event that the statutory override is removed without a suitable funding solution (Appendix 8).