December Update on Medium-Term Financial Plan
- our assumptions following the Chancellor's Autumn Statement
- the progress made towards delivering a balanced budget for 2025-26
Councillors noted the report and the progress made on updating its MTFP position.
The budget and medium-term financial plan process for 2025-26 began earlier this year. This reflects our push for increased transparency and good governance.
The 2025-26 budget process is closely aligning with our five main priorities. These are set out in our new Corporate Strategy that Full Council approved in July:
- a more sustainable borough
- a more prosperous borough
- a more inclusive borough
- decent and affordable homes
- a resilient and well-managed council
This applies to:
- existing budget allocations
- the evaluation of growth bids proposed by each of the twelve services.
Once we know our government funding allocation for 2025-26, we will properly consider these.
What's happened since we published our December update?
The government has issued its local government finance policy statement. It sets out the government's plans for the Local Government Finance Settlement for 2024 to 2025. The assumptions made by the Joint Strategic Director for Finance and Resources seem broadly right. Until we get the Finance Settlement in December there is still some uncertainty around the detail.
The main cost pressure facing us
- the increase in Employer National Insurance (NI) contribution rate
- a reduction in the threshold at which NI is paid
Our costs could increase by around £700,000 unless the government offers an offset adjustment.
Work being undertaken
Revenue Budget and Service Review
Work continues on the potential impact of contract inflation and the 2025-2026 pay award. Engagement with trade unions on a salary settlement is ongoing. Budget challenge sessions within each service have focused on:
- expenditure plans
- growth bids
- savings proposals
Adjustments to fees and charges are also being reviewed.
Capital Programme Review
Updates to the capital programme on timing and cost of projects will ensure efficient planning and management of future borrowing. Key areas under review include:
- car parking
- vehicle replacement
- ICT
- parks and countryside commitments
Housing Revenue Account (HRA) Budget
Updates to account for new schemes, particularly Guildford Park Road, are being made.
What we already know
- rent caps are known for the next few years
- right to buy discounts are being reduced by central government.
This should mean we:
- see less housing stock leaving the organisation
- we can keep all the capital receipts for sales and re-invest in its housing stock
Lead Councillor for Finance and Property, Cllr Richard Lucas, said:
"This financial year we're starting with the outcomes we want to achieve in our Corporate Strategy and then allocating budgets to make it happen. This process is a big shift from what we've historically done and shows the progress we're making to become a resilient and well-managed council."
Next Steps:
- we are waiting for the Local Government Finance Settlement, so we can finalise the 2025-26 budget.
- we will present revised budget details to Full Council in February 2025. This will include capital programme adjustments
Read The Medium-Term Financial Plan Update (opens new window)
Published on: 4 December 2024