Agenda item

To receive a report from the deputy chief executive (S151) Officer and the Head of Finance, Property and Climate Resilience on the 2025/2026 Budget including Capital Strategy & Capital Programme, Treasury Management Strategy and the Budget Book.

The Cabinet had before it a report * from the Deputy Chief Executive (S151) presenting the 2025/2026 draft Budget Report.

The Cabinet Member for Governance, Finance and Risk outlined the contents of the report with particular reference to the following:

• The delivery of a fully balanced budget, not only maintaining the general fund reserves above required minimum, but making a net contribution to earmarked reserves, building resilience for future periods.
• This administration had stayed true to their principles: sound financial management, investment in the future, and delivering for communities, even in the face of adversity. They had demanded better support, funding and decision making for their residents and would continue to do so.
• This budget was the culmination of extensive collaboration over the past year. It had been scrutinised at every level by ten Policy Development Group meetings (PDG’s), by this Cabinet five times, by Scrutiny Committee, and in an all-Member briefing.
• Every single Councillor had had the opportunity to contribute, because the funding and delivery of the Council’s services was not just a matter for the administration; it was a matter for every elected Member and the residents they served.
• The Capital Programme worth £135.6 million, with £41.6 million of deliverable investment in 2025/26 alone. This was about building the infrastructure, ensuring the Council invested in the future rather than leaving liabilities for the next generation.
• The Council’s capital investments included social housing development, ensuring that the Council continued to deliver high-quality, affordable homes for residents. Also, the Council was making targeted investments in waste and environmental services, responding to new regulatory requirements and preparing for the future. 
• It included a fully funded provision for the Cullompton Town Centre Relief Road, a project that had been promised for many years, and would finally be delivered under this administration.
• The Treasury Management Strategy ensured the Council would remain financially stable and well-governed, taking a prudent approach to borrowing, maximising internal resources, and ensuring that every pound of public money was used wisely.
• The Minimum Revenue Provision (MRP) policy ensured that repaying debt responsibly, secured the long-term financial sustainability of this Council.
• The General Fund and Housing Revenue Account (HRA) Budget had been a huge challenge throughout the budget-setting process, with councils across the country facing relentless financial pressures. This Council had delivered a balanced budget that protected and enhanced key services.

Ø  Increased funding for tackling Net Zero and Planning Enforcement—investing in sustainability and ensuring that this Council held developers to account.

Ø  Expansion of Apprenticeship Scheme—investing in the future workforce and providing real opportunities for young people.

Ø  Continuing an ambitious social housing programme, ensuring the provision of good-quality homes and correcting the historic rent calculation error in a responsible way.

Ø  Growth in income streams, particularly from thriving leisure memberships and higher recycling levels, ensured that income was generated from services that would benefit the Councils residents.

• Unfortunately, one of the biggest challenges, was Central Government.

Once again, this Council had been handed another single-year settlement, making long-term financial planning nearly impossible. The lack of certainty left councils like ours in a constant state of financial firefighting, unable to plan properly for the future.

• This Council faced an expected additional cost of £466,000 as a result of the Government’s increases to employer’s national insurance contributions.  Despite reassurances, the Council would only be receiving £151,000 in funding, essentially diverting the regressive Council Tax away from local services to Central Government. As if that was not enough, the Government had arbitrarily slashed key grants at the last minute, including the Rural Services Delivery Grant, leaving Mid Devon with an 18% cut in real-terms funding. This was a direct hit on rural district councils, making it even harder to deliver essential services without increasing the financial burden on residents, this was in the same week as the Government launched its latest Devolution White Paper.
• Devolution and reorganisation would not fix the fundamental issue of underfunding, it would only cause higher and higher council tax bills as seen in other parts of the country, and indeed from some towns and parishes, who would be expected to pick up many of the services that district councils provided when they were abolished, or risk them being lost.
• Despite those challenges, this Council had kept its council tax increase modest and within the cap at £6.96 (2.99%), this remained below inflation and equated to a 14p per week increase—a small but necessary adjustment to protect the Council’s vital services.
• This budget not only maintained the General Reserve and funded the services residents relied on for the coming year, but it also strengthened the financial position for the future. This Council was making a net contribution to earmarked reserves, setting aside £2.225 million to mitigate future pressures, while carefully drawing down £1.763 million for planned investment.
• The budget was balanced and made provision for the future, the financial challenges ahead remained severe. The Medium-Term Financial Plan (MTFP) continued to forecast a deficit, and the Council must be prepared to make difficult choices. Processes had started now with engaging Members early, and ensuring every possible option was considered in a measured and responsible way.
• Officers were thanked for their outstanding work in producing this budget, and to all the officers across the Council whose dedication had been instrumental in this process. Their hard work was felt to be invaluable.

Discussion took place with regards to:

• The budget setting had been challenging.
• The impact on rural areas, whereas the cities seemed to be receiving a large uplift in funding.
• The recent council tax increases where they had Social Care duties, currently this Council did not have those duties.
• To continue with the Planning Strategy for house building and the funding announcement at Easter about Junction 28 and the benefits of this to the communities.

RESOLVED that Cabinet recommend to Council that:

Capital Strategy and 2025/26 – 2029-30 Capital Programme:

1. That the proposed 2025/26 Capital Strategy be APPROVED – Appendix 1;
2. That a Capital Programme consisting of new and existing projects totalling £135,569k with a profiled spend forming a Deliverable Capital Programme for 2025/26 of £41,614k be APPROVED– Annexes 1a, 1b and 2 to Appendix 1. (Note this was inclusive of forecast slippage as at Quarter 3 from the existing Capital Programme and would be finalised and formal approval sought as part of 2025/26 Outturn report);
3. The updated Capital MTFP’s for the General Fund and Housing Revenue Account covering the years 2026/27 to 2029/30 be NOTED.

Treasury Management Strategy:

4. The proposed Treasury Management Strategy and Annual Investment Strategy for 2025/26, including the prudential indicators for the next 3 years and the Minimum Revenue Provision Statement (Appendix 2) be APPROVED.

     2025/26 Revenue Budget:

5. A Council Tax Requirement of £7,348,850 calculated using a Council Tax of £239.12 for a Band D property, an increase of £6.96 or 2.99% from 2024/25 and a Tax Base of 30,732.91, in accordance with the Local Authorities (Calculation of Tax Base) Regulation 1992, as amended, after the relevant adjustments in respect of the Council tax support scheme approved by Cabinet on 12 November 2024 be APPROVED;
6. The overall budgeted Net Cost of Services within the General Fund of £15,356,730 for 2025/26 be  APPROVED as detailed within Appendix 3 (p2 – 40) and inclusive of the proposed balancing adjustments included within Table 1 in paragraph 5.5;
7. All of the transfers to and from Earmarked Reserves as detailed in Appendix 3 (p41) be APPROVED;
8. The HRA budget for 2025/26 as detailed within Appendix 3 (p42 – 51), with total income of £16,058,310, less direct costs of £12,939,410 with internal charges of £2,050,250 and capital financing of £1,068,650 balancing the budget be APPROVED;;
9. Work on strategic planning for delivering a balanced budget for 2026/27 and beyond be commenced immediately be NOTED.

(Proposed by Cllr J Buczkowski and seconded by Cllr S Keable)

Reason for Decision:

The 2025/26 Capital Strategy and Capital programme, the 2025/26 Treasury Management Strategy and the 2025/26 Revenue Budgets for the General Fund and Housing Revenue Account were in line with the Corporate Plan priorities within existing financial resources without materially reducing service delivery. The Local Government Finance Act required a balanced budget to be set by Tuesday 11 March 2025.

Note: * Report previously circulated.