Issue - meetings

To submit a report by the Director of Function (Resources)/Section 151 Officer.

It was resolved to note the contents of the Medium Term Financial Plan 2025/26 to 2026/27 and to approve the assumptions made therein.

The report of the Director of Function (Resources)/Section 151 Officer incorporating the Medium-Term Financial Plan (MTFP) for 2025/26 to 2026/27 was presented for the Executive’s consideration and approval. The MTFP set outs the Council’s likely resource requirement for the next three financial years and details how the Council plans to balance the resource requirement with the funding available. It takes account of all known changes that are required to be built into the 2024/25 base budget and makes assumptions on the main factors that impact on the Council’s revenue budget (pay costs, pensions, general inflation, Welsh Government funding, demographic and demand pressures).

The report was presented by Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance as an annual pre budget statement as required by the Council’s Constitution which outlines the Council’s current financial position and sets out the projections for the following three years along with the assumptions on which the projections are based and the financial issues that are facing the Council over that time. The MTFP has been drawn up during a period of continued economic uncertainty which makes financial forecasting difficult as the situation could change significantly over the period.

The Director of Function provided a detailed exposition of the Council’s financial position and projected budget requirements over the next three financial years as reflected in the report taking into account all the relevant issues including local and national budget pressures as described in sections 5 and 6 of the report. An estimate of the revenue budget for the each of the financial years for 2025/25 to 2027/28 is given in Table 8 of the report based on the most likely scenario for all the assumptions (best and worst case scenario models are set out in Table 9) and shows an additional budget requirement of £11.841m for 2025/26. In order to fund this requirement as well as to replace the £4.425m of reserves used to balance the budget in 2024/25 with permanent funding would require the Council’s Aggregate External Funding (AEF) to rise by 7% and Council Tax to increase by over 17% (Table 10 of the report refers). If there is no increase in AEF, then Council Tax would have to increase by around 36% in order to generate sufficient permanent funding to meet the estimated net budget requirement of £196.005m in 2025/26. A 1% increase in AEF and a 5% increase in Council Tax would only generate an additional £3.88m leaving a gap of £7.958m plus the replacement of the £4.425m of reserves used in 2024/25 which takes the shortfall to £12.382m. Section 12 of the report outlines the possible avenues available to the Council to begin to address the funding gap including the limited use of general balances and reserves. The analysis in Appendix 4 of the report shows that 85.9% of the Council’s net expenditure budget is spent on statutory services which makes it very difficult to achieve budget savings if statutory services are to be maintained. Work has begun to  ...  view the full minutes text for item 10