Agenda item

To present the draft Budget proposals and estimates for 2025/26 for both the General Fund and the Housing Revenue Account.

Purpose of the report

To present the draft Budget proposals and estimates for 2025/26 for both the General Fund and the Housing Revenue Accounts.

Decision

That Cabinet:

1. Noted the budget proposals for 2025/2026 in respect of:

          - General Fund – Revenue and Capital

          - Housing Revenue Account – Revenue and Capital

2. Propose a rent setting increase of 2.7% for 2025/2026 for the Housing Revenue Account.

3. Propose an increase of 1.7% for garage rents and service charges for the Housing Revenue Account.

4. Approve consultation in respect of Council Tax setting for 2025/2026 in accordance with the requirements of Section 65 of the Local Government Act 1992 for the period 20 January to 3 February 2025. A preference for a 3% Council Tax rise rather than £5 was approved for consultation.

Alternative options considered and rejected

The Council was legally required to set a balanced budget each financial year, therefore there were no other options.

Reasons for the decision

A Budget Joint Overview and Scrutiny Committee meeting was held on 14 January 2025 which covered matters relating to the General Fund, Housing Revenue Account and capital spending.

The government had announced the New Homes Bonus funding would not continue and that the Rural Services Delivery Grant had been removed without notice or consultation. Both funds had been received annually by SKDC. The Council would not be fully reimbursed for the upcoming national insurance impact as a result.

A balanced budget for 2025/2026 had been presented with a prediction of a deficit in the following year as things stand – a way to bridge that gap would be explored in the coming months.

Public consultation on Council Tax options for 2025/2026 would begin after the January meeting of Cabinet. Consultation feedback would then be considered by Cabinet at their meeting on 11 February 2025.

There was a one-off reserve increase of £4 million; £3 million was earmarked for the Local Priorities Reserve and the remaining £1 million was to go to the Budget Stabilisation Reserve. A Markets Reserve of £50,000 was proposed, and there was also a proposal to increase the Climate Change Reserve to £500,000. More money had been set aside for community projects, leisure and community buildings.

A windfall was to be received from the Extended Producer Responsibility which would be allocated to reserves to help mitigate the requirements of the Environment Act 2021 which mandated the collection of domestic food waste across the district.

Whilst the intention in 2025/2026 was not to increase the cost of the waste collection rounds, it was likely that the day of collection would change for some residents. Clear communications would be sent out from the Council informing residents of any changes.

The Autumn Budget had two main impacts on the Housing Revenue Account. The first was the confirmation of a five-year rent settlement of the Consumer Price Index (CPI) plus 1% for social housing providers. This was certainly a significant improvement on year-on-year settlements and would help in the planning and forecasting for the future. In addition, it was announced that Right to Buy (RTB) discounts would be reduced and councils would be able to retain the full receipts of RTB sales. Whilst the retention of full receipts would provide further resources to support the building of new homes, the reduction in the discount could reduce the level of receipts as RTB’s became less affordable.

Budgeted income would increase as a result of the proposed 2.7% rent increase. This would equate to an average weekly rent increase of £2.65.

Void rent assumptions of 2.0% had been built into the budgets. Whilst this figure was lower than current performance levels, the direction of travel had improved, and it was suggested the 2.0% would be achievable from April 2025.

The government had presented two options for council tax to consult on; a rise of £5, or a rise of 3% on a Band D property. In South Kesteven a rise of 3% would be a greater return. The Leader’s preference, and that of the Budget Overview and Scrutiny Committee was to consult on a rise of 3%; the public should be invited to comment on this proposal so that the Cabinet meeting of 11 February 2025 could make an informed decision. The question to the public of whether they wanted to see a rise in council tax needed to be considered against outside financial pressures.

One Cabinet member highlighted the stable financial situation for 2025/2026 without the need to draw down from reserves, which was an achievement in the current financial climate. Within that financial framework was an additional £1 million to address a backlog of maintenance in council owned buildings. If the decline in council owned buildings had continued it would have posed an existential threat to services.