Agenda item

Report to follow.

Dave Shipton (Head of Finance, Policy, Strategy and Planning) was in attendance for this item

1.    Mr Oakford (Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services) introduced the report that set out the  proposed process and timetable for updating the Medium Term Financial Plan (MTFP) which was presented to full Council on 19th February 2024 including consultation, scrutiny and final approval which would be sought by full Council in February 2025. Mr Oakford commented on the welcome news regarding a multi-year settlement from government from 2025-26 onwards; however, the Council needed to continue to identify efficient ways of making savings. Cabinet remained fully committed to finding £20m of policy savings in 2025-26 to replace one-off measures taken to balance 2024-25.

2.    Mr Shipton (Head of Finance, Policy, Strategy and Planning) advised that the current plan showed forecast spending growth was higher than the assumed funding growth and the paper presented to Cabinet outlined the timescales and processes to be carried out by Finance to update both the spending and saving figures to identify if there were any gaps that needed to be addressed or a surplus.

3.    Price growth was forecast to decline in line with inflation forecasts (the rate of inflation had been declining steadily in recent months). The MTFP was based on the Office for Budget Responsibility (OBR) forecasts made in November 2023 and based on an annual rate of 3.6% for 2024 which fell to 1.8% for 2025. The actual rates for 2024 were lower than the OBR forecast (3.5% in the first quarter, 2.3% in April 2024 and 2.0% in May 2024). However, the May Bank of England forecast for 2025 was 2.8% in quarters 1 & 2 falling to 2.6% in quarter 3 and 2.4% in quarter 4.  These were higher than the 1.8% that the OBR had forecast. Officers were waiting for the August Bank of England projections to review inflation rates.

4.    Updates would continue to be received as outlined in the report and as proposed, Scrutiny Committee in November would focus on the policy choices within the budget proposals relevant to each Committee, rather than the overall assumptions on which budget proposals were based. Each Committee would receive a tailored report with an overall budget plan as background information, rather than the standard report that had been published in recent years. The BI dashboard introduced for the 2024 budget would continue to be used, however, enhanced in line with the suggestions put forward by Scrutiny Committee.

5.    The Budget Consultation for 2025-2026 was launched on 13^th June. To date the response rate had been lower compared to the same time last year. A comprehensive communications campaign had been launched alongside the consultation; however, this was due to be reviewed to ascertain as to whether additional activity was required to increase response rates.

6.    Further to comments and questions from Members it was noted:

• Clarity was needed from Government, particularly in relation to Social Care reform in terms of funding mechanisms and the fair cost of care which was due to come into effect from autumn 2025.

• A new financial settlement under a new Labour administration was unlikely to relieve the financial pressures for the 2025-26 budget. Whilst there were suggestions of reform that could impact the cost drivers within Adult Social Care and Children’s Social Care, the Council would need to continue to make difficult decisions to balance the budget for 2025-26.

• Whilst local authorities had faced a reduction to core funding from Government over the years, KCC continued to deliver its services despite the financial challenges. Thanks was paid to staff who continued to deliver savings and for their ongoing commitment.

7.    RESOLVED that Cabinet note the proposed process and timetable to update the MTFP.