Conservative Budget raises alarm bells

Despite having proposed the maximum possible council tax increase for 2025/2026, the Conservative-led Executive is still planning a Budget that will put the financial standing of the council at serious risk.

The Council’s own finance officers warn, ‘In the event that budget pressures cannot be contained in 2024/2025 and 2025/26 it is likely that the financial position would be unsustainable’. They also urge a ‘Resilience Review’ be carried out by external experts because of the dwindling amount of reserves available to the Council. 

Cllr Michael Headley, Liberal Democrat Budget spokesperson, commented: 
‘We have consistently warned the Mayor that reserves can only be spent once. This Conservative administration has reduced the amount of reserves that they inherited from us from £57m to £31m in just two years. They have not made good use of taxpayers’ hard-earned money , buying up property they don’t need at more than the independent fair valuation and wasting money refurbishing Oasis just to close it.  Alarm bells are now ringing as external experts are having to be brought in to assess the council’s financial health. The Mayor needs to think again about his approach to spending taxpayers’ money before it’s too late.’

Notes: 
Section 25 report    (Public Pack)Agenda Document for Budget and Corporate Services Overview and Scrutiny Committee, 23/01/2025 18:30
RECOMMENDATION(S) 
2.1 To take into account, in accordance with statutory requirements, the information contained in this report before taking decisions on the 2025/2026 Annual Revenue and Capital Budget proposals and note the following proposed recommendations for the Council to: 
• Carry out a Resilience Review during 2025/2026 in light of the diminishing level of revenue reserves; 
• Put in place plans to replenish the General Fund Balance to within the recommended risk assessed range within a two-year period taking into consideration the potential for further use of reserves in 2024/2025; 
• Develop a Transformation Plan to manage the expected reduction in Government Funding from 2026/2027
(Page 245)
This Budget is not reliant on the use of one-off reserves; and makes a cash injection of £1 million, however the Council is already operating on minimum levels of reserves, which reduces the financial resilience of the Council both now and looking forward. The Council should take steps to re-build reserves within a reasonable time period, depending on the shortfall, but a 2 year period would seem reasonable. 
5.43 In the event that budget pressures cannot be contained in 2024/2025 and 2025/26 it is likely that the financial position would be unsustainable. Therefore, it is recommended the Council undertake a Cipfa Resilience Review to fully understand the Council’s position now and enable the Council to develop a Transformation Plan to
i) Establish a stronger balance sheet to manage financial shocks in the future and
ii) Prepare for a reduction in Government Funding in the uncertain context of financial reform 
(Page 256)