Agenda item

Cabinet RESOLVED;

1. To note the updated Medium Term Financial Strategy (MTFS) and related assumptions set out in this report.

2. To note the positive dialogue to date with MHCLG to develop a further package of support in order to set a sustainable and balanced budget for the future years 2025-26 to 2028-29.

3. To note the changes the Council needs to consider resulting from the work to develop a new target operating model, set out in paragraph 4.58 of this report.

4. To approve a period of public engagement, as set out from paragraph 4.66, on the proposals for returning the Council to financial and operational sustainability including the savings and growth proposals set out in Appendices B and B1.

5. To note the outcome of the public engagement will be reported back to Cabinet as part of the budget and council tax setting decision making.

6. To consider the outcome of the review of the Council Tax Support scheme as set out from paragraph 4.40 of this report.

7. To approve the recommendation to Full Council that the Council Tax Support scheme is not changed from that agreed by Full Council resolution on 6 March 2024.

8. To note the budget timetable set out in Appendix E.

The Executive Mayor introduced the report advising of the administration's commitment to transparency and financial discipline. Whilst progress had been made, the demand-led pressures coupled with the council's £1.6 billion debt burden remained a significant challenge. Servicing the debt would cost  £69 million next year, representing 16% of the council’s core spending power, double that of the average local authority.

The council remained in dialogue with the Ministry for Housing, Communities and Local Government (MHCLG) pressing for structural financial support and a Financial Sustainability Plan outlining options had been submitted.

The recently launched in-year Financial Recovery Plan to address the current budget overspend was noted.

The council was continuing strict financial discipline and sound governance which had ensured it was one of three London councils which delivered a balanced budget in the last financial year.

The council's Transformation plan and work with strategic partners Boston Consulting Group, Impower and Newtons aimed to save just under £100m in four years by becoming the most cost-efficient and effective council in London.

The Medium-Term Financial Strategy (MTFS) update outlined the financial outlook for the next three years and marked the beginning of the budget process for next April.

Cabinet Member for Finance, Councillor Jason Cummings noted the pan London pressures had been built into the MTFS. Several presumptions were built in and therefore a level of variation was anticipated. The best and worst case scenario planning was detailed at Appendix F of the report and provided an indication of the potential impact of these variables. Newham's £175 million MTFS budget pressure forecast illustrated Croydon's position was not exceptional. Updates would be provided as new information became available.

Section 151 Officer and Corporate Director of Resources Jane West noted the uncertainty in Local government finance both due to the pressures discussed and the unknowns in regard to funding from government. Working with these assumptions had made the position very challenging and variation to the figures was expected.

Deputy Leader of the Opposition Councillor Callton Young asked for officers to clarify if extraordinary government support in the form of capitalisation direction would increase cumulatively over the course of the MTFS, how this would be managed and if the council's current debt would increase.

Section 151 and Corporate Director of Resources, Jane West advised the report demonstrated scenarios where better case assumptions could come through. If the middle case with additional capitalisation direction was taken, this would put pressure on the council’s overall level of borrowing. The capital programme position would be reported to Cabinet in December 2024.

In response to questions, the Executive Mayor advised they had written to the Secretary of State and the council was awaiting a visit to Croydon by the minister. Officers were in regular contact with MHCLG regarding the council's financial position.

Leader of the Opposition, Councillor Stuart King noted the inclusion of the assumption of a 4.99% Council Tax increase and asked if the threshold were higher, would this rise be sought.

The Executive Mayor advised the pledge remained that the administration would not go through the cap again and if the threshold rose above 4.99% this would be reviewed at the time.

Cabinet RESOLVED;

1. To note the updated Medium Term Financial Strategy (MTFS) and related assumptions set out in this report.

2. To note the positive dialogue to date with MHCLG to develop a further package of support in order to set a sustainable and balanced budget for the future years 2025-26 to 2028-29.

3. To note the changes the Council needs to consider resulting from the work to develop a new target operating model, set out in paragraph 4.58 of this report.

4. To approve a period of public engagement, as set out from paragraph 4.66, on the proposals for returning the Council to financial and operational sustainability including the savings and growth proposals set out in Appendices B and B1.

5. To note the outcome of the public engagement will be reported back to Cabinet as part of the budget and council tax setting decision making.

6. To consider the outcome of the review of the Council Tax Support scheme as set out from paragraph 4.40 of this report.

7. To approve the recommendation to Full Council that the Council Tax Support scheme is not changed from that agreed by Full Council resolution on 6 March 2024.

8. To note the budget timetable set out in Appendix E.