Agenda item

To consider the Section 25 Statement.

Councillor Liz Leyshon proposed the recommendations, which were seconded by Councillor Bill Reavns.

Having been duly proposed and seconded, the Council Resolved to consider and acknowlegde:-

a)    The advice of the Council’s Interim Chief Finance Officer (Section 151 Officer) in their Section 25 report (Appendix A) in relation to the robustness of the Budget estimates and the adequacy of the level of Reserves for 2025/26, as required by Section 25 of the Local Government Act 2003.

b)    The Section 151 Officer’s warning about the critical financial position of the Council, the £101.384m 2026/27 Budget gap increasing to £190.041m over the medium term, inadequate reserves and the lack of financial sustainability over the period 2026/27 to 2029/30.

c)    The minimum level of Reserves was set at 5% of the Net Revenue income stream on 1 April 2025 which was £33.254m (excluding the use of EFS to meet the Net Revenue Budget). The appropriate level of General Fund Balance be set at £60.000m for 2025/26.

d)    The responsibility of Council Members under Section 31A of the Local Government Finance Act 1992, to have regard to this report when making decisions on agreeing the Budget and setting the Council Tax for the financial year 2025/26.

(NB – recommendation (c) amended at the meeting)

The Section 151 Officer, Maria G Christofi, introduced the report which detailed the statutory requirement made under Section 25 of the Local Government Act 2003, which required the Section 151 Officer to report on the following matters to Council when agreeing the annual budget and Council Tax levels:-

·       the robustness of the estimates made for the purposes of the budget calculations, and

·       the adequacy of the proposed financial reserves.

She further highlighted that the report formed part of the legal requirement to ensure that councillors had regard to the professional advice provided by the Chief Financial Officer when debating the annual budget.

The Section 151 Officer reminded councillors that this was the second year that the Council had been unable to balance the budget without assistance from the Exceptional Financial Support from the Ministry of Housing, Communities and Local Government.  The Council had also received approval to raise the Council Tax by an additional 2.5% without the need of a local referendum, along with an ‘in principle’ approval for a Capitalisation Direction.

Having taken all of the additional support into account, the Section 151 Officer considered that the proposed budget was robust and constituted a balanced and lawful budget and that the level of Reserves was adequate.  However, she did raise serious concerns on the critical financial position of the Council and its financial viability.

During the discussion, the following points were raised:-

·       The Deputy Leader and Lead Member for Finance, Procurement and Performance advised that the figure stated in recommendation c should be 5% not 10%.

·       Councillors highlighted the letter received by the Minister and the level of support for the Council detailed within.

·       Councillors raised concern that the report only provided assurance on the budget for the upcoming year and not beyond.

·       Councillors raised concern that the Council was reliant upon assistance provided by the Exceptional Hardship Fund.

The Section 151 Officer advised that although it was the second year of support from the Exceptional Hardship Fund, it had meant that the Council had not drawn from the reserves.

·       Councillors suggested that some of the details in the report were contradictory and that one of the appendices appeared to show the reserves being depleted with no plans to regain.

·       Councillors queried the risks and scoring contained within the report and that there were concerns on the mitigation measures.

The Section 151 Officer advised that the risk scores referred to the Medium Term Financial Plan and not the Budget.

·       Councillors requested assurance that there was a robust method in place for the collection of Council Tax, Community Infrastructure Levy and Section 106 monies.  They further suggested that a review be carried out on the process to ensure that all monies ‘due’ to the Council were collected.

·       Councillors raised concerns that commercial assets had been sold at a loss, some of which had been making a profit.

The Section 151 Officer gave clarification on the commercial assets.

·       Councillors thanked the Finance Team for all their hard work carried out on the report and budget.

·       Councillors thanked the Section 151 Officer for their detailed report.

Councillor Liz Leyshon proposed the recommendations, which were seconded by Councillor Bill Revans.

Having been duly proposed and seconded, the Council Resolved to consider and acknowlegde:-

a)    The advice of the Council’s Interim Chief Finance Officer (Section 151 Officer) in their Section 25 report (Appendix A) in relation to the robustness of the Budget estimates and the adequacy of the level of Reserves for 2025/26, as required by Section 25 of the Local Government Act 2003.

b)    The Section 151 Officer’s warning about the critical financial position of the Council, the £101.384m 2026/27 Budget gap increasing to £190.041m over the medium term, inadequate reserves and the lack of financial sustainability over the period 2026/27 to 2029/30.

c)    The minimum level of Reserves was set at 5% of the Net Revenue income stream on 1 April 2025 which was £33.254m (excluding the use of EFS to meet the Net Revenue Budget). The appropriate level of General Fund Balance be set at £60.000m for 2025/26.

d)    The responsibility of Council Members under Section 31A of the Local Government Finance Act 1992, to have regard to this report when making decisions on agreeing the Budget and setting the Council Tax for the financial year 2025/26.

Meeting adjourned at 1.50pm

Meeting restarted at 2.40pm