Agenda item - Revenue and Capital Budget and Council Tax 2025/26 and Medium Term Financial Strategy 2025/26 - 2029/30

To consider the recommendations from the Leader and Executive.

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

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

In respect of the Robustness of the Budget

a. Confirm that it has had regard to the report of the Council’s Interim Chief Finance Officer (Section 151 Officer) (Appendix A) as to the robustness of the estimates made for the purposes of the calculations of the budget in making the calculation of its budget requirement confirming the robustness of the Budget estimates and the adequacy of the financial reserves, noting in particular their warning about the forecast deficits and the lack of Financial Sustainability over the period 2026/27 to 2029/30, as required by Section 25 of the Local Government Act 2003;

In respect of the General Fund Revenue Budget 2025/26

b. Having considered the detailed Equalities Impact Assessments Appendix L, approve the Savings and Income generation plans outlined in Appendices B(i) B(ii) and B(iii).

c. Approve the additional funding for new Growth requirements set out in Appendix C.

d. Approve the General Fund Net Revenue Budget for 2025/26 of £622.089m and the individual Executive and Service Directorate Budgets for 2025/26 as outlined in Appendix D.

e. Note the MTFP Movements set out in Appendix E from the report that was presented to Executive in October 2024.

f. Approve the MTFP for the next five years set out in Appendix F and the MTFS 2025/26 – 2029/30 Strategy Document set out in Appendix G.

g. Approve the changes to the Fees and Charges schedule for 2025/26 set out in Appendix H.

h. Note the Specific Revenue Grants Schedule 2025/26 set out in Appendix I

i. Note the Parking Account for 2025/26 set out in Appendix K

j. Note the MTFP Cumulative Equalities Impact Assessment set out in Appendix L

k. Note the 2025/26 Budget Consultation Feedback set out in Appendix M

l. Note and agree that the 2025/26 Budget had been balanced. The budget includes £43.000m of Exceptional Financial Support from MHCLG in the form of a Capitalisation Direction which enabled operational expenditure to be capitalised as set out in Appendix AA and Appendix D.

m. Note and accept the conditions set out in the Minister’s ‘minded to approve’ Exceptional Financial Support letter dated 20 February 2025 set out in Appendix A, Annex A(i), that Somerset Council would need to accept and fulfil in order to secure the Capitalisation Direction of up to £43.000m.

In respect of the Dedicated Schools Grant (DSG)

n. Note that the forecast spending on the Dedicated Schools Grant, set out in Appendix J(i) was forecast to exceed the funding provided by government by £33.914m in 2025/26 and was projected to reach a cumulative deficit of £99.125m by 31 March 2026.

o. Note the overall Dedicated Schools Grant allocation of £481.393m for 2025/26 and breakdown by block set out in Appendix J(ii).

p. Approve the distribution of the Schools Block of £416.883m in compliance with the National Funding Formula and as recommended by Schools Forum on 15 January 2025 and agree that any changes to the budget reasonably required as a result to the 2025/26 DSG settlement were delegated for decision to the Chief Finance Officer (Section 151 Officer) Appendix J(i) and J(ii).

In respect of the Earmarked Reserves

q. Note the annual review of reserves and that the level of General Reserves was maintained within the risk-based assessment range of £33.254m minimum to £60.000m appropriate level.

r. Note the Earmarked Reserves reprofiling as set out in Appendix N.

s. Note the overall estimated position of Earmarked Reserves outlined in Appendix AA, Table 17 and the proposed use of reserves detailed in Appendix N which included the estimated use of Earmarked Reserves during the year.

In respect of the General Fund Capital

t. Consider and approve the Capital Investment Strategy for 2025/26 to 2029/30 set out in Appendix O

u. Approve the £235.103m new Capital proposals 2025/26 to 2029/30 set out in Appendix P

v. Approve the revised Capital Programme of £1,077.384m 2024/25 to 2029/30, as set out in Appendices Q(i) and Q(ii)

w. Approve the Flexible use of Capital Receipts Strategy 2024/25 and 2025/26 as set out in Appendix S.

In respect of the Treasury Management Strategy and Prudential Indicators 2025/26

x. Approve the Treasury Management Strategy 2025/26, the Treasury Management Policy Statement 2025/26, the Prudential Indicators and the Annual Investment Strategy 2025/26 as set out in Appendix R(i)

y. Approve the Minimum Revenue Provision 2024/25 & 2025/26 set out in Appendix R(ii)

z. Approve the Non Treasury Investment Strategy 2025/26 set out in Appendix T

In respect of Council Tax

aa. Approve the calculations for determining the Council Tax requirement for the year 2025/26 in accordance with the Local Government Finance Act 1992 set out in the Council Tax Resolution in Appendix U.

bb. Agree to continue the Council Tax precept of £14.65, included in the overall Band D Council Tax for the shadow Somerset Rivers Authority (representing no increase for 2025/26). This resulted in a Council Tax Requirement of £3,112,887 for the Somerset Rivers Authority.

cc. Approve the increase in Council Tax for a Band D property for Somerset Council, including the Somerset Rivers Authority Precept, by £129.43 for 2025/26, giving a Band D Council Tax of £1,857.61 per year, being:

i) The General Band D Council Tax by 5.49%, £94.87, being the maximum 2.99% permitted without a referendum and the additional 2.5% permitted by the Ministry of Housing Communities and Local Government as part of the Local Government Finance Settlement for 2025/26; and

ii) The Adult Social Care Precept by 2.00%, £34.56.

dd. Approve a Special Expenses rate of £151,509 as detailed in Appendix U.

ee. Approve the precept requirement of £394,863,503 (including Special Expenses Rate) £394,711,994 (excluding Special Expenses Rates).

ff. Approve the 7.49% increase formal Council Tax resolution, in Appendix U, for Council Tax incorporating:

· 5.49% General Council Tax (including an additional 2.5% EFS) and

· 2.00% Adult Social Care Precept and

· Note the precepting bodies precepts as below:

	2024/25 £	2025/26 £	Increase %
Somerset Council	1,498.80	1,593.67	5.49
Somerset Council – Social Care	229.38	263.94	2.00
Somerset Council Total	1,728.18	1,857.61	7.49
Police and Crime Commissioner	279.20	293.20	5.01
Devon and Somerset Fire Authority	99.68	104.68	5.02
Sub-Total	2,107.06	2,255.49	7.04
Special Expenses Average	1.11	0.71	(36.04)
City, Town and Parish Council (average)	158.86	182.42	14.84
Total	2,267.03	2,438.62	7.57

gg. Note the Council Tax Scenarios set out in Appendix V

hh. Approve the formal Council Tax resolution below:

· The Council Tax Base for the year 2025/26 was calculated in accordance with the provisions of the Local Authorities (Calculation of Council Tax Base) (England) Regulations 1992 as amended and made under Section 33 (5) of the Local Government Finance Act 1992, (referred to hereinafter as “the Act”).

			Legislation	Plain English
1	a	212,483.78	The Council Tax Base 2025/26 for the whole Council area [Item T in the formula in Section 31B (3) of the Local Government Finance Act 1992, as amended (the "Act")] and, for dwellings in those parts of its area to which a Parish precept related as in Appendix U(iii).	The Tax Base for the whole District and the Tax Base for each City/Town/Parish.

· Calculate that the Council Tax requirement for the Council’s own purposes for 2025/26 (excluding Parish precepts) was:

		£	Council Tax Requirement
2	a	391,599,107	(excluding Parish precepts)
		3,112,887	with an additional requirement for the Somerset Rivers Authority

· That the Council calculated the following amounts for 2025/26 in accordance with Sections 31B and 34 to 36 of the Act (as amended by the Localism Act 2011 and Local Government Regulations 2012).

		£	Legislation	Plain English
3	a	1,375,125,232	being the aggregate of the amounts which the Council estimates for the items set out in Section 31A (2) of the Act, taking into account all precepts issued to it by Parish Councils.	The estimated gross revenue expenditure (including transfers to reserves and deficits on the collection fund) for the General Fund, Special Expenses account, other General Fund revenue reserves and Parish/City/Town precepts
	b	941,500,138	being the aggregate of the amounts which the Council estimates for the items set out in Section 31A (3) of the Act	The estimated gross revenue income (including the transfer of the surplus on the Collection Fund, formula grant and transfers from reserves) for the same funds as mentioned above.
	c	433,625,094	Being the amount by which the aggregate expenditure at 3(a) above exceeds the aggregate income at 3(b) above, calculated by the Council, in accordance with Section 31A (4) of the Act; as its Council Tax requirement for the year. [Item R in the formula in Section 31B of the Act.]	The net (expenditure less income) funding requirement for the General Fund and Special Expenses accounts plus the Parish precepts issued for the year.
	d	2,040.74	Being the amount at 3(c) above (Item R), all divided by Item T (1(a) above), calculated by the Council, in accordance with Section 31B (1) of the Act, as the basic amount of it’s Council Tax for the year.	The average Band D Council Tax across Somerset inclusive of parish precepts and Special expenses. It is not actually charged anywhere in Somerset but must be calculated by law as part of the Council Tax setting process.
	e	38,913,100	Being the aggregate amount of all special items referred to in Section 34(1) of the Act.	The total of Parish precepts received for the year and the net Special expenses.
	f	1,857.61	Being the amount at 3(d) above less the result given by dividing the amount at 3(e) above by Item T (2 above), calculated by the Council, in accordance with Section 34(2) of the Act, as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no special items relates.	This is the Band D Council Tax for Somerset Council (including the Somerset Rivers Authority) only.

· To note that the Police Authority and the Fire Authority have issued precepts to the Council in accordance with Section 40 of the Local Government Finance Act 1992 for each category of dwellings in the Council’s area as indicated in the table below.

· That the Council, in accordance with Sections 30 and 36 of the Local Government Finance Act 1992, hereby set the aggregate amounts shown in Appendix U as the amounts of Council Tax for 2025/26 for each part of its area and for each of the categories of dwellings.

The Deputy Leader and Lead Member for Finance, Procurement and Performance, Councillor Liz Leyshon, introduced the report which the Executive considered and endorsed at its meeting on 3 March 2025.

The report detailed the Council’s financial position and included several supporting documents which provided information on the following:-

· Revenue Budget 2025/26

· Capital Programme 2025/26

· Treasury Management Strategy 2025/26

· Council Tax Setting 2025/26

· Medium Term Financial Plan and Strategy 2025/26 to 2029/30.

All of the above documents were part of the Council’s Budget and Policy Framework and formed part of its statutory responsibility in setting a Balanced Budget and Council Tax.

The Deputy Leader and Lead Member for Finance, Procurement and Performance highlighted the vast amount of work that had gone into the report and supporting documents and the serious position the Council faced. She thanked all officers who had worked on the report and for their continued support.

During the discussion, the following points were raised:-

· The Leader of the Council thanked the Lead Member for Finance, Procurement and Performance for all her hard work on the budget and her knowledge and understanding of the financial position faced by the Council.

· Councillors wanted a sustainable future for Somerset and to ensure that the right provisions were in place for the residents of the county.

· Councillors raised serious concerns on the funding model used by Central Government and called for an urgent reform of the system.

· The Leader of the Conservative Group advised that they had not submitted an alternative budget due to the tight timescales for the budget cycle of meetings along with the lateness of the reports.

· Councillors raised concerns on the critical financial situation which included two statutory recommendations from the external auditors, the lack of pace on the Transformation Project and the low Council Tax base.

· Councillors raised concerns on the increased fees and charges along with the disposal of commercial assets and that this was not a sustainable option for the future.

· Councillors raised concerns on the parking proposals contained within the report and that mitigations would be required in certain areas.

· Councillors raised concerns on the reliance on redundancies, devolution of services to the Parish Councils and the cutting of Council Tax support and services to be able to produce a balanced budget.

· Councillors had hoped that the budget would provide some certainty and assurance for the medium term, but sadly they did not believe that had been achieved.

· Councillors queried when the letter from the Ministry for Housing, Communities and Local Government (MHCLG) would be published.

The Section 151 Officer advised that officers were carrying out some fact checking ahead of responding to the Minister and that the Council were not permitted to publish until the MHCLG had.

· Councillors highlighted that although there were concerns on the budget, there had been no other suggestions put forward on how to avoid a Section 114 Notice.

· Councillors wanted assurance that work would be done to continue to review services and the budget over the upcoming year.

· Councillors wanted all parties to work together and to take responsibility for the future of Somerset Council.

· Councillors thanked the work of the Finance Team on the report and supporting documents.

In accordance with Standing Order 18(2)(i), the Chair called for a recorded vote to be taken and recorded in the minutes.

Councillor Liz Leyshon proposed the recommendations, which were seconded by Councillor Bill Revans. A vote followed and the recommendations were agreed with fifty-nine for, thirty-four against and two abstaining, votes cast:

Those voting FOR: Councillors Steve Ashton, John Bailey, Lee Baker, Mike Best, Adam Boyden, Theo Butt Philip, Simon Carswell, Simon Coles, Nick Cottle, Adam Dance, Tom Deakin, Caroline Ellis, Habib Farbahi, Ben Ferguson, Pauline Ham, Ross Henley, Mike Hewitson, Edric Hobbs, Henry Hobhouse, Dawn Johnson, Val Keitch, Andy Kendall, Tim Kerley, Marcus Kravis, Christine Lawrence, Liz Leyshon, Tony Lock, Martin Lovell, Matthew Martin, Kevin Messenger, Harry Munt, Tessa Munt, Mike Murphy, Nick O’Donnell, Graham Oakes, Stephen Page, Oliver Patrick, Emily Pearlstone, Derek Perry, Evie Potts-Jones, Hazel Prior-Sankey, Wes Read, Rob Reed, Bill Revans, Mike Rigby, Tony Robbins, Jo Roundell Greene, Peter Seib, Heather Shearer, Fran Smith, Federica Smith-Roberts, Jeny Snell, Andy Soughton, Mike Stanton, Andy Sully, Claire Sully, Richard Wilkins, David Woan and Ros Wyke.

Those voting AGAINST: Councillors Suria Aujla, Marcus Barr, Brian Bolt, Alan Bradford, Hilary Bruce, Hayward Burt, Norman Cavill, Mandy Chilcott, Barry Clarke, Peter Clayton, Hugh Davies, Dawn Denton, Martin Dimery, Andy Dingwall, Bob Filmer, Tony Grimes, Andy Hadley, Susannah Hart, Mark Healey, Bente Height, Alastair Hendry, John Hunt, David Mansell, Frances Nicholson, Sue Osborne, Connor Payne, Tom Power, Steven Pugsley, Diogo Rodrigues, Brian Smedley, Lucy Trimnell, Martin Wale, Rosemary Woods and Gwil Wren.

Those ABSTAINING from voting: Councillors Shane Collins and Michael Dunk.