Budget Update 2024/25

Since we approved the balanced budget for 2024/25 there have been a number of new costs and a reduction in council income. This has caused a forecast budget deficit of £7.7 million. The main reasons for this are:

• increased costs of Children’s Social Care, particularly related to Children’s Placements
• increased costs of Home to School Transport, linked to a rise in Children with special educational needs requiring an Education, Health and Care Plan
• a higher than budgeted pay award, which is decided nationally
• lower business rates income than previously forecast

In March this year, we established a Financial Sustainability Board. Working with the Leader of the Council and Cabinet Members, our work has included:

• a) a Council-wide freeze on all non-essential spending
• b) vacancy panels in all Council departments that review the need to recruit to posts when they become vacant
• c) a full review of all spending on agency staff and consultants
• d) lobbying government for more funding for essential services
• e) reviewing how we deliver Council services, to see which services can be provided in a more cost-effective way

The Budget approved by Council on 27 February 2024, showed a forecast budget deficit for 2025/26 of £7.5 million. Mainly due to the reasons set out in the response to question one, this forecast deficit will now increase.

The main actions are those set out in d) and e) above. Significant effort is going into lobbying government, as the level of funding given to local government is not sufficient for the range of services we provide.

Our budget forecasts approved at our Council meeting in February 2024 were already showing a future funding deficit which we knew we had to respond to. Immediately after the budget was approved, we put arrangements in place to look at this. However, more recent pressures have made the situation more challenging.

The Council has always held a level of reserves to help with peaks in demand, but in the last local government finance settlement, we were encouraged to use these reserves to help with immediate financial pressures.

The Council still holds some reserves, but these are now nowhere near sufficient to deal with the challenges we face and can only be used once, so they do not provide an ongoing funding solution.

We are looking at how all of our services are currently provided.

We will need to deliver services in a different way to reduce costs, for example we will make greater use of digital services and we may reduce the number of buildings that we operate from.

All proposed service changes will be fully worked through to ensure we can deliver the best outcomes with the money we have available to us.

In order to achieve the budget reductions that we require, there is likely to be a reduction in our workforce.

This will be done in a managed way through redesigning our services and effectively managing our vacancies.

We will not be having a Council-wide redundancy programme.

We review all of our fees and charges annually.

Fees and charges usually increase each year to reflect inflation and increases in service costs.

Any changes will be considered by our Scrutiny Boards and our Cabinet before they are implemented.

The maximum level of council tax is determined by central government each year.

Solihull Council cannot exceed the maximum council tax increase without conducting a referendum with local council taxpayers.

The Council’s budget forecasts for future years already include a forecast council tax increase based on previous government limits.

The Council has no plans to conduct a referendum.

The Leader of Solihull Council, along with the six other leaders of the West Midlands Metropolitan Councils has written to the Deputy Prime Minster to set out how the local government finance system needs to change and requesting a meeting with the Deputy Prime Minister.

The local government finance settlement needs to recognise the level of demand now being experienced by local authorities, particularly across adults and children’s services.

The Council’s draft budget proposals for 2025/26 will be presented to the Council’s Resources and Delivering Value Scrutiny Board in February 2025.

Update reports on the Council’s financial position for the current year will be presented to this Scrutiny Board and the Council’s Cabinet throughout 2024.

The Council has made a commitment that any significant service change will be subject to consultation before it is implemented.