Agenda and minutes

The Committee noted that Councillor Naim Salim had stepped down as a member of the Committee.

Councillor Georgia Power  -  personal reason

Councillor Sarita-Marie Rehman-Wall  -  personal reasons

None

To confirm the Minutes of the meeting held on 29 January 2025

The Committee confirmed the Minutes of the meeting held on 29 January 2025 as a correct record and they were signed by the Chair.

Report of the Statutory Scrutiny Officer

The Chair presented the Committee’s current Work Programme for the 2024/25 municipal year.

The Committee noted the Work Programme.

Report of the Statutory Scrutiny Officer

Councillor Neghat Khan, Leader of the Council and Executive Member for Strategic Regeneration, Transport and Communications; Councillor Ethan Radford, Deputy Leader of the Council and Executive Member for Skills, Growth and Economic Development; Councillor Linda Woodings, Executive Member for Finance and Resources; Sajeeda Rose, Chief Executive; Stuart Fair, Interim Corporate Director for Finance and Resources; and Jon Rea, Engagement and Participation Lead Officer, presented a report on the Council’s proposed Budget for 2025/26. The following points were raised:

a)  The 2025/26 base budget gap has been reduced from £69 million to £23 million, so an application for Exceptional Financial Support (EFS) has been made to the Government for up to £25 million in 2025/26 and up to £10 million in 2026/27. The proposed 2025/26 budget focuses strongly on delivering transformation. Service demand is increasing and needs are becoming more complex, and it is extremely difficult to forecast in-year pressures as they are strongly influenced by external factors – so an appropriate contingency sum has also been budgeted. The overall budget does account for service growth – but directorates must meet this within their individual budgets to ensure that the Council’s financial position becomes sustainable.

b)  A great deal of work has been done to close the current budget gap, with improvements made to financial controls and transparency in the context of the Council’s Section 114 notice and the recent report of the Council’s external auditor on the current risk environment. The EFS will allow the use of capital receipts and borrowing to fund revenue costs, with the current aim being to end the need for EFS by 2027/28. Work to deliver operational savings and efficiencies, and to maximise income, is taking place across the Council. The capital programme has also been set and monitoring is in place for the needs of the Housing Revenue Account.

c)  A main focus of the 2025/26 budget is to deliver a wide range of strategic, cross-cutting savings across the Council. A public consultation on these cross-cutting proposals, totalling £10.78 million, took place between 17 December 2024 and 13 January 2025. In total, 360 responses were received, showing a generally positive position. However, the proposals consulted on were primarily strategic and did not set out direct service delivery impacts – so the grass-roots response was not as large as it had been in relation to the 2024/25 budget proposals. Meetings were held with disability groups to ensure that the consultation was as accessible as possible, and Equality Impact Assessments will be drawn up as the practical delivery of the strategic proposals develops. Going forward, work will continue to be carried out to ensure that all communities within the city are able to engage effectively in the context of longer consultation processes. More listening expertise is being developed, and a full stakeholder mapping process is underway to identify where engagement needs to be focused.

d)  The development of the 2026/27 budget will begin in March. Resilience in the General Fund is being developed so that it can respond to one-off cost pressures, with work underway to ensure that all underlying financial sustainability issues are addressed. Reserves are in place to help drive overall transformation. A strong Treasury Management structure is working to paying down borrowing and ensure a good investment position. To ultimately achieve long-term financial sustainability on a stable income base and cash flow, there is a focus on achieving sustainability in areas of structural deficit, delivering transformation change to meet the more difficult savings, and managing growing service demand and complexity of need.

The Committee raised the following points in discussion:

e)  The Committee asked what spend controls were still operating in relation to the Section 114 notice. It was reported that some of the emergency controls had been paused in November 2024, with Corporate Directors now responsible for exercising spend controls within their individual areas. A great deal of work is taking places within Children’s Services and Adult Social Care to manage costs effectively and deliver best value. The Section 114 notice remains in effect until the end of the current financial year, but Corporate Directors will be able to continue with the use of spend controls beyond this if they consider it to be necessary.

f)  The Committee asked how the Council’s new strategic plan was being developed alongside the current budget. It was explained that the new Our Council Plan’s objectives had been developed to be in step with both the Council Improvement Plan and the Medium-Term Financial Plan. Both the proposed Strategic Council Plan and 2025/26 Budget will be taken to Full Council in March for agreement, following their endorsement by the Executive Board.

g)  The Committee asked what rationale had been used to set the level of financial reserves. It was explained that reserves had been in place in financial, transformation and contingency areas, with an additional workforce reserve. These have now all been rationalised into a consolidated General Fund reserve, to support the delivery of the overall transformation process. There is a £15 million contingency with the current 2025/26 budget to mitigate against the in-year risks to the delivery of the needed transformation savings, and a series of management boards are in place to ensure that the targets are met within directorates. General Fund reserves are then allocated for the mitigation of any major, externally-driven, one-off financial shocks, with some additional reserves held within individual directorates for very specific purposes. An overall reserve target of 5% is helpful in striking a balance between holding funding for emergencies while ensuring that service investment needs are met.

h)  The Committee asked what learning had been taken from the 2025/26 budget development process. It was set out that, in order to achieve a fully holistic approach to the new budget, a great deal of benchmarking had been carried out against other similar Local Authorities to establish sustainable core service levels. This led to the development of the cross-cutting transformation proposals, with a review of management tiers and IT systems also taking place to ensure consistency across the Council. Best practice has been taken on board from other Local Authorities, including in relation to effective risk profiling and growing digital access.

i)  The Committee asked how the new East Midlands Combined County Authority (CCA) would be funding local services. It was explained that the CCA primarily provides additional funding for specific projects related to wider transport and infrastructure development, and engagement is being carried out around future partnership activity in these areas.

j)  The Committee asked how the delivery of the cross-cutting savings proposals would be managed. It was set out that the whole Executive would be leading on the implementation of the cross-cutting savings collectively, as none of the proposals sat within just one Executive remit. The Executive and senior officers will need to coordinate effectively across all remits and service area on delivery, and a Strategic Director of Transformation and Change role has been established to support this process – along with a range of delivery boards. Overarching business cases, timetables and risk assessments are being developed and will then be consolidated into focused delivery plans. Corporate Directors are becoming ‘sponsors’ for the delivery specific proposals, supported by multi-disciplinary teams. An overall Transformation Board has been established, which will be fed into by a range of Project Oversight Boards. A great deal of benchmarking has been carried out against other similar Local Authorities to ensure that the savings figures put against the strategic, cross-cutting proposals are proportionate and deliverable.

k)  The Committee asked how in-year cost pressures on the 2025/26 budget would be managed, in the context of rising service demand. It was explained that all contracted services and levels of investment in prevention activity were being reviewed. Specific reserves are in place for the greatest areas of risk, and there is a contingency provision to mitigate against costs resulting from service growth. The greatest pressures are likely to arise in homelessness, Children’s Services and Adult Social Care, so as much work as possible is being done in the areas of early help, intervention and prevention.

l)  The Committee raised concerns around the overall effectiveness of the public consultation given that it had been carried out in a very short duration across a holiday period. It was reported that the period of consultation on the strategic budget proposals was short because it had been extremely difficult to develop proposals ahead of time in the currently very challenging context. However, face-to-face consultation meetings had still been held, including with voluntary and community sector partners. The future approach to budget development is being reviewed to enable a wider consultation process to take place at an earlier stage for a longer period. A broad listening exercise is planned to be carried out in the summer in engagement with Ward Councillors, and work is underway to take consultation activity out into a range of communities.

m)  The Committee requested that a commitment was made by the Executive to ensure that early engagement with Scrutiny was an embedded part of the development process for future Council budgets, given that the Scrutiny activity around the 2025/26 proposals had predominantly only been able to take place from January 2025. The Committee considered that, ultimately, it would be vital for the business plans for the delivery of the cross-cutting 2025/26 budget proposals to come to Scrutiny so that it could develop an informed view of the direct impacts and outcomes, and take assurance that the identified savings figures were achievable. It was set out that full consideration would be given to how the timetable for future Council budgets could be developed to better account for and align with effective Scrutiny engagement. It is aimed for the delivery plans for the 2025/26 cross-cutting proposals to be completed by May.

The Chair thanked the Leader and Deputy Leader of the Council, the Executive Member for Finance and Resources, the Chief Executive, the Interim Corporate Director for Finance and Resources, and the Engagement and Participation Lead Officer for attending the meeting to present the report and answer the Committee’s questions. The Chair also thanked the further members of the Executive and senior officers from the individual directorates who had attended the meeting to support the Committee’s discussions.

The Committee resolved to write a report to City Council outlining its views on the Budget.