Council sets out financial position ahead of budget

A financial monitoring report, for period three of 2024-25, will come before the cabinet at its meeting next Wednesday.

It provides members with the forecast financial position in relation to the revenue and capital budget for 2024-25.

It also summarises the council’s reserves and balances position and includes the treasury management position.

Furthermore, the report provides detail on the delivery of the 2024-25 programme of budget savings, including “savings brought forward from prior years”.

According to the report, the failure to deliver agreed savings presents a “key risk” to the council.

It says: “There is a forecast portfolio overspend of £11.250m against the updated net portfolio budget of £184.359m.

“There were portfolio overspends in both 2022-23 and 2023-24, making 2024-25 the third consecutive year in which the council is forecasting a significant overspend.

“One-off corporate underspends are forecast to offset the portfolio overspend by £5.697m, resulting in a forecast net budget overspend of £5.553m for 2024-25.

“This presents a significant financial risk to the council.”

It adds: “The most significant pressure is within the children & young people portfolio, and the main drivers of this being increasing demand, social work staffing challenges and unachieved savings.

“The pressure in the transport & environment portfolio is primarily because of the unsuccessful retendering of the recycling contract.

“The pressure within the inclusive growth and regeneration portfolio primarily relates to planning income being lower than the target and energy costs higher than was budgeted for.

“Pressures within integrated health & social care reflect ongoing demand pressures and the complexity of service users’ needs.

“Whilst management continue to make efforts to reduce the level of the overspends, 2024-25 will be the third consecutive year in which the council has significantly overspent, requiring further unplanned use of reserves.

“It is vital for the council’s financial sustainability that it is able to control its costs and operate within its approved budgets.”

The revenue budget covers the hundreds of services provided by the council every day.

Council tax increase As previously reported, the council's plans a council tax increase for 2025/26 of 4.99 per cent, this would include two per cent to go towards funding the extra cost of adult social care.

The proposed increase in council tax would raise around £4.8m for services which otherwise would have to be cut, the local authority adds.

"For approximately 85 per cent of households the proposed rise would mean less than an extra 22p per day to help maintain vital services at a time of increasing demand," the local authority adds.

Alongside the proposals, the council's cabinet is due to discuss plans for support for those who may be struggling to meet the full cost with a council tax reduction scheme in place.

Capital budget

Meanwhile, the capital budget - funds which cannot be used for daily operations due to government rules - sets out plans for more than £115 million in investment over the next year.

The report sets out £115 million which is committed for investment in projects such as the regeneration of St Helens and Earlestown town centres, school building improvements and supporting people to prosper while living in their own homes among others.

Works will start on the once-in-a-generation transformation of St Helens and Earlestown town centres in the coming months.

The council adds that its budget looks to build on supporting key areas such as SEND provision in our schools, with funding to expand specialist secondary education provision at De La Salle.

This follows on from the opening of new classrooms at Green Lane School last year that expanded capacity for SEND students that could potentially otherwise have to travel outside the borough for education.

The report adds: “The council has an approved capital programme which has already committed significant resources to support schemes for 2025/26 and future years, including the regeneration of both St Helens and Earlestown town centres, investment in highway assets and school re-building projects and improvements. The estimated value exceeds £203 million over the period 2025-2028.”

How the budget works - capital and revenue

Revenue

Council budgets are funded through a variety of different revenue streams, with council tax and business rates income becoming increasingly vital sources of revenue for local authorities due to cuts in central government grants.

In 2024/25 this where the council's website states money came from: £125m - School Specific Grants, £96m - Council Tax, £78m - Business Rates Income, £71m - Government Specific Grants, £43m - Housing Benefit Subsidy Grant, £40m - Sales, Fees and Charges, £30m - Other Contributions (including Health, Merseyside Recycling and Waste Authority, Liverpool City Region Combined Authority), £19m - General Government Grant, £16m - Public Health Grant, £6m - Investment Income, £6m - Commercial Rent

Capital

The council's capital expenditure funds long-term regeneration and infrastructure projects such as highways improvements and works to public buildings.

According to the local authority, the capital budget is funded predominantly by external grants and long-term borrowing, but the interest cost and the repayment of the debt fall on revenue and impact on council tax levels.

The council says it cannot use capital funds for daily operations due to government rules.