Cabinet – 19 February 2025

Medium Term Financial Plan and Annual Budget 2025/26

Purpose	For Decision
Classification	Public
Executive Summary	This report sets out for Cabinet’s consideration and recommendation to Council the proposed 2025/26 budget and Council Tax. The report sets out what is considered the most likely medium-term financial scenario, based on latest updates from the government and from within the council. The budget includes significant investment across both revenue and capital towards agreed Corporate Plan Priorities, including most notably the roll-out of the new waste service commencing in 2025/26. The proposed balanced budget includes a recommendation to increase Band D equivalent Council Tax by £5.98 (2.99%) in 2025/26 in line with government’s annual threshold. The report gives due consideration to the changing local government landscape as a result of the government’s English Devolution White Paper and confirms the need for the council to still have due regard to the long-term impact of decisions taken in the course of setting a sound balanced budget.
Recommendation(s)	Cabinet is asked to recommend to Council that: 1) the updated Medium Term Financial Plan (MTFP) and financial strategy, as set out in the report and throughout appendices 1-3, are approved 2) there is a General Fund Net Budget Requirement in 2025/26 of £25.509 million, as set out in appendices 5a - 5d to this report; 3) the New Forest District Council Band D Council Tax for 2025/26 shall be £205.77 (paragraph 24); 4) the General Fund Capital Programme for 2025/26 of £19.411 million, as set out in appendix 6 to this report be approved; 5) the proposed fees and charges as included at appendix 7 to this report be approved; and 6) the principal of utilising up to £1.377 million of the budget equalisation reserve to fund investment in community assets, supporting the future transition to the new unitary authority and town and parish councils, is approved.
Reasons for recommendation(s)	The council is required to set an annual balanced budget. This report enables members to consider the development of the Medium Term Financial Plan, set the General Fund revenue and capital budgets for 2025/26, set the level of Band D Council Tax for 2025/26, and make determinations on the future level of fees and charges.
Ward(s)	All
Portfolio Holder(s)	Councillor Jeremy Heron – Finance and Corporate
Strategic Director(s)	Alan Bethune – Strategic Director Corporate Resources and Transformation (Section 151 Officer)
Officer Contact	Paul Whittles Assistant Director – Finance (Deputy Section 151 Officer) 02380 285766 paul.whittles@nfdc.gov.uk

1. On 2 October 2024 and 4 December 2024, the Cabinet considered a number of issues through the established Medium Term Financial Plan (MTFP) reporting that would affect the annual budget for 2025/26. Regular Financial Monitoring reporting throughout 2024/25 has also highlighted areas for consideration in setting the budget for 2025/26.

2. The figures, as included in the October and December MTFP reports, were based on latest information available at that time, before the provisional local government finance settlement had been released and before various new funding measures had been announced, as part of the government’s pledge to support local government from the ongoing financial issues facing the sector as a whole. The financial assumptions in this paper are based on the final finance settlement for 2025/26.

3. The medium-term position to 2028/29 forecasts a budget deficit of £2.222 million. The Senior Leadership of the council are absolutely committed to ensuring the council remains well placed to invest in services and key priorities and continue to deliver a balanced budget over the medium-term period.

4. In accordance with the council’s financial strategy this report sets out the final proposals for the:

a. General Fund Net Budget Requirement for 2025/26

b. Level of Council Tax for 2025/26

c. Medium Term Financial Plan to 2028/29

d. General Fund Capital Programme for 2025/26

5. The local government finance settlement for 2025/26 was once again only a one-year finance settlement. The most significant difference was the change in approach from the previous Funding Guarantee (providing a 4% increase to core spending power before an annual Council Tax increase is taken into account) to a Funding Floor (only guaranteeing the council’s core spending power would not reduce in comparison to the previous settlement). This resulted in an unchanged level of Government funding for 2025/26, despite the council initially assuming growth in Core Spending Power would be realised (as usual) through annual Council Tax growth and an inflationary increase on the Business Rates baseline. The new approach by the government was to counter these growth areas with a reduction in core settlement grant, creating a £487,000 reduction in funding compared to the December MTFP position. Furthermore, the council’s allocation of the £515 million, earmarked by government to fund increased pressures due to the change in employer National Insurance contributions, falls significantly short of our forecasted costs. Our allocation shall only mitigate approximately 25% of our increased costs.

6. As part of the finance settlement announcement the government stated its intention to fundamentally improve the way councils are funded including implementing reforms following the Fair Funding Review; [1]’we will reform the local government finance system to put councils on the road to recovery…We will begin this process at the 2025-26 Settlement…From 2026-27, we want to fundamentally improve the way we fund councils and direct funding to where it is most needed’. This extends to resetting the business rates retention system with a desire to match funding where there is greatest need; ‘We intend to ‘reset’ the business rates retention system, as was originally intended when the previous government established the system. This is long overdue…’.The Government has demonstrated a clear intention to introduce these reforms from 2026/27 as part of a multi-year settlement. As a consequence, the MTFP makes allowances for a tapering of business rates resources in 2027/28 and 2028/29.

7. The council has protected itself against any immediate financial challenge that might come about as a result of Levelling Up and Fair Funding Reform, through the inception and accumulation of a Budget Equalisation Reserve. In addition to a likely static government core funding position, it is business rate growth of c£4 million, as included within the council’s MTFP each year, which is most at risk in any revised finance settlement formulae. Transitional funding is expected, but quantum and longevity are yet to be determined.

8. The Bank of England interest rate has remained comparatively high throughout 2024, albeit reducing by 0.75% over the past year to the current 4.50% base rate figure (February 2025). Inflation continues to be greater than the government’s 2% target (2.5% December 2024). The important context of high costs of borrowing and above target inflation indices cannot be forgotten when balancing the needs of the council to cover its own expenditure pressures to deliver services to residents, and the proposed levels of Council Tax.

9. Notwithstanding the government’s white paper regarding devolution and local government reorganisation (LGR), the council’s MTFP and Annual Budget for 2025/26 has been prepared based on business as usual for the authority; that is to align financial resources to enable service delivery, and the alignment of resources to key priorities in accordance with the Corporate Plan. Subject to the pace of change, members need to be cognisant of the potential for future in-year budgetary changes in response to any emerging requirements due to local government reform. For the avoidance of doubt, it is also right and proper that the council continues to forecast its medium-term financial position on a going-concern basis over a 4 year period, and councillors must have due regard to the medium-long term implications of any financial decisions taken in setting the 2025/26 budget and adopting the latest MTFP.

Financial Strategy

10. The council’s proposed budget has been set out in line with the financial strategy for 2025/26:

a. The provision of additional financial resources to facilitate the delivery of key strategic objectives

b. The establishment of a transformation governance framework to ensure delivery of projects, taking opportunities as they arise to crystalise efficiencies, income, and savings to protect the delivery of frontline services provided to the Community

c. The maximisation of income, including reviews of fees and charges

d. Supporting investment in capital infrastructure and services through the prudent use of its reserves and affordable external borrowing

e. Sufficient and appropriate level of reserves are available during the period of the MTFP to safeguard frontline services; and

f. An understanding of balancing the needs of service users and council taxpayers

11. In order to appropriately utilise reserve balances and address the forecast deficit to 2028/29, the council’s financial strategy over the medium-term period extends to:

a. A broad council-wide focus on delivery and transformation to identify and deliver a programmed approach to assets, services, and ways of working

b. Continuation of partnering and collaboration with others to transform service delivery in the context of the devolution and LGR agenda and timetable.

c. Supporting the orderly transition of services and assets to the new unitary authority and town and parish councils as part of LGR.

d. The release of accrued short-term reserve balances to assist in the damping of the Fair Funding Review (and impact this has specifically to retained business rates) as necessary

e. The utilisation of reserve balances (and when necessary external borrowing) to deliver community infrastructure projects, invest in assets and assist in supporting a vibrant and robust New Forest Economy, whilst targeting valuable additional income

f. Ensuring strategies developed through the corporate framework appropriately feed into the council’s financial strategy; and

g. Investing in an environmentally sustainable approach to financial planning and spending.

General Fund Budget 2025/26

12. The backdrop of the council’s annual budget process has been in the context of available funding, including Council Tax increases, still failing to meet the additional service costs, let alone enabling a surplus for investment in enhanced activity and delivery. However, thanks to the ongoing identification and delivery of savings and additional income being brought into the council, the council is able to set a balanced budget for 2025/26 which includes: a) the significant investment required to roll out the new waste service, b) investment to deliver on its key priorities, AND c) supporting the financing of the Capital Programme through the Revenue General Fund Budget.

13. The updated resource summary and budget requirements (both totalling £25.509 million for 2025/26) are provided as appendix 1 and 2. Within the 2025/26 proposed budget, specific new budgetary provision has been made for targeted investment in the following areas;

a. Waste Strategy; The council’s 2025/26 revenue budget includes £2.297 million supporting the transition and roll out of the new service in full during 2025/26 partially mitigated by the receipt of £1.175 million Extended Producer Responsibility for Packaging (pEPR) funding and additionally supported by the one-off use of £346,000 from the corporate priority reserve as detailed as part of the 5 February 2025 Financial Monitoring Report to Cabinet. Going forward into 2026/27, it is assumed that new burdens funding of £1.5 million will be received to contribute towards the cost of the new food waste service, budgeted (annual steady state) at £1.892 million.

b. Transformation; £328,000 up front investment (in line with the approved business case) supporting the dedicated team and mobilisation of the Transformation Programme and the development of modern working practices and a digitally supported council.

c. Devolution and LGR programme; £150,000 has been built into the 2025/26 budget to support the council in preparing for Local Government Reorganisation.

d. Information Governance and Complaints; The council’s revenue budget includes £59,000 to fund additional resources supporting the administration of complaints.

e. People Strategy; An additional post (£50,000) to support staff with change management and learning & development has been proposed within the 2025/26 budget, to ensure our staff remain well placed and appropriately supported through the significant change process that comes with LGR.

f. Community Grants; An additional £40,000 has been added to the Community Grants Fund, with a total of £250,000 revenue grant funding available to support our communities.

14. The latest triennial pension fund valuation (2022) was positive, confirming the fund was in overall surplus, to the extent that asset values were higher than scheme liabilities by 7.1%. The council has therefore not been required to make an annual deficit payment to the fund between in 2023/24 and 2024/25 and will not be required to make a payment in 2025/26. Latest fund performance has been positive, and the fund remains in surplus based on interim valuations.

15. Tying in with the summary headings as used within appendix 2, other material changes not already referenced above in paragraph 12 and greater than £50,000, or worthy of note, which have been made within the budgets in comparison to 2024/25 include;

a. Pay & Price Increases: +£1.360 million in 2025/26

i. Pay Award; additional budgeted pay award costs (including 2024/25 pay award beyond the original assumption anticipated) and incremental progression have totalled £1.260 million (this includes a £600,000 assumption regarding the increase in National Insurance costs built into the proposed 2025/26 budget, which is partially offset by new government support of £155,000).

ii. Inflation and cost increases; £100,000 is included within the 2025/26 budget to allow for inflation, including insurance and contractual uplifts.

b. Budget Adjustments relating to one-off items: -£562,000 in 2025/26

i. Homelessness & Housing; The present level of demand requires the council to maintain its current budget level, consequently the originally assumed £334,000 reduction from the additional £1 million budget included within the homelessness service for 2023/24 will not be removed in 2025/26.

ii. £602,000 of adjustments relate to the reversal of one-year budgets provided for in 2024/25 to invest in strategies and the initial stages of the Local Plan as laid out in the previous year’s report.

iii. A one-off investment of £40,000 for a review of Commercial Waste and Glass collection rounds has been added in 2025/26.

c. Waste Service Change: +£776,000 in 2025/26; -£1.442 million in 2026/27; -£120,000 in 2027/28

i. Transition costs; the 2025/26 budget includes transition budget of £842,000 (an increase of £556,000 on 2024/25), with the removal of the full transition budget over the following two years (£120,000 retained in 2026/27 before complete removal the year after).

ii. Food waste transition; removal of the anticipated £150,000 one off funding budget from 2024/25 supporting the introduction of food waste collection.

iii. New Service Rollout; commencing in 2025/26, new service delivery costs, covering refuse, recycling, and food waste collections, of £1.591 million have been assumed for 2025/26. Full new service costs totalling £2.125 million then take effect from 2026/27.

iv. pEPR funding of £1.175 million will be received in 2025/26 and is assumed to continue at the 2025/26 value over the medium-term. A one-off contribution of £346,000 will be drawn down from the Corporate Priority Reserve in 2025/26. Additionally, new burdens funding forecast at £1.500 million regarding food waste collections is expected to commence in 2026/27 to support the increased costs.

d. Ongoing Savings and Income Generation: -£844,000 improvement in 2025/26

i. Efficiency Programme and Fees and Charges Yield

1. Garden and Trade Waste Charges have been reviewed, with new charges forecasting an additional yield of £156,000 to the council.

2. New parking service charges with effect from 1 January 2025 are forecast to generate an additional net yield (after some direct service costs being taken into account) of £250,000 to the council for 2025/26.

3. Other fees and charges reviews have taken place, including the annual rent increase at Stillwater Park, new charges for street naming and numbering and charges across the foreshore adding £203,000 to 2025/26 budgets.

ii. Contractual income

1. Contractual increases in income relating to our leisure facilities are forecast to yield an additional £146,000 in 2025/26 and a further £494,000 growth over the subsequent 3 years.

2. Contractual increases to glass recycling prices are expected to yield an additional £75,000 in 2025/26.

iii. Income Adjustments

1. Damage caused during the winter storms is impacting the level of beach hut income achievable with an adverse adjustment of £30,000 in 2025/26.

2. Adjustments have been made to reduce income expectations in Planning income by £170,000 as reported in the council’s Financial Monitoring Reports throughout 2024/25 (albeit with the potential for mitigation through increased householder statutory fee levels from April 2025).

iv. Ongoing Savings

1. A review of vacancies has determined £175,000 can be permanently removed from service budgets, including Revenue and Benefits (£75,000), Planning (£46,000) and Economic Development (£54,000) creating an ongoing saving in the MTFP with no impact on current service and delivery.

v. Strategy Delivery

1. Uplifts in commercial property income generate an additional £39,000 from 2025/26.

2. No change has been made to anticipated Treasury Management interest earnings in 2025/26, but treasury income budgets then gradually reduce between 2026/27 and 2028/29 due to an expectation of falling interest rates and investment balances.

e. Alignment of budget to Priorities and New Budget Requirements: +£243,000 in 2025/26

i. New Budget Requirements

1. Investment in ICT Hardware provides an additional £125,000 to support the Azure cloud migration requirements.

2. ICT Software requires an extra £213,000 to fund the cost of council software licences.

3. A review of General Fund recharges has increased the net recharge to the HRA by £687,000. An element of this is due to the share of upfront investment in Transformation totalling £73,000.

4. £50,000 is required to fund a review of Public Space Protection Orders (PSPOs) in 2025/26 as they are set to expire at the end of their 3 year term at the end of June 2026.

5. The removal of the internal courier service in 2024/25 has created ongoing annual savings of £44,000.

6. £94,000 of additional depot costs predominately relating to Business Rates following the transfer from Claymeadow depot to Hardley depot have been allowed for in 2025/26.

7. Periodic air quality monitoring enables the removal of £54,000 in 2025/26, noting its reinstatement in 2027/28.

8. Additional minor adjustments across services result in a net adjustment required of -£81,000.

Planned use of and contributions to Reserves

16. Appendix 5d outlines all movements in reserves actioned in the 2025/26 General Fund revenue budget setting. In summary, the original 2024/25 budget allowed for net transfers from reserves totalling £410,110. In 2025/26, planned net transfers from reserves total £1,645,310. A full breakdown of the Transfer from and to are shown at Appendix 5d.

17. As included in the recommendations it is proposed to consider the utilisation of a proportion of the budget equalisation reserve to seed fund investment in community assets for the purpose of facilitating Community Asset Transfers, supporting any transition to the new unitary authority and revised arrangements with town and parish councils. Based on the current MTFP and the potential requirement to use £1.322 million from the reserve to close the gap (subject to meeting the fees and charges income expectations), up to £1.377 million could be made available.

Summary of Proposals and Council Tax for 2025/26

18. The General Fund net budget requirement for 2025/26 will be £25.509 million (appendix 5a & 5b), an increase of £973,000 on the 2024/25 budget requirement.

19. The General Fund budget is split across six portfolios (as per appendix 5a). Due to their nature, the costs of some corporate resources are apportioned across several, if not all, portfolios and so to support transparency, warrant separate inclusion as part of this budget setting report (appendix 5c). The breakdown of the 2025/26 budget at ultimate Portfolio level is as follows:

20. Graph A – NFDC General Fund: Portfolio Breakdown 2025/26

21. The budget is funded predominantly through Council Tax and Business Rates, with further support coming via central government grants:

22. Graph B – NFDC General Fund: Funding Breakdown 2025/26

23. At the Cabinet meeting on 5 February 2024, the Cabinet agreed to the recommendations as included within the ‘Community Grant Funding 2025/26’ paper. This confirmed the award of £274,730 of revenue and capital community grants for the 2025/26 financial year. The council also has £48,000 budgeted under the councillors grant scheme, resulting in total community grant awards of £322,730 for the year.

Council Tax for 2025/26

24. The proposed balanced budget for 2025/26 includes a proposed New Forest District Council Band D Council Tax increase of £5.98 (2.99%), resulting in a New Forest District Precept of £205.77 for the year (equivalent to £3.95 per week for all services provided by New Forest District Council).

25. Out of the overall General Fund Net Budget Requirement in 2025/26 of £25.509 million, the overall cost to be met by council taxpayers will be £15.094 million.

The Medium Term Position

26. Whilst a multi-year settlement has been promised from 2026/27, as has been the recent trend, a 1-year funding settlement has been made by the government for 2025/26 leaving uncertainty over the medium-term on the potential impact that the Fair Funding Review and the reset of business rate retention scheme will have on individual local authorities. Both could have the ability to have a significant weighting on the availability of resources to fund council services

27. The final 2025/26 local government finance settlement introduced a significant change to its funding methodology. It removed the Funding Guarantee given in 2024/25 and replaced it with a Funding Floor. This effectively protected the council core spending power at the 2024/25 funding level but did not guarantee any level of growth (usually 3-4%). Consequently, due to this offset, the council is unable to benefit from the full increases to Council Tax and Business Rates. An assumption has made over the Medium Term of a removal of residual government grant from 2026/27.

28. The medium-term summaries set out over appendices 1, 2 and 3 provide an outlook of the future years’ budgets and are set out on a prudent basis using the latest known information.

29. The council will continue to work towards the financial strategy as set out in paragraphs 10 and 11 of this report to ensure the longer-term financial stability of the council. The current MTFP deficit to 2028/29 (appendix 2) of £2.222 million will be closed dependant on;

a. taking appropriate opportunities regarding commercial and residential property strategies to bring valuable new sources of additional income into the council;

b. crystalising savings and efficiencies from the council’s Transformation Programme;

c. ongoing growth in all council fees and charges income in line with policy;

d. council’s ability to maximise its revenues through local taxation (the graph demonstrates below the severity of the budget deficit, if annual Council Tax increases are not assumed); and

e. appropriate use of the budget equalisation reserve.

30. The MTFP currently shows the potential for a small surplus in 2026/27, but this is subject to change in line with the uncertainties as outlined further in the report. The short-medium term outlook will become clearer as we progress into 2025/26, and so future MTFP updates can take account of the latest forecast and make recommendations about future budget provision beyond 2025/26 towards agreed priorities accordingly.

31. Graph C – NFDC General Fund Cumulative Deficit to 2028/29

Pay and reward

32. A base pay award assumption of 2% is allowed for within the detailed budget for 2025/26 and between 2 - 2.5% throughout the MTFP. Based on relatively high levels of inflation in recent years there is always potential for settled pay awards to be larger over the short-medium term. As a result of this, and a backdrop of larger pay awards covering 2022/23, 2023/24 and 2024/25, an allowance of £565,000 has been retained in a pay award contingency for 2025/26. The NJC unions have now presented their claim for 2025/26 which would be in excess of the 2% and the pay award contingency. On the basis the final negotiated payment is usually lower than the initial claim, there is no need for the council to reflect additional pay award costs at this time. The Employee Side Liaison Panel will keep abreast of developments on the 2025/26 pay bargaining negotiations as they progress during 2025.

General Fund Capital Programme and Financing

33. The council’s proposed General Fund Capital Programme for 2025/26 totals £19.411 million. This significant programme will utilise the majority of remaining general capital reserve balances with current needs exhausting them over the medium-term.

34. The Asset Maintenance and Replacement Budget and General Fund Capital Programme report presented to the Cabinet on 5 February 2025 gave the full detail at individual scheme level. This report includes the summarised programme and financing at appendix 6.

35. The Commercial and Residential Property Acquisition and Development Funds are not shown in the programme at appendix 6 because of the uncertainty around when funds will be required. The council has established governance arrangements in place for the approval of funds, with each potential Commercial purchase demonstrating a strong link to supporting employment and the Economy within the District. The in-year financial reporting and updates to the Resources and Transformation Overview and Scrutiny Panel provide members with valuable updates on activity in this area.

36. A range of Prudential Indicators need to be approved prior to the start of each financial year. The council’s Capital Strategy presented to the Cabinet on 5 February 2025 included the key capital indicators. The Treasury Management and Investment Strategies for 2025/26 to 2027/28, including key indicators, were considered by the Audit Committee on 24 January 2025 and have been recommended to the council for approval.

37. As of the 31 March 2024, the council was holding Developer Contribution (DC) balances of £3,954,622 and Community Infrastructure Levy (CIL) balances of £7,687,051. So far during the year, a further £370,124 of DC and £1,352,538 of CIL has been collected in cash receipts from developers. The latest 2024/25 budget provides for expenditure of £2,000,000. The proposed Capital programme budget for 2025/26 - 2027/28 includes DC and CIL funded projects of £11,138,000. Further work will be undertaken during 2025/26 to ensure the council continues to facilitate the delivery of projects using the funding it collects for this purpose.

Section 25 Statement: Robustness of Estimates and Adequacy of Reserves

38. There are a range of safeguards in place to help prevent local authorities overcommitting themselves financially. These include the Chief Finance Officer’s duty to report on the robustness of estimates and adequacy of reserves (under section 25 of the Local Government Act 2003) when the authority is considering its budget requirement 41 (England and Wales).

Section 25 Statement from the Section 151 Officer

39. The 2025/26 budget has been constructed based on all latest information and considers all factors that will have an implication to 2025/26 that are in the council’s control. Budget variations in relation to high levels of inflation have been considered and included within the budget where appropriate. Income projections are sensible and not overinflated, and the full cost of the council’s staffing establishment is based on latest pay assumptions and is calculated in an appropriate level of detail. Senior Management across the council engage with the council’s central finance team on the preparation of the detailed budgets, and only budgets that have the backing of senior management make it through to this budget setting report for consideration by members of the Cabinet and ultimately Council.

40. There are areas of uncertainty that the council needs to be particularly mindful of, affecting the budget assumptions over the medium-term. These include (but are not entirely limited to) the:

a. methodology regarding the Government’s multi-year finance settlement from 2026/27

b. business rate changes

c. timing and scale of Fair Funding Review impact

d. amount of separate food waste collection new burdens funding yet to be confirmed by the Government

e. steady state costs of the new waste service when operating effectively as planned

f. level of ongoing EPR funding beyond 2025/26

g. impact on resources required to support LGR preparations

h. expectation that the level of new government funding matches the increases to National Insurance costs

i. pay award increases

j. impact regarding proposed changes to increase the statutory fee structure regarding Planning applications

41. In setting the General Fund Revenue Budget for 2025/26, the council is contributing to the financing of the capital programme. The overall reserve transfers are clearly laid out in appendix 5d and are for specific purposes. Appendix 7 details the value of reserves to be used in financing the General Fund Capital Programme in 2025/26. The council’s Capital Strategy (Cabinet: 5 February 2025) takes this further to combine the General Fund and Housing Revenue Account Capital Programmes and details how reserves will be used in financing the delivery of these forecast programmes over the medium-term period. Use of reserves is supplemented where appropriate with borrowing, and an assessment is made on the affordability and proportionality of financing charges to the revenue budget.

42. The General Fund Balance reserve at £3 million and the Housing Revenue Account (HRA) reserve at £1 million are considered to be adequate for 2025/26 considering the overall size of the council’s budget across these two accounts. Variations in actual performance as compared to budget assumptions are inevitable in an organisation with a turnover as large as the council’s, especially when also considering the diverse range and complexities of services and differing levels of demand on those services throughout a fiscal period. Reserves exist, in particular the General Fund Balance and HRA reserves, to provide a cushion for these variations.

43. The proposal to use a proportion of the Budget Equalisation Reserve balance (£2.699 million as at 31/3/24) to support the delivery of Community Asset Transfers is considered appropriate and acceptable, both in the context of Local Government Reorganisation, and on the principle of invest-to-save for the council.

44. The council maintains a suitable level of liquidity regarding its cash balances in order to service the day-to-day requirements of the council. In order to maintain its professional investor status a minimum of £10 million must be available. Full details on how the council manages its borrowing, investments and risks can be found in the council’s Treasury Management Strategy 2025/26 report.

45. As the council’s Chief Finance Officer, I am satisfied on the robustness of the estimates as included in the budget for 2025/26 and MTFP to 2028/29 and I am able to provide assurance on the adequacy of reserves held by the council.

Fees and Charges

46. A fees and charges policy position was set and adopted by the council in October 2023. It included an assumption on growth equivalent to 20% over the 3-year period to 2026/27. Further fees and charges growth is budgeted to continue thereafter, with a £300,000 increase each year, targeted from 2026/27.

47. Portfolio Holders have reviewed and proposed their fees and charges levels across several services for 2025/26 and these are documented throughout Appendix 7 and where required any changes form part of the recommendations to council.

Corporate plan priorities

48. This budget supports all the council priorities whilst maintaining a balanced MTFP. It ensures we are being financially responsible and supports our Future New Forest transformation programme which underpins the delivery of all our priorities.

49. The council is resourced to enable a review of priorities, and the budget as laid out makes suitable provision for allocated funding to support new and emerging priorities as a result of Devolution and Local Government Reorganisation.

Options appraisal

50. Due to the finite level of resources available to the council and the need to maintain adequate reserves every budget has been considered with due regard to all others.

51. Should significant options not be taken (for example the recommendation to increase Council Tax) this would require contra reduction within service budgets to be identified. It is considered such action would be detrimental to the delivery of a sound balanced budget, aimed at delivering the council’s priorities.

Consultation undertaken

52. Internal consultation between portfolio holders, finance officers, service managers and budget holders informed by external consultants and surveys have determined the forecast data presented in the report.

53. Throughout December and early January an on-line consultation was available to Business Rate payers. This provided the opportunity for feedback regarding the budget and MTFP including the proposed financial strategy and options to close the gap.

Financial and resource implications

54. This is a financial report with budget implications already detailed and considered in the main body of the report.

Legal implications

55. The council has a fiduciary duty to its taxpayers to be prudent in the administration of the funds on their behalf and an equal duty to consider the interests of the community which benefit from the services it provides.

56. It is the responsibility of councillors to ensure the council sets a balanced budget for the forthcoming year. In setting, such a budget councillors and officers of the council have a legal requirement to ensure it is balanced in a manner which reflects the needs of both current and future taxpayers in discharging these responsibilities. In essence, this is a direct reference to ensure that council sets a financially sustainable budget which is mindful of the long-term consequences of any short-term decisions.

57. As a billing authority, failure to set a legal budget by 11 March each year may lead to intervention from the Secretary of State under section 15 of the Local Government Act 1999. It should however be noted that the deadline is, in reality, the 1 March each year to allow sufficient time for the Council Tax direct debit process to be adhered to.

Risk assessment

58. The budget for 2025/26 is based upon best estimates, but uncertainty still remains over the short-term and medium-term on a variety of matters, most notably surrounding the assumed compensation for the increase in National Insurance costs and the potential re-design of the Business Rate retention scheme (in replacement of all other central funding). It is vitally important that the council continues with its prudent financial planning and continues to take actions to deliver a balanced budget over the medium-term period.

59. The council provides regular financial monitoring reports, providing valuable updates on the latest forecasts as against original expectations and has £3m in the General Fund Reserve, available to support service delivery budgets. The council also has a Budget Equalisation Reserve, which exists to smooth out annual fluctuations in council funding. Within this context, the budget as now presented to Cabinet is considered to be robust and deliverable.

Environmental / Climate and nature implications

60. The ongoing £250,000 annual budget within revenue and capital allowed for within the council’s Medium Term Financial Plan will enable the council to deliver critical priorities on its agreed Climate and Nature Emergency action plan and invest in carbon reduction projects and green initiatives. As the council moves forwards with its climate action plan and longer-term strategy, the Medium Term Financial Plan will be reviewed and further reports brought forward as required.

61. Hybrid working continues to help reduce travelling time for officers across several departments of the council and has improved the efficiency of a large proportion of office space.

62. The council’s proposed investment in a fleet infrastructure strategy will inform the council on how it can make progress in delivering a more sustainable green fleet going forward.

63. All of the council’s procured energy comes from 100% renewable energy sources.

Equalities implications

64. Over the medium-term, as the council continually strives to provide quality services at maximum value for money, any potential equality and diversity implications will be covered as and when key decisions are made.

Crime and disorder implications

65. The council’s budget for 2025/26 contains £873,000 supporting community safety and CCTV operations.

Data protection / Information governance / ICT implications

66. There are no additional data protection, information governance or ICT implications arising directly from this report, the report and budget does however provide sufficient funding to ensure obligations and requirements in this area are met.

Appendices:

Background Papers:

Appendix 1 – MTFP General Fund Budget 2025/26 - Summary of Resources

Appendix 2 – MTFP General Fund Budget 2025/26 - Summary of Budget Requirements

Appendix 3 – MTFP General Fund Budget 2025/26 – Options identified to close budget shortfall

Appendix 4 – MTFP General Fund Budget 2025/26 – Asset Maintenance and Replacement Programme

Appendix 5a – MTFP General Fund Budget 2025/26 – Portfolio Summary

Appendix 5b – MTFP General Fund Budget 2025/26 – Portfolio Summary

Appendix 5c – MTFP General Fund Budget 2025/26 – Central Support Service Business Units

Appendix 5d – MTFP General Fund Budget 2025/26 – Movement in Reserves

Appendix 6 – MTFP General Fund Budget 2025/26 – Capital Projects

Appendix 7 – MTFP General Fund Budget 2025/26 – Proposed Fees and Charges