That a resolution be placed before the meeting of the Council on Tuesday, 20 February 2024, specifying the Council Tax to be levied in the Borough of Gravesham for the year 2024-2025.

The Cabinet was presented with the draft revenue and capital estimates for General Fund services in 2024-25 together with the recommended level of council tax to be levied for 2024-25.

The report was presented in seven sections and included an executive summary:-

·         Section One – Policy Context;

·         Section Two – Government Funding;

·         Section Three – Medium Term Financial Strategy;

·         Section Four - General Fund Revenue Budget;

·         Section Five – Council Tax;

·         Section Six - Robustness of Estimates and Adequacy of Reserves; and

·         Section Seven - Capital Programme.

The Interim Assistant Director (Corporate Services) provided Members with a summary of the key areas contained within the report.

The Interim Assistant Director (Corporate Services) advised that on 18 December 2023 the Provisional Local Government Finance Settlement for 2024-25 was announced by the Department for Levelling Up, Housing and Communities (DLUHC). As had been the case for the last five years, the provisional settlement was for one year only with local government funding reform now effectively put on hold until after the next Comprehensive Spending Review.

At a headline level, the 2024-25 Provisional Local Government Finance Settlement indicated a 4.9% increase in cash terms in Core Spending Power for Gravesham in 2024-25 compared to 2023-24. Whist this was in line with the increase experienced by other Shire Districts, it fell significantly below the 6% plus increase experienced by Authority types; this being the case in the last four settlements.

The New Homes Bonus Scheme was higher than anticipated and it was also confirmed that the Kent Business Rates Pool would continue to operate in 2024-25.

Support for homeless households continued to be the most significant pressure on the Council’s budget, with spend on temporary accommodation increasing by 661% in past 4 years.  Increase in demand for other Council services, delays in proposed changes in government policy and economic factors such as inflation and interest rates had brought about an increasingly difficult environment within which the Council operated.

These factors came alongside over a decade of significant cuts in local government funding, with direct government funding to meet expenditure on Council services reducing from £8.44m in 2010/11 to £592,390 in 2024/25.  In 2010/11 expenditure on Council services was primarily met by secure, known funding sources provided directly by Central Government.  Today, funding for Council services was principally met from more volatile, local income sources, substantially from council tax.  Over the last decade the Council had to manage its financial position, with proactive action delivering total net reductions in its base budget of £7.56m since 2016.  In 2010/11 the Council’s net budget requirement was £14.4m.  When considering inflation this would have increased to £23.4m for the current financial year.  The budget requirement for 2024/25 was £14.59m.

The proposed budget for 2024-25 represented a balanced budget position, achieved through a contribution of £2.07m being made from working balances to support expenditure in the year (assuming a Council Tax increase of £6.57 per annum for a Band D property in 2024-25).   This would see the level of Working Balances fall below its recommended minimum level of £5.25m by 31 March 2025.  Proactive and accelerated action would be required to deliver the Balancing the Budget initiatives to prevent the Council finding itself in a position where it had limited capacity to respond to and manage the impact of any significant or unexpected events or emergencies during 2024-25 and unable set a balanced budget for 2025-26. This advice was also in line with the view of the Director (Corporate Services), as Section 151 Officer. The Local Government Act 2003 required the Chief Financial Officer to certify that, when setting the annual Council budget, the estimates were robust and that the level of reserves was sufficient for the Authority. To support this, the Director (Corporate Services), as Section 151 Officer, had conducted a review of reserves and working balances, with the conclusions of which detailed at appendix five of the report.

In relation to the council tax to be levied, the Interim Assistant Director (Corporate Services) advised that the provisional settlement confirmed the continued flexibility for District Councils in setting council tax levels by permitting District Councils to raise council tax by 3% or up to and including £5 (whichever is higher) without triggering the requirement for a referendum. 

The budget proposals reflected the Council implementing an annual increase of £6.57 to its council tax charge in 2024/25. This was within the referendum principles and equated to an increase of less than 13 pence per week for a Band D property. 58.1% of residential properties within the borough fall within the bands of A-C and therefore the annual council tax increase will be less than £6.57 for those properties. The total annual charge for the Gravesham element of the council tax bill will be £231.03; by way of comparison, the Band D equivalent council tax for 2023/24 was £224.46.

It was also highlighted that, within the recommendations, Members will also be requested to:-

·         endorse the Council decision taken in February 2023 for the application of a 100% council tax premium on ‘second homes’, applicable from 1 April 2025 (in order to provide the required one-year minimum notice), as enabled by Section 80 of the Levelling-Up and Regeneration Act 2023; and

·         reduce the current Prescribed Class C and Class D discount to 0% with effect from 1 April 2024 as enabled by the Council Tax (Prescribed Classes of Dwellings) (England) (Amendment) Regulations 2012.

The Cabinet stated that, due to the significant financial challenges that the Council continued to face and the declining level of financial support from Central Government, it had no choice but to increase council tax. It was felt that the proposed amount represented good value for money for those services delivered by the Council. It was noted that the Council had increased within the amount permissible however other preceptors such as Kent County Council, Kent Fire and Rescue etc. had not yet set their council tax levels; Parish Councils were not bound by the referendum principles/a maximum amount permissible.

Resolved that:-

1.    a resolution to be placed before the meeting of the Council on 20 February 2024, specifying the council tax to be levied in the Borough of Gravesham for the year 2024-25.

Cabinet also recommends to Council that:-

2.    the draft revenue estimates for 2024-25 together with revised estimates for 2023-24, be approved, subject to any final amendments agreed by the Section 151 Officer in consultation with the Chief Executive and Leader of the Executive;

3.    the provisional estimates for the following eight years be noted;

4.    the draft capital estimates for 2024-25, together with the revised estimates for 202324, be approved subject to detailed reports coming forward on new schemes where applicable;

5.    due consideration is given to the view of the Director (Corporate Services) (as S151 Officer) on the robustness of estimates for the coming year, the medium-term financial strategy and the adequacy of proposed reserves and balances, as required under Section 25 of the Local Government Finance Act 2003;

6.    the threshold for Key Decisions remains at £100,000;

7.    endorsement is given to the Council decision taken in February 2023 for the application of a 100% council tax premium on ‘second homes’, applicable from 1 April 2025 (in order to provide the required one-year minimum notice), as enabled by Section 80 of the Levelling-Up and Regeneration Act 2023.  Delegated authority be given to the Director (Corporate Services) (as S151 Officer) to take all necessary and timely action to implement this recommendation;

8.    approval is given to reduce the current Prescribed Class C discount to 0% with effect from 1 April 2024 as enabled by the Council Tax (Prescribed Classes of Dwellings) (England) (Amendment) Regulations 2012; and

9.    approval is given to reduce the current Prescribed Class D discount to 0% with effect from 1 April 2024 as enabled by the Council Tax (Prescribed Classes of Dwellings) (England) (Amendment) Regulations 2012.