RBWM announces draft budget 2025/26 and public consultation

The draft 2025/26 RBWM budget was published and approved for consultation on 19^th December 2024. Link here to the RBWM press release and draft budget. 

The dire state of the Borough’s finances has been well documented and described over the past year or more. This has reached a critical point now with the preparation of the 2025/26 budget. Like every other local authority, RBWM has a legal duty to set a balanced budget. The hard fact is that RBWM is unable to set a balanced budget for next year, or become sustainable in the medium term, without significant government support. 

Five main factors have created the situation we are facing today:

• Historic cuts to RBWM council tax rates – from 2010, successive Conservative administrations cut council tax for six years and froze for a further year, leaving the budget £30m lower now than if national average increases had been applied.
• Increased debt – debt increased from £59m in 2014 to around £230m now, which is expected to cost £18.5m to service next year. The vast majority of this debt increase was incurred by the Conservative administration of 2015-2019. We do not have an asset portfolio to match this debt due to poor operational decisions and accounting practices in the past.
• Historic accounting errors – a detailed review of financial accounts – the first since 2021 – revealed errors booked under the Tories’ watch currently totalling £30m which need to be corrected.
• High and increasing demand for care services – being adult and children’s social care (statutory care for the most vulnerable in our communities) and temporary accommodation, also for vulnerable people. Private social care providers, facilitated by Conservative party policies, are increasing charges uncapped and with demand for services exceeding supply, the council is paying for private profits in an unsustainable way.
• External factors – high service cost inflation, mostly thanks to the Liz Truss disaster budget, and higher than historic interest rates add to the challenges. 

The administration has taken the tough decision to formally request, from government, a loan (known as Exceptional Financial Support) and approval to raise council tax above the normal limit. The proposal needed for the council to be sustainable next year and in the medium term is a loan of £60.3m and a council tax increase of an additional 20% over the guide 4.99% increase. We await the result of this request, which we expect to be finalised in mid-February 2025. 

Despite this significant increase in council tax, RBWM will likely still have the lowest council tax among all surrounding local authorities and the whole of Berkshire, including being more than £450 a year lower than Reading (at Band D). We have also proposed a greater support package for the most vulnerable residents in the borough, protecting them from the impact of the additional increase. 

RBWM officers and councillors have spent the last 18 months working to gain clarity on the financial situation and we have made a number of improvements to create a strong foundation and demonstrate to government that we are doing everything we possibly can to shore up the council. These include:

• Initial financial recovery plan agreed by Cabinet and Full Council in Sept 2023
• Spending Control Panel set up in October 2023, to scrutinise all spend items over £500
• Detailed and specific transformation programme, FutureShape RBWM, established in April 2024, and regularly reported on since.
• CIPFA review of the council’s financial resilience which endorsed the administration’s plan.
• Reductions to the capital programme to focus only on the most important priorities
• Approval of the RBWM Financial Improvement and Sustainability Plan (FISP, here) by Cabinet and Full Council in November 2024.
• Programme of asset disposal in conjunction with a review of the Property Company, to better manage property assets in the Borough.
• Progressing major development sites such as the Elizabeth Quarter (including the Maidenhead Golf Course) and Nicholson’s  Quarter, delivering over 2,000 homes and over £100m of capital receipts in the future.
• Stronger governance, more transparency and a higher quality of financial and operational reporting
• Engaging Newton Europe to conduct an expert review of Adults and Childrens social care with a target to save 10% of total care costs over the next two years

These actions not only benefit the council but also demonstrate to government that we have a plan and are taking the necessary steps to put the council on a sustainable footing. This is a critical part of securing the financial support we need from government and avoiding the issuing of a Section 114 notice, effective bankruptcy. 

The present situation is much clearer than it has been for many years, and both our assessment and the plan have been validated by CIPFA, the external professional body of Public Finance and Accountancy, who’s support is also critical for gaining government support. 

The public consultation runs from 19^th December 2024 to 30^th January 2025, and the draft 2025/26 budget will be reviewed by Corporate Overview and Scrutiny panel in January 2025, before returning to Cabinet on 26^th February 2025 and Full Council on 5^th March 2025. 2025/26 Draft Budget Consultation | RBWM Together