A draft budget for 2025/26 will be considered by Herefordshire Council’s Cabinet at its meeting on Monday 13 January 2025.
Like many other councils across the country, Herefordshire Council has seen changes to funding arrangements which has reduced the money it receives from central government. The most significant of these is the removal of the Rural Services Delivery Grant which was awarded in recognition of the increased cost of delivering services in a rural county and worth £7million locally in 2024/25.
This reduction in core funding comes against a backdrop of increasing demands for statutory services including child and adult care services and an increase in the cost of providing them. While the government has indicated it will provide support to offset the increased national insurance contributions for council employees this remains unfunded for those employed by businesses who provide services to the council.
When the reduction in central funding, increased demand for services and inflation are considered together, the total budget pressure facing the council prior to any mitigation is £26million.
Work to develop the council’s budget has responded to movements in expected funding from government and identifies budget pressures, and the council is now in a position to publish a balanced revenue budget for 2025/26.
The total draft revenue budget proposed for 2025/26 will be £232million.
In order to balance the budget it proposes a council tax increase of 4.99% along with £6.9million savings and mitigations across council services.
Subject to approval by Cabinet, the draft budget will then be considered by the council’s scrutiny committees. Any changes to the proposals will be included in a report to Cabinet on 23 January 2025 before the final budget is submitted to Council for approval at its meeting on 7 February 2025.
Councillor Jonathan Lester, Leader Herefordshire Council said:
“This proposed budget does not shy away from the significant challenges handed to us by inflation, increasing demand for services, a reduction in government funding or the changes to national insurance. Instead it harnesses our previous prudent and strong financial management to preserve and protect the council’s financial resilience and sustainability at a time when other councils are having to cut services and investment.
“We took some extremely difficult decisions last year, making wide-ranging savings across all council service areas, which has left us in a more robust financial position enabling us to address the extra pressures on services and the reduction of government support. Alongside the savings last year we also committed to investing more than £2.5million to support local priorities. This included more funding for Parish and Town Councils to open up public rights of way and to improve drainage, and a freeze on parking charges. This was in addition to a capital budget which allocated record levels of investment in our road network with £8million spent on road resurfacing.
“Despite reduced funding from government our draft budget takes the same approach this year - investing in local priorities, including maintaining the freeze on parking charges, and investing in our roads, while at the same time balancing the budget by making efficiencies and ensuring best value for public money.
“The decision to propose an increase to the council tax by 4.99% has been a very difficult one. The government has removed the rural services delivery grant, worth around £7million to Herefordshire, and introduced other grants for social care. Despite this, our total revenue grant funding from central government has reduced by around £2.5million. Alongside this, measures in the government budget around national insurance and national living and minimum wage rates impacts all employers, and our providers are passing on their costs to us. Those costs need to be met and funded. In the context of these pressures the only alternative would have been to cut services.
“We will continue to campaign hard for the government to rethink its decision to get rid of the rural services grant before the final financial settlement is announced in January.
“We’ve developed a sustainable financial strategy for 2025/26 and onwards, to ensure the council can achieve an ambitious programme of innovation and improvement to deliver the best for Herefordshire.”
The draft budget report is available to view on the council website.