Budget Engagement 2025/26

Background information

Unprecedented levels of demand for essential services this year has created significant budget pressures for Reading Council.

Despite having identified additional in year savings of £8.5 million this year, latest in-year budget projections for 2024/25 still show overspends in the following areas:

• £5.7 million in children’s social care at Brighter Futures for Children. This is mainly because of increased placement costs related to looking after vulnerable children and young people, many of whom are presenting with more complex needs.
• £1.2 million in tackling homelessness pressures, with 174 individuals or families currently in need of emergency accommodation, compared to a budgeted figure of 70 households.
• £1.4 million pressure in adult social care, due to the increased cost of care packages and more vulnerable people requiring support (up 4% on last year).
• £3.1 million in Housing Benefit pressures, due to there being significant additional temporary accommodation pressures and supported accommodation costs that are not 100% recoverable through the Housing Benefit Subsidy received from central government.

The Council will finalise its budget for 2025/26 and the savings needed to deliver a balanced budget in February next year, following the publication of the Local Government Finance Settlement, which sets out how much funding councils will receive from central government.

At this time however, the increase in demand for Council services, combined with the increasing cost of meeting that demand, is driving a projected funding gap of £6.4 million for next year (2025/26), increasing to a projected £15.6 million by 2027/28. This results in a cumulative gap of £37.0 million over the next three years. The Council currently has £19.4 million of un-ringfenced usable reserves that have not been earmarked for spend in other areas (forecast for March 2025). Without additional resources or savings being identified, these reserves will be gone within two years.

The above numbers assume an annual increase in Council Tax of 2.99% and the Adult Social Care precept of 2.00%. If the Council were to keep Council Tax and the Adult Social Care precept at the current level, this would make the budget gap next year bigger by £6 million, resulting in a gap of £12.4 million for 2025/26.

Earlier this year the Council agreed in-year saving mitigations totalling £8.5 million to partially offset some of the increased costs of demand-led pressures, which are on target to be delivered.

Transformation programmes are also ongoing in both adults and children’s social care, focused on managing demand and reducing costs. In adult social care services, these include using technology to enable people to remain at home for longer; intensive occupational therapy for people being discharged from hospital, allowing them to regain their independence more quickly; and investing in new in-house accommodation and day services for residents with learning disabilities.

Brighter Futures for Children’s transformation plan includes building children’s homes, reducing the need for expensive external residential accommodation; and increasing SEND places in borough to reduce expensive home to school transport costs.

In addition, a series of management actions have also been implemented internally to manage expenditure. This includes a cross-council hold on filling posts which are not front line, increased scrutiny of all non-essential spend and a reduction in agency spend by limiting it to essential roles only,

What we spend our budget on

Our net budget for day-to-day services (‘revenue’ spending) for 2025/26 is £184.6 million. This figure takes into account income from ringfenced government grants and service users (in the form of fees and charges).

Every £100 we spend on day-to-day services is split as follows:

How we are funded

Our net budget for day-to-day services is funded by a combination of Council Tax, Business Rates, and non-ringfenced central government grants.

Our projected funding for 2025/26 is £178.2 million. This assumes a 2.99% increase in Council Tax and a 2.00% increase in the Adult Social Care precept. This results in a projected budget gap of £6.4 million in 2025/26. 

Key documents

Summary of the Proposed General Fund Budget 2025/26 to 2027/28

General Fund Capital Programme 2025/26 - 2027/28

Medium Term Financial Strategy 2025/26-2027/28 Update to Policy Committee