It means "explaining"

Set out is a phrasal verb. It generally means to begin something, usually to begin something with a specific aim or goal in mind. So I think in this usage it means that the council was making it goal known and beginning to plan for that outcome (a shorter summer holiday). T set out can also mean to begin a journey - We set out tomorrow for our trip to France.

Simply, it means "to arrange" or "the process of organizing". A similar phrase is "to set the table", which means to bring out dishes and silverware in preparation for a meal. When you set the table, you are organizing, or arranging, all the individual items (plates, cups, knives, forks) in a particular pattern so that everything is in order. When making a plan, you will have to "set out" all the details of what has to come together, so that you can organize what has to be done. In this situation, the plan is regarding what to do in the next five years, and the details involve reducing the summer holiday.