Agenda item

To receive an update on the MTFS Consultation and Provisional Settlement Update.

The Committee considered an update on the development of the Medium?Term Financial Strategy (MTFS) for 2026–2030, including the impact of the Provisional Local Government Finance Settlement received on 17 December 2025.

The Committee noted that the revised budget position incorporated a £6.104m net improvement in funding for 2026/27, following grant consolidation and updated government allocations. The report highlighted challenge?session refinements to growth and savings proposals, updated capital financing requirements, the rephasing of elements of the Transformation Programme, and revisions to pay and inflation assumptions.

The Committee reviewed the summary findings of the public budget consultation, including stakeholder engagement and survey results, and acknowledged the continuing budget gap of £30.950m for 2026/27, which included the previously approved one?off Exceptional Financial Support (EFS) requirement.

The Committee noted that, in relation to Council Tax, raising the referendum limit would help to address the Council’s budget gap by generating £15.5m next year and reducing future gaps to manageable levels.  Without flexibility, if granted, a full capitalisation direction and accelerated capital receipts would be required.  Historical decisions not to maximise Council Tax, taken with the best of intent, had created a £22.4m shortfall.

The Committee raised the following points/queries, particularly in relation to a proposed increase in Council Tax payments:

·         The impact on residents: Council Tax was a regressive tax; above inflation increases hit hardest those least able to afford it.  It particularly hit those with incomes that were above the Council Tax benefit threshold, but below 60% of medium income.  It was assumed that most of those households would be concentrated in Crewe and parts of Macclesfield.  It was queried how many households would fall into that group and what the effect on disposable income would be if the Council were to increase Council Tax by 9.99%.  In response, it was agreed that officers would provide a written response.

·         The Council offered ongoing financial support.  Officers confirmed that the Crisis and Resilience Fund (previously the Household Support Fund) provided support; the Council Tax Support (CTS) scheme was also in place.  Guidance to accompany Council Tax bills had been updated; additional support to residents also included signposting to wider financial?support options.

·         The implications of the local government settlement.

·         The amount of EFS provided by the government.

·         The officers’ professional recommendation on the 9.99% Council Tax flexibility.

·         The scale of service cuts required without a raise in Council Tax, and the level of confidence in service budgets.

·         The concerns raised by residents on the proposed Council Tax increase, particularly in areas with higher band properties.

·         Assurances were sought that the budget was deliverable given past underperformance, rising borrowing, and residents’ concerns.  Officers advised that all proposals now had delivery plans and business cases in place, unlike in previous years, and reiterated the need for transparent communication and realistic planning.

·         The potential impact on building the Council’s reserves if permission to increase the referendum limit was not granted.

·         The role of scrutiny and impending changes in the Council’s governance framework.  Consideration was given to pre-decision scrutiny and corporate scrutiny matters.

·         The Council’s core spending power had increased by 60.7% since 2015, which was higher than the national average of 54.5%, and higher than inflation at 44%.

·         Concerns around the Transformation Programme, in particular the financial costs and delivery timescales involved; activity could be reviewed by the Audit and Governance Committee.  Assurance in the ability to achieve savings going forward was felt to be required if residents were going to be asked to provide an additional 9.99% in their Council Tax.

·         Cheshire East’s Council Tax base remained lower than neighbouring authorities due to historic freezes and use of reserves, and that even with a 9.99% increase it would still be comparatively low.

·         The progress updates to Members on the Transformation Programme were welcomed. 

·         The importance of making clear financial and performance information accessible to the public was highlighted.

·         Previous decisions to freeze increases in Council Tax payments were taken on advice provided at the respective time.

·         Several factors had contributed to the Council’s current financial position, including: inflation outpacing Council Tax increases, historic reserve movements, and the need to review the Council Tax support scheme to protect vulnerable residents.

RESOLVED (by majority):

That the Finance Sub-Committee:

1.    Note the updated budget position for the period 2026/27 to 2029/30 as set out in Table 3 of the report.

2.    Note the outcome of the Provisional Local Government Finance Settlement received on 17 December 2025 (paragraphs 9-14 of the report).

3.    Review the summary results from the Budget Consultation survey which ran from November to 17 December 2025 as contained in paragraphs 26-33 of the report.

4.    Recommend the list of 2026/27 budget change proposals as contained in Annex 2 of the report onto Corporate Policy Committee (12 February 2026) for inclusion in the final budget to be approved at full Council on 25 February 2026.

5.    Note the submissions made for an application for Exceptional Finance Support (paragraph 20 of the report).

6.    Recommend to Corporate Policy Committee (12 February 2026) to consider recommending to Full Council an increase in Council Tax as one of the tools to set a balanced budget, if granted the ability to raise Council Tax above the current referendum thresholds by Ministry of Housing Communities & Local Government (MHCLG).

At this point in the meeting, the Committee adjourned for a short break.