Agenda item

To consider a report on the Medium-Term Financial Strategy.

The committee considered the Medium-Term Financial Strategy (MTFS) for 2026/27 to 2029/30, including the proposed balanced budget for 2026/27 and the accompanying capital programme, reserves strategy, and treasury management documents.

The committee noted that the council continued to face significant financial pressures, with a forecasted budget gap of £30.44m for 2026/27 and ongoing risk from inflation, increased demand in social care and SEND, and low levels of reserves. The MTFS set out a combination of savings proposals, income generation, transformation activity and use of Exceptional Financial Support (subject to government approval) to achieve a legally balanced budget. The committee also noted the outcome of the public budget consultation and the restructured transformation programme.

The committee referred to the information contained within the addendum report following publication of the Final Local Government Finance Settlement on 9 February 2026. The committee noted that the council had not been granted flexibility to raise Council Tax above the referendum limit, and discussions with Government on Exceptional Financial Support through a capitalisation directive was continuing. The Final Settlement also confirmed that 90% of the council’s High Needs DSG deficit up to 2025/26, equating to approximately £130m, would be met through the national High Needs Stability Grant, resulting in savings of £2.723m in 2026/27 and £5.265m in 2027/28. In addition, the council would receive a small increase in Core Spending Power, including £0.278m through consolidated grants. Overall, the changes resulted in an improved 2026/27 budget position of £3.001m. 

The committee noted that in order to be eligible for the 90% write-off funding, the council needed to prepare its SEND Reform Plan which would be approved by the Department for Education (DfE). Assurance was provided that this was in hand with the Strategy and Reform Plans prepared against the seven pillars of SEND reform published by the DfE. A maturity assessment of the service had also been prepared. All plans had been shared with, and received positive feedback, from the Regional Group of the DfE.

The committee noted that, as part of the Funding Review, there would be a full reset of the Business Rates Retention System in 2026/27. It was noted that the 50% of the net rates collected would be paid to the Government with 49% being retained specifically to support Council services. 1% was paid to the Fire Authority. The committee requested a more detailed briefing on Business Rates Retention. Officers committed to providing a written response.

RESOLVED (by majority):

That the Corporate Policy Committee

1.    Note that the Council’s Finance Procedure Rules remain unchanged and will always apply to ensure proper approval should any changes in spending requirements be identified (Appendix A, Annex 9 of the report).

2.    Note the summary results of the Budget Engagement exercise undertaken by the Council, as set out in Appendix B of the report.

3.    Recommend 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).

That the Corporate Policy Committee recommends the following to Full Council for approval, having given due regard to the Section 25 report of the Chief Finance Officer.

4.    The revenue estimates for the 2026/27 budget (Appendix A, Section 2, Overview) and the medium-term Capital Programme estimates 2026-2030, as detailed in the Medium-Term Financial Strategy Report (MTFS) 2026-2030 (Appendix A, Section 2, Capital budget).

5.    The setting of Band D Council Tax of £1,975.95 representing an increase of 4.99%. This is currently below the referendum limit (including 2% ringfenced for Adult Social Care) and arises from the provisional finance settlement (Appendix A, Section 1, Key Funding Assumptions). (Recommendation to be revised if increased council tax referendum limits are approved by MHCLG).

6.    The utilisation of up to £30.440m conditional EFS (Capitalisation Direction) via borrowing to balance the 2026/27 budget shortfall (as reflected in Appendix A, Section 2, Balancing the Budget) and to delegate to the Chief Finance Officer (Section 151 Officer) to review the basis of funding through the 2026/27 year and report to the appropriate committee / Cabinet any recommended change to the funding basis of the EFS. (Recommendation to be revised if increased council tax referendum limits are approved by MHCLG).

7.    The 2025/26 planned use of Flexible Capital Receipts is increased to £15.000m, an increase of £14.000m from the £1.000m approved in the 2025-29 Medium-term Financial Strategy Report to fund transformational projects within the Council (Appendix A, Section 1, Key Funding Assumptions).

8.    The allocation of Revenue Grant Funding for 2026/27 of £405.900m (Appendix A, Annex 3 of the report), and delegates authority to the Chief Finance Officer, to approve supplementary estimates if the value of any named grant changes from the figures contained within Appendix A, Annex 3 (noting that all such variations will subsequently be reported to the appropriate committee / Cabinet, and that any new, previously unnamed, grants are subject to approval in-line with the Constitution).

9.    The allocation of Capital Grant Funding for 2026/27 of £99.955m (Appendix A, Annex 4), and delegates authority to the Chief Finance Officer, to approve supplementary estimates if the value of any named grant changes from the figures contained within Appendix A, Annex 4 of the report (noting that all such variations will subsequently be reported to the appropriate committee / Cabinet, and that any new, previously unnamed, grants are subject to approval in-line with the Constitution).

10.The Capital Strategy (Appendix A, Annex 5 of the report).

11.The Prudential Indicators for Capital Financing (Appendix A, Annex 5 of the report).

12.The Investment Strategy; including the financial limits for various classifications of investment, and the investment decision making process set out in the Strategy (Appendix A, Annex 6 of the report).

13.The Treasury Management Strategy (Appendix A, Annex 7 of the report) and the Minimum Revenue Position (MRP) Statement for 2026/27 to 2029/30 (Appendix A, Annex 5 of the report).

14.The Reserves Strategy (Appendix A, Annex 8 of the report), which includes proposed movements to and from reserves.

15.The Fees and Charges schedule for 2026/27 (Appendix C of the report).

That Council recognises that the Corporate Policy Committee considered:

16.The budget engagement exercise undertaken by the council, as set out in the attached (Appendix B of the report) and the results contained within that report.