Decision details

The Financial Services Manager presented the Medium Term Financial Plan (MTFP) Scene Setting Report.

Members were advised that the report represented the first stage in the process of preparing the 2027/28 budget and the Medium Term Financial Plan through to 2030/31. The report set out the proposed timetable, key assumptions and financial issues that would inform the development of future budget proposals.

It was noted that the report had been prepared during a period of significant change. Whilst the Government had provided a three-year financial settlement, uncertainty remained beyond that period. Members also recognised the implications of Local Government Reorganisation (LGR) and the approach of vesting day, which created additional uncertainty for long-term financial planning.

The Financial Services Manager highlighted three key messages arising from the report. Firstly, the Council continued to face a number of significant financial pressures. An initial review of the budget had identified pressures totalling approximately three million pounds. Members were advised that a number of savings and efficiency measures had yet to be delivered and that some one-off savings, including those achieved through vacancy management, had not been incorporated into the Council’s base budget. In addition, projected shortfalls within the Town Hall budget and other emerging pressures indicated that further action would be required to address the funding gap.

Secondly, Members were advised of the need to continue prudent financial planning. The assumptions underpinning the MTFP included provision for a two per cent pay award, annual increases in fees and charges, and Council tax increases in line with Government expectations and referendum limits. Despite these assumptions, the financial settlement did not fully offset rising costs, including pay, contractual commitments and inflationary pressures. The Council would therefore need to continue identifying efficiencies and opportunities to strengthen its long-term financial sustainability.

Thirdly, the report highlighted the uncertainty surrounding future local government funding arrangements as a consequence of LGR. As details continued to emerge, the Council’s financial planning would need to take account of the associated risks and uncertainties.

In summary, the Committee noted that the report provided the framework for the development of the 2027/28 budget, set out the principal financial challenges and assumptions facing the Council, and established the timetable through which detailed budget proposals would be brought forward for Member consideration.

The Portfolio Holder for Finance and Governance highlighted the need to address the two point three million pound savings requirement. He stated that the administration would take greater ownership of the budget process moving forward and noted that additional pressures could arise if future pay awards exceeded the contingency included within the financial assumptions. He further commented that local government remained underfunded and advised that he would be working closely with the Director of Finance and the Finance team to identify savings and address emerging budget gaps.

In response to a query regarding the impact of national policy changes and the future of the New Homes Bonus, officers advised that the funding stream had not been confirmed as ending entirely. It was noted that the local government funding landscape remained highly fluid, making it difficult at this stage to identify with certainty which funding streams would continue beyond the current settlement period. Greater clarity was expected as vesting day approached.

RESOLVED that

1)    The budget process outlined in this report be followed for the 2027/28 annual budget and the Medium Term Financial Plan (2027/28 to 2030/31) subject to the impact of Local Government Reorganisation and vesting day on 1 April 2028.

2)    The current pressures of £2.338m be noted for consideration as part of the budget process for 2027/28.