Issue - meetings

Budget 2026/27 and Medium Term Financial Plan

RECOMMENDED that Council: -

(a) Undertakes a recorded vote in relation to the following items as required by the Local Authorities (Standing Orders) (England) (Amendments) Regulations 2014;

(i) Agrees that a net budget requirement of £452m, resulting in a total council tax requirement of £297.033m, is set for 2026/27 based on the draft local government financial settlement figures published by government in December 2025.

(ii) Agrees an increase in council tax of 2.99% for 2026/27 in respect of the basic annual threshold and the collection of the additional social care precept of 2%.

(iii) Confirms the key assumptions and provisions made in the budget as proposed and as set out in Appendix 3.

(iv) Agrees the allocations to service areas in the budget as set out in Appendix 5.

(v) Agrees the implementation of £14m of savings as set out in Appendix 5a.

(vi) Approve that the current Council Tax discount for Beach Chalets on Mudeford Sandspit and Hengistbury Head is removed from 1 April 2026 onwards see appendix 5b.

(vii) Approves the flexible use of capital receipts efficiency strategy as the mechanism for funding the council’s transformation related and invest to save expenditure as set out in Appendix 6 and potentially a capitalisation direction from government to cover the 2026/27 DSG borrowing costs should it be granted.

(viii) Approves the capital investment programme (CIP) as set out in paragraphs 66 to 82 and Appendix 7.

(ix) Approves the asset management plan as set out in Appendix 8.

(x) Agrees the treasury management strategy (TMS) and prudential indicators as set out in paragraphs 84to 87 and Appendix 9.

(xi) Accepts and supports the formal advice of the chief finance officer on the robustness of the budget and the adequacy of the reserves as set out in paragraphs 102 to 109and Appendix 10.

(b) Agree to borrow £95.7m to fund the 2026/27 excess Special Educational Needs and Disability (SEND) High Needs DSG revenue expenditure above the government grant being made available. This is also based on previous assurance from government that the council can exceed its borrowing thresholds temporarily based on their commitment to return the SEND system to financial sustainability;

(c) Delegate to the Chief Executive, in consultation with the Director of Finance, Leader, and Portfolio Holder for Finance, the allocation of any additional resources that become available through the final 2026/27 local government finance settlement or any other means;

(d) Approves the chief officers’ pay policy statement 2026/2027 for consideration and approval by the council in accordance with the provisions of the Localism Act 2011 as set out in paragraphs 111 to 113 and Appendix 12; and

(e) Note amendments to the Council’s Shared Vision (Appendix 1b), updated to reflect changes to political and officer leadership, the list of milestones to reflect progress made in the last two years and areas of focus for 2025 to 27. The vision, ambitions and priorities remain unchanged.

Additional documents:

Meeting: 11/02/2026 - Cabinet (Item 132)

132 Budget 2026/27 and Medium-Term Financial Plan PDF 2 MB

To set out for Cabinet’s consideration and recommendation to Council the proposed 2026/27 budget and council tax based on.

· Increasing council tax by 4.99% in 2026/27 in line with the government’s annual referendum threshold which can be broken down into a 2.99% basic increase and a 2% uplift by way of the Adult Social Care (ASC) precept.

· Implementation of the approved financial strategy including £14m of further savings, efficiencies, and additional income generation.

· Borrowing a further £95.7m to fund the Special Educational Needs and Disability services revenue expenditure above the level of the Dedicated Schools Grant (DSG) High Needs grant.

· Recognition that the council has technically been insolvent from the 1 April 2025 onwards as the accumulated deficit on the DSG is now greater than the total reserves held by the council, with a negative overall general fund position and is only protected by the legislative statutory override that allows the council to ignore this issue to 31 March 2028.

This report also provides the latest Medium Term Financial Plan (MTFP) covering the 3-year period to 31 March 2029.

It is also important to recognise that in the absence of government support for historic and accruing DSG deficits, the proposed 2026/27 budget has been drawn up based on the use of £4.8m of previously unearmarked reserves to present a legally balanced budget. This reduces unearmarked to be around 6% which is still above 5% which is widely regarded as a statutory minimum. The Council’s Director of Finance advises that although the estimates used for the purposes of this budget are robust, subject to the list assumptions, the reserves should be considered inadequate based on the level of the DSG deficit and the ongoing risks faced by the council. His advice is to apply any resources announced by government as part of the final 2026/27 local government finance settlement to improve the financial health and sustainability of the council. Specifically, this may or may not include any of the following matters all designed to support the councils forecast £379m DSG deficit on the 31 March 2028.

· In response to a 6 January 2026 application by the Council for Exceptional Financial Support from the government.

o Government permission to increase council tax by more than the 4.99% threshold limit.

o Government permission to capitalise the £10.5m cost of borrowing to finance the DSG deficit in 2026/27.

· Any government support for historic or accruing DSG deficits.

Additional documents:

Minutes:

The Portfolio Holder for Finance presented a report and addendum papers, copies of which had been circulated to each Member and a copy of which appears as Appendix 'A' to these Minutes in the Minute Book.

Cabinet was advised that the report set out for Cabinet’s consideration and recommendation to Council the proposed 2026/27 budget and council tax based on.

· Implementation of the approved financial strategy including £14m of further savings, efficiencies, and additional income generation.

· Borrowing a further £95.7m to fund the Special Educational Needs and Disability services revenue expenditure above the level of the Dedicated Schools Grant (DSG) High Needs grant.

Further to this Cabinet was informed that the report also provided the latest Medium Term Financial Plan (MTFP) covering the 3-year period to 31 March 2029.

In addition Cabinet was advised that it was also important to recognise that in the absence of government support for historic and accruing DSG deficits, the proposed 2026/27 budget has been drawn up based on the use of £4.8m of previously unearmarked reserves to present a legally balanced budget, and that this reduced unearmarked to be around 6% which is still above 5% which is widely regarded as a statutory minimum.

Cabinet was informed that the Council’s Director of Finance advised that although the estimates used for the purposes of this budget are robust, subject to the list assumptions, the reserves should be considered inadequate based on the level of the DSG deficit and the ongoing risks faced by the council.

In relation to this Cabinet was advised that his advice is to apply any resources announced by government as part of the final 2026/27 local government finance settlement to improve the financial health and sustainability of the council, and that specifically, this may or may not include any of the following matters all designed to support the councils forecast £379m DSG deficit on the 31 March 2028.