Agenda item

This report:

·        Aims to ensure the council presents a legally balanced 2026/27 budget. 

·        Presents an update on the MTFP position of the council.

·        Presents an update on the letters of the Leader of the Council and Director of Finance in writing to Government to seek assurance around the council’s ability to continue to cashflow the significant and growing Dedicated Schools Grants deficit within the statutory framework.

Provides details of the council’s responses to two government consultation documents namely the Local Government Fair Funding Review and Modernising and Improving the administration of council tax.

The Chief Finance Officer presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'B' to these Minutes in the Minute Book. The Board was advised that the report was being taken to Cabinet to comply with accounting codes of practice and best practice which requires councils to have a rolling multi-year medium term financial plan. The report providedthe latest high-level overview of the 2026/27 Budget and 3-year medium-term financial plan. The report also provided an update on the Leader of the Council and Director of Finance’sletters submitted to MHCLG in July 2025 to seek assurance around the council’s ability to continue to cashflow the significant and growing Dedicated Schools Grants deficit within the statutory framework. Details of the council’s responses to two government consultation documents namely the Local Government Fair Funding Review and Modernising and Improving the administration of council tax were also included. The Board raised a number of issues in discussion on this item including:

·        National Living Wage – It was reported that the increase in this would need to be taken into account for contracted services for social care.

·        Escalation of DSG Deficit - The Dedicated Schools Grant (DSG) deficit was highlighted as a major financial risk. It was noted that the deficit was projected to reach an accumulated total of over £180 million by March 2026. Members expressed concern about the scale of this increase and the lack of clarity on how the deficit would be resolved.

·        Interest Costs on DSG Deficit - The cost of servicing the debt associated with the DSG deficit was confirmed as £9.9 million for the next financial year. Members requested that future reports include graphical representations of these projections, alongside tabular data, to make the financial implications clearer for all members. It was explained that the Council could face a critical point during 2025/26 when cash resources may become insufficient to service debt obligations. Members expressed frustration at the delay in government announcements, which were now expected close to Christmas.

·        Council Tax - Questions were raised about the assumptions underpinning council tax increases. Members sought clarification on whether the projected rises were sustainable and what impact they would have on residents, particularly given ongoing cost-of-living pressures.

·        Unearmarked Reserves - The level of this was discussed, currently standing at £27.3 million, concerns were expressed that holding reserves above this level could potentially lead to risks of clawback.

·        Use of Capital Receipts - Clarification was sought on this to fund transformation projects and whether this would remain viable beyond the current financial year. It was confirmed that the flexible use of capital receipts had been extended nationally until 2030, providing scope for future investment in transformation and service improvement.

During consideration of this item the Board also considered any comments and recommendations arising from Budget conversations.  The key issues which were discussed included:

·       The need to prioritise repairs and maintenance for public-facing assets, particularly libraries, was considered

·       Concerns were expressed about reputational risk if essential services such as libraries were not maintained.

·       The potential use of capital receipts from asset disposals to address maintenance backlogs.

RESOVLED that the Overview and Scrutiny Board recommend to Cabinet that as part of the Budget setting process. consideration be given to utilising receipts from the existing surplus asset disposal programme for 2026/27 to address some of the repairs and maintenance of publicly facing assets.

Voting: 7 in favour, 1 against, 2 abstentions

The meeting was adjourned at 7.19pm and reconvened at 7:27pm