Agenda item

The Committee gave consideration to the Medium Term Financial Plan 26/27-30/31, the budget 26/27, capital programme 26/27-30/31. The Director of Finance and Assets (Section 151 Officer) explained that the report set out the Medium Term Financial Plan for 2026/27 onwards. The purpose of the Medium Term Financial Plan was to set a robust overall framework for the Council’s Financial Strategy and spending plans over the next five years. The report set out the revised financial plans within the Financial Analysis for changes in Government Funding, the economic environment and local engagement. The plan reflected the revisions to previous estimates and covered the period 2026/27 to 2030/31. The Medium Term Financial Analysis included the draft budget for 2026/27 for scrutiny and consideration prior to recommending to Full Council.

Members heard that the government conducted a spending review during 2025 and, this combined with the first reset of the business rates system, had been incorporated into the provisional local government finance settlement announced in December. At the time of writing the report, the final settlement had not been announced, this was subsequently announced on Monday prior to the meeting. It was explained that this was a three year settlement and the government had tried to simplify the funding landscape by removing a number of specific grant streams and combining them into a much smaller number. The draft settlement outlined that the Council had received small, below inflation rises, in core spending power, however the Council was then informed late in the previous week that, due to incorrect business rates data being used in the provisional settlement, the Council would receive substantially less funding in the final settlement which was a similar situation to a significant number of district councils.

Although the government had mitigated this in the 2026/27 funding figures, the Council had lost circa £730k over the last two years of the settlement between provisional and final settlements and therefore the report would need to be updated prior to going to Full Council. Due to the final settlement coming so late there was no option at this stage but to use reserves in 2028/29 to cover the shortfall. It was hoped that the government would reconsider this position in December when the final year two allocations were to be released.

Members heard that the government had delivered on its promise to deliver a three year settlement and so there was now more certainty of three years funding allocations making it easier to plan over the medium term. The spending power assumptions made by government were predicated on the Council increasing Council Tax by the maximum amount permitted. The Council had planned for this situation and therefore the Section 151 was pleased to present a balanced budget for the next three years with a small draw on reserves for 2028/29.

It was highlighted that the budget was predicated on Council Tax rises of 2.97% in 2026/27 and 2.99% thereafter which was included in the spending power assumptions. This meant for 2026/27 a Band D property would pay £256.14 per year, which was a rise of £7.38 from 2025/26. As part of the settlement the government announced a further year of assistance to authorities such as West Lindsey who were affected by drainage board levies, however the exact amount the council would receive would not be known until the spring.

The Section 151 Officer continued that the 2026/27 Draft Budget totalled £21.4m and was fully funded, and represented a balanced budget. Contributions to Earmarked Reserves totalled £2.550m with the Use of Earmarked Reserves being £0.985m. Total useable reserves were projected to be £27m at the end of 2026/27. The movement on the General Fund Balance was forecast as a reduction of £0.146m and was forecast to be £2.052m at the end of 2026/27. The Capital Programme totalled £12.164m over the Medium Term Financial Plan and was fully funded. Also included in the MTFP was a risk register at appendix 2, Pay policy statement at appendix 6 and human resources statement at appendix 7.

The Chairman and Committee Members thanked the Officers for their time and dedication to achieving the best for the Council, commenting that the delayed notice of the finance settlement from government made their job harder than it needed to be.

In response to robust questioning regarding the rate of council tax rise, whether this was inflation related, and whether alternative options had been fully considered, it was explained that whilst every department within the council had been tasked with identifying savings and efficiencies as far as possible, there had been increased costs absorbed by the Council in relation to the food waste collection service meaning savings and efficiencies had been incorporated into budgets already. Additionally, where there had been above-inflation price rises for contracted services, the Council had had to pay those increases. The Chief Executive added that the upcoming Local Government Reorganisation (LGR) changed the agenda for local authorities in needing to prepare for that but no additional funding being available.

Members of the Committee made reference to the particular struggles faced by rural communities and authorities, with funding structures being seen as favourable to urban locations. In light of comments regarding LGR, Members were keen to highlight the financial strength of the Council, reiterating comments made in other forums that monies should be used for the benefit of the district whilst the Council still had opportunity to influence spends.

The Chairman and Members of the Committee again commended the Section 151 Officer and his team on their achievements with the short turnaround for the settlement details, and, having been proposed and seconded, the Chairman took the vote. It was

            RESOLVED that

a)    the approval of the Medium-Term Financial Plan 2026/27 – 2030/31 be RECOMMENDED to Full Council; and

b)    the review of Reserves and the proposed use and contributions to both the General Fund Balance and Earmarked Reserves as detailed at 2.7 within the Medium-Term Financial Plan be approved; and

c)    a balanced Revenue Budget for 2026/27 (Appendix 1) had been considered and be RECOMMENDED to Full Council; and

d)    the Capital Programme 2026/27 – 2030/31 (Appendix 4) had been considered and be RECOMMENDED to Full Council; and

e)    the Statement of the Chief Finance Officer on the Robustness of Estimates and Adequacy of Reserves be accepted; and

f)     any housekeeping or changes required to the Medium-Term Financial Plan due to the final financial settlement and any approvals elsewhere on this agenda, be delegated to the Section 151 Officer in consultation with the Chairman of this Committee prior to the final consideration by Full Council on 2 March 2026.