Agenda item

To receive a report from the Deputy Chief Executive (S151) presenting to Member’s the updated Medium Term Financial Plan (MTFP) which covers the period 2026/27 to 2028/29 and to discuss initial options for cost pressures/savings or income related to the services covered by this Policy Development Group (PDG).

The Group had before it a report * from the Deputy Chief Executive (S151) presenting the updated Medium Term Financial Plan (MTFP) which covered the period 2026/27 to 2028/29 and which discussed initial options for cost pressures/savings or income related to the services covered by the Policy Development Group.

The Head of Finance, Property and Climate Resilience stated that the report needed to be considered in two distinct halves, firstly the General Fund and secondly the Housing Revenue Account.

The report was a little different to that provided in previous years. This was due to theraft of changes expected from 2026/27 and the longer term restrictions placed upon the Council byLocal Government Reorganisation (LGR). The report didn’t give a forecast shortfall to beaddressed. Instead it highlighted the unprecedented level of uncertainty faced by all councils inrespect of funding from 2026/27 onwards and estimated a range that the shortfall could fallwithin.

The Chancellor’s Autumn Budget would not be available until the end of November 2025. This would have a knock on effect of delaying the detail at individual local authority level. The uncertainty regarding future funding could not be overstated.

General Fund Budget Options

Over the summer officers had identified a range of budget options to address the budgetshortfall, using the Red, Amber and Green (RAG) assessment, which were being presented tothe relevant Policy Development Groups for discussion, with the recommendation to support the Green and Amber options.

Housing Revenue Account (HRA) Budget Options

This was largely based on assumptions, including the level of Pay Award, the price of utilities, contractor / materials pricing and income projections. These would be keptunder review and would be updated and brought back to the November PDG as moreinformation became available.As shown in Appendix 5, the forecast indicated a funding shortfall of £541k in 2026/27 risingto £1,796k over the 3-year forecast. Therefore savings ideas and proposals were required.

Discussion took place regarding:

·         The need to estimate the Homelessness Prevention Grant (HPG) due to such uncertainty.

·         It was sensible to be prudent and ‘over cautious’ when assessing the future budget due to the unprecedented circumstances.

·         The proposal to increase the budget in relation to Climate Change needed to be considered given the forecast financial position and the implication it might have in reals of finding further savings in order to be able to afford it.

·         The expected increase in income due to the Extended Producer Responsibility (EPR) and that this would offset the loss of the Devon County Council Share Savings.

·         The question marks shown in the report against the Collection Fund which were due to so many unknowns at this stage of the budget setting process.

·         The Homes for Ukraine Scheme would neither be reduced or expanded, the Council would continue to seek to do what was required of it by Government.

·         The robust approach being taken as regards vacancy approvals by senior management.

·         Temporary accommodation costs.

·         Whether the figures took account of the delay of 6 weeks in the payment of Universal Credit.

·         ‘Rent Convergence’ was explained as a process of gradually aligning social rent levels across the country to ensure fairness and consistency. This process aimed to have people pay similar rents for similar properties while remaining below market rates. The effects of the increase of £1 per week and £2 per week were discussed. ‘Rent Convergence’ was currently out for consultation by the government with the outcome determining the level of the weekly increase allowed.

RECOMMENDED to Cabinet that:

a.    The updated MTFP position for both the General Fund and the Housing Revenue Account covering the years 2026/27 to 2028/29 be NOTED.

b.    The budget proposals as set out in Appendices 2, 3 and 6 be approved.

(Proposed by the Chair)

Reason for the decision

By undertaking regular reviews of the MTFP the Council can ensure that its Corporate Plan priorities are affordable. The implications of the budget gap were set out within the paper. Many areas require greater clarity, particularly around national funding and possible changes to Government Policy. Therefore a number of key assumptions underpinned the reported position, which would be refined as greater clarity was received through the budget setting process.

Note: * Report previously circulated.