Agenda item

To receive an update from the Deputy Chief Executive (S151) Officer on the Budget update 2026/27.

The Cabinet had before it and NOTED a report * from the Deputy Chief Executive (S151) and the Head of Finance, Property and Climate Resilience on the draft Budget update on 2026/27.

Note: *Report previously circulated

The Cabinet had before it and NOTED a report * from the Deputy Chief Executive (S151) and the Head of Finance, Property and Climate Resilience on the draft Budget update on 2026/27.

The Deputy Chief Executive (S151) outlined the contents of the report with particular reference to the following:

• That recent Government funding changes were classified as major reforms to make the system fairer and more transparent, with greater weighting on deprivation and removal or downgrading of rural benefits like the sparsity grant.
• Transitional protections were to be phased in over three years, the Council was among 60 other councils expected to face a real-terms funding reduction of around 5% over the next settlement period.
• The New Homes Bonus, a key funding source, would not continue into 2026/27.
• A three-year financial settlement was announced, which would help planning but still posed challenges.
• Business rate changes included five new rating multipliers and adjustments for retail, hospitality, and leisure, with transitional relief expected. Local modelling work was underway, and Members would be updated.
• The loss of all business rate growth since 2013/14 was avoided.
• Overall finding reductions were closer to £1 million rather than £3 million, though still significant.
• The national budget had made a few changes for Local Government, aside from impacts like minimum wage increases, National Insurance (NI) changes, fuel duty adjustments, and small allocations for EV charging and planning capacity.
• Further details were expected in mid-December, and Members would receive more briefings as figures became available.

Discussion took place regards to:

• Clarification on the criteria used to determine the 60 authorities facing cuts due to the shift from sparsity to deprivation weighting. It was explained that areas of greatest need and deprivation were typically urban, while sparsity applied to rural parishes. As a result, most of the 60 councils affected including two-thirds of those in Devon fell into the sparsity category and were set to lose 5% of their funding.
• Concerns about how Government generated deprivation data, noting that rural deprivation was significant and compounded by isolation, which limited access to opportunities. Some families in schools did not claim the available support.  It was explained that that Devon, including Mid Devon, had pockets of severe deprivation. This was why most funding was targeted to urban areas, and the Council had expressed their concerns and the allocation was based on deprivation metrics.
• How much the proposed ‘mansion tax’ would generate and be passported back to the Government. It was explained that Mid Devon had relatively few bands F–H properties compared to the national average, so the impact would be minimal. No modelling had been done yet, as the measure was newly announced and the Valuation Office would need to complete the work.
• The multi-year settlements in the past allowed Government to introduce targeted schemes and asked whether this would happen again or if funding would simply be cut back. It was explained that the fair funding changes were about redistributing existing resources rather than adding new money. Future departmental budgets would determine whether extra funding schemes appeared, but currently councils were told to expect a 5% cut. While multi-year settlements could help planning, core funding was still likely to reduce.

Note: *Report previously circulated.