Agenda item

The Assistant Director of Finance and Customer Services presented the Medium-Term Financial Plan Budget Update and Consultation Report 2026/2027 to 2028/29 for the consideration of Cabinet. In doing so the following was highlighted:

·       As in previous years, the budget-setting process was split into two stages as follows:

o   Stage 1: Based on known data up to December 2025.

o   Stage 2: To be finalised in January 2026 and approved by full Council in February 2026, following the Local Government Finance Settlement.

·       A public consultation in respect of the 2026/27 budget was due to take place from 20^th November 2025 to 2^nd January 2026, with results informing Stage 2 of the budget process.

·       Currently a £1.030 million deficit was forecast for 2026-2027 and a £399,000 deficit forecast for 2027-2028. It was noted that these figures reflected inflationary pressures, pay awards, and anticipated reductions in grant funding and pressures from previous years.

·       Several Budget assumptions had been made in preparing this report. These included:

1)    Council Tax – it was assumed that the full 2.99 per cent allowable increase in 2026/27 and 1.99 per cent increases in subsequent years would be included. In addition, it was assumed that there would be no growth in the number of properties. Any increase in Council Tax was expected to be offset by a reduction in grant funding, maintaining flat Core Spending Power.

2)    Business Rates – it was assumed that there would be no growth in the base due to the anticipated business rates reset. The Fairer Funding Review may reduce retained business rates by an estimated £620,000, with assumed dampening over three years.

3)    Government Grants - New Homes Bonus and other grants expected to be abolished or merged into the Revenue Support Grant (RSG) under Fairer Funding. Therefore, no increase could be assumed. Any increase in local income (Council Tax or Business Rates) was expected to be offset by grant reductions.

4)    Pay Awards and Staffing Costs - The 2025/26 pay award exceeded the budgeted 3 per cent by 0.2 per cent adding £28,000 to future costs. A 2 per cent pay award was assumed for 2026/27, costing £389,000. It was noted that an additional 1 per cent cost-of-living uplift was assumed, costing £195,000.

5)    Local Government Pension Scheme (LGPS) - Councillors were expected to be permitted to rejoin the LGPS. This would result in an additional cost pressure with no additional funding provided. It was noted that at this time no further information was available on this matter.

Information in respect of savings targets for the Council was outlined for Members’ consideration. These were as follows:

1)    The Council had a £1.213 million savings target for 2025/26, comprising of the following:

·       £250,000 in departmental efficiencies.

·       £511,000 in staff turnover savings (which amounted to 5 per cent of staffing budgets).

·       £400,000 in ongoing savings pressure.

It was noted that £319,000 of this target remained to be delivered.

Members were informed there were currently no changes to the Capital Programme at this stage in the Budget setting process. It was noted there was £14.891 million to be carried forward from 2024/25 and the spend to date was £4.873 million. It was reported that a review was underway to assess deliverability and alignment with the Council’s strategic priorities.

In terms of Reserves, it was reported that currently there was £13.38 million in General Fund Balances and £11.27 million in Earmarked Reserves. While these levels exceeded the recommended 5 per cent, any significant event could have a major impact on these.  The amount of Reserves also needed to be considered within the context of Local Government Reorganisation (LGR). In addition, the Council needed to be mindful that any significant event could have a major impact on the levels of Reserves and Balances the Council holds. 

It was highlighted that no further assumptions had been made for additional income from Council Tax or Business Rates. This would not take place until the Local Government Settlement was confirmed. In addition, no assumptions had been made for inflationary increases in contracts.

The next step of the Budget setting process was that Fees and Charges submissions would be received from Officers by 21^st November 2025. Following that, the Stage 2 Budget would be finalised in January 2026, with full Council approval sought in February 2026.

The Policy Manager presented Cabinet with details regarding the public consultation to be undertaken as part of the Budget setting process. It was proposed that a public consultation exercise be undertaken from 20^th November 2025 to 2^nd January 2026. The consultation this year would include a wider number of areas for the public to consider not just specific budget bids which had been the focus on the previous year’s consultation. Following the consultation, analysis of the responses would be undertaken to understand what the residents of Bromsgrove had highlighted as priority areas.

The consultation survey would be available through a number of Council communication channels including the Bromsgrove District Council website and social media accounts. The survey could be accessed via a QR code through these sites which meant that data collected would be more easily accessible. In addition, paper versions would also be available on request and in libraries across the District. Increased engagement with young people living in the District was planned and local school sixth forms and colleges would be invited to submit ideas as part of the consultation process. This would ensure that a wider demographic of residents was involved as part of this year’s process. Members were also keen to utilise other channels to engage young people, such as Tik Tok.

Members raised that Parish Councils may have had their final Parish Council meeting of the year, and it may be difficult to contact them to ensure their views are included in the consultation. It was noted that Parish Councils would be emailed and a link to the survey provided to ensure their views could also be included.

It was hoped that the extra engagement for this consultation process would result in a greater number of responses.

RESOLVED that

1)    The updated budget position for the Council be noted in respect of the 2026/27 annual budget and for the Medium-Term Financial Plan up to 2028/29.

2)    The key assumptions listed in the report were confirmed as accurate for the purpose of projecting an initial budget position.

3)    A further report in February 2026 would include additional information from the Local Government Settlement to give a final financial position for the Council.