Issue - meetings

To submit the report of the Director of Function (Resources)/Section 151 Officer.

It was resolved to note the contents of the Medium Term Financial Plan 2026/27 to 2028/29 and to approve the assumptions made therein.

The report of the Director of Function(Resources)/Section 151 Officer incorporating the Medium Term Financial Plan (MTFP) for 2026/27 to 2028/29 was  presented for the Executive’s consideration. The Plan sets out the Council’s budget strategy over the next three year period including the assumptions which will be taken forward to the annual budget setting process.

Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance and Housing presented the Plan which sets out the Council’s likely resource requirements for the next three financial years and outlines how the Council plans to balance the resource requirements  with the funding available. The MTFP takes account of all known changes that are required to be built into the 2026/27 base budget and makes assumptions on the main factors that impact the Council’s revenue budget – pay costs, pensions, general inflation, Welsh Government funding, demographic and demand pressures.

The Director of Function (Resources)/Section 151 Officer provided context on the wider UK economic outlook noting that although the Council’s central funding comes from the Welsh Government, the UK government provides Welsh Government with its entire funding. Consequently, the state of the UK economy and budgetary decisions have a direct impact  on both Welsh Government and local government funding. The timing of the Senedd elections is also impacting on the local government settlement. Welsh Government’s Cabinet Secretary for Finance has announced that the 2026/27 budget will be based on the 2025/26 allocation adjusted for inflation estimated at around 2%. A reserve of £400m will be held back for allocation by the new Government. However the actual funding which the Council eventually receives may be lower depending on the distribution formula.

The Section 151 Officer expanded on the national and local budget pressures facing the Council over the term of the Plan as detailed in section 5 of the report. By considering all these issues alongside the Council’s income prospects (section 6) and applying the  assumptions set out in appendix 2 to the report, it is possible to estimate the revenue budget for the three years to 2028/29 (Table 8 refers). The estimated net revenue budget reflects a 11.2% increase over this period. Under the most likely scenario, an additional £12.63m will be required in 2026/27 to address the inflationary pressures of providing the current service and to meet demand pressures. Assuming a 2% increase in AEF of £4.98m and a 5% rise in Council Tax (2.853m), a budget gap of £4.796m remains. When factoring in the £2.46m of reserves used to balance the previous year’s budget, the shortfall increases to £7.256m. Services are reviewing their budgets to identify potential savings and political pressure is being applied to the Welsh Government through the WLGA to reconsider its proposed 2% only funding increase.

The Council retains the option to use general balances and reserves to help address the projected shortfall in 2026/27.However, this is a short-term measure and does not eliminate the need to resolve the funding gap in the long-term. The MTFP highlights the fact that the Council  ...  view the full minutes text for item 12