Agenda item

Purpose: To determine financial planning assumptions for future years and align these with the Council Strategy to ensure that strategic objectives are delivered. The MTFS highlights the overarching key issues facing the Council’s finances and references the scenarios and wider uncertainties concerning the Council’s future revenue streams in light of national and local economic factors.

Council considered a report (Agenda Item 4) concerning the Medium-Term Financial Strategy (MTFS) for the Financial Years 2026-2030.

MOTION: Proposed by Councillor Iain Cottingham and seconded by Councillor Jeff Brooks:

“That Council approves the Medium-Term Financial Strategy”.

Councillor Cottingham introduced the report and highlighted that the document set out the financial plan for the Council for the next four years and that it was aligned to the approved Council Strategy. In addition, it also detailed known issues and risks concerning income and expenditure at the point when it had been written. He also discussed The Fair Funding Review 2.0 which had resulted in a £28m funding reduction to West Berkshire over the next three financial years – reducing retained business rates from the equivalent of 30 pence in the pound to 13 pence. The result of this would be that Council Tax payers would be required to fund 84 per cent of Council services, compared to the historic average of 70 per cent. However, the Government had also made two announcements about Special Educational Needs and Disabilities (SEND) and School Grants after the finalisation of the budget papers. Therefore, the Emergency Financial Support (EFS) that had been requested would likely be the worst-case scenario.

Council noted that, faced with significant financial pressures, an increasing number of local authorities had been struggling to keep a balanced budget. 36 Councils had requested EFS, totalling £1.5bn for the 2026/27 financial year. These Councils were run by a range of different political administrations in both rural and urban areas.

West Berkshire Council had received confirmation that it would receive £20m of EFS for the current financial year, 2025/26, and £30m for the upcoming financial year, 2026/27. This would be used to provide financial resilience after the Council’s reserves had been depleted due to the cost pressures experienced in adult social care and children services. An example of these increasing pressures was that the costs of the top 25 packages for children with SEND increased by 18 per cent per annum, up to £320k per child. For these reasons, it was noted that the Council would be requested to approve the full 2 per cent increase in Council Tax and the full 2.99 per cent increase in the adult social care precept. 

Members stressed that the EFS that the Council had received was not a grant, but was borrowing and would need to be repaid, with interest. In addition, in response to a question about the discrepancy between the figure of reserves presented in the MTFS and the Investment and Borrowing Strategy, Councillor Cottingham confirmed that this was a cross-casting error, with reserves confirmed as being £13.01m.

Council agreed that the financial landscape for local councils was very tough. However, several Members indicated that this position had been made worse by some of the decisions of the Administration. The comments of the Section 151 Officer were also noted, who stated that without EFS the Council would have to declare effective bankruptcy with a Section 114 Notice.

In the previous year’s MTFS, EFS was described as a one off, with the Council not being reliant on it in the medium term or long term. However, it was emphasised that the new strategy would request £160m in EFS over the next four years in order to keep a balanced budget and maintain minimum reserves. Ultimately, the Council would have to use 16 per cent of its Revenue Budget in 2030 just to repay these loans.

Council also debated a recent report by the Chartered Institute of Public Finance and Accountancy (CIPFA). Members highlighted a part of the review which stated that West Berkshire’s financial position was perilous and that the Administration had no clear plan to resolve the issues. In response to another point taken from the report, that the Administration had become too involved in operational issues and resulted in Officers being reluctant to challenge the financial merits of their proposals, Members of the Administration clarified that this level of engagement had resulted in them uncovering neglected areas of the Council, and that setting the direction for officers was a positive thing. It was also mentioned that the full CIPFA report had not yet been seen and so specific extracts did not provide an accurate view of the situation.

On the Grazeley Solar Farm project, Councillor Cottingham indicated that he would be double checking the project himself in order to ensure that all the figures were accurate before it would come to Council.

Overall, as the majority of Members considered that the MTFS was realistic as to the income and expenditure pressures faced by the Council, whilst allowing them to continue to deliver their services, they agreed that it should be approved.

The motion was put to the meeting and duly RESOLVED.