Lead Member – Councillor Roger Evans, Portfolio Holder for Finance

Lead Officer – James Walton, Executive Director (S151)

REPORT TO FOLLOW

RESOLVED:

That Cabinet:

1.     Work with Officers during Q4 in the current year and into 2026/27 to develop a Financial Sustainability Strategy and transformation and change programme which will deliver savings and generate income, in order to reduce the duration of time for which EFS (exceptional financial support) is required across the medium-term financial period.  

2.     Work with Officers during Q4 in the current year and into 2026/27 through the establishment of a joint working group to develop and progress an approach to business and budget planning.  

3.     Ask Officers to continue to work with MHCLG in support of its application for exceptional financial support and actions required to return to financial stability. 

To consider the Draft Financial Strategy 2025/26 - 2029/30 and provide feedback to Cabinet.

REPORT TO FOLLOW

The Finance Director presented an overview of the draft budget, highlighting a significant shortfall in resources, applications for exceptional financial support (£71.4m for 25/26 and £130m for 26/27), and the impact of government funding reductions. The report included details on budget pressures, savings targets, and benchmarking reviews.

In response to a query, the Finance Director offered to remove the internal references if needed to improve clarity around unachieved savings and what they relate to.

Concerns were raised about optimism bias, noting that previous savings were not achievable and questioning the evidence-based changes made to the transformation programme to ensure future savings targets are realistic, especially given staffing reductions. In response, the Chief Executive emphasised the need to remove optimism bias from budgeting, referencing recommendations from the corporate peer challenge. The budget for 26/27 would exclude savings without a plan and ensure service areas have realistic budgets based on available information, aiming to stabilise the Council's finances and reserves. The next 12 months would focus on stabilising the budget, with future years dedicated to building capacity for true transformation and sustainable change, supported by the exceptional financial support application.

The Chair indicated that the question of responsibility for unachieved savings would be addressed in a future separate review as agreed in the committee's work plan.

Members requested a detailed breakdown of borrowing costs for past and future years which the Finance Director agreed to circulate after the meeting.

RESOLVED:

That the committee supported the MTFS recommendations progressing to Cabinet.