Cabinet – 1 October 2025
Medium Term Financial Plan - Scene setting
|
Purpose |
For Decision |
|
Classification |
Public |
|
Executive Summary |
This report · Presents the latest medium-term financial plan (MTFP) of the council. · Considers the initial development of the MTFP for the General Fund and Housing Revenue Account (HRA) including the factors that will influence its delivery and that of the annual budget strategy 2026/27. · Proposes a financial strategy to support the delivery of a legally balanced budget for 2026/27. · Proposes a budget planning process and timeline for key financial reports. |
|
Recommendation(s) |
Cabinet are asked to recommend to Council that the: 1. Council’s MTFP continues to be prepared on a going-concern basis, until such a time that LGR plans for the District are backed by appropriate legislation 2. revised MTFP forecasts, as outlined within the report and appendices be adopted. 3. options identified to close the budget gap for 2026/27 and through to 2029/30 are developed further. 4. reporting timeline as set out in paragraph 82 be agreed. 5. proposed car parking fees and charges from 1 January 2026 as referenced in paragraph 53 and detailed in appendix 5 are approved. 6. proposed Keyhaven river fees and charges from 1 January 2026 as referenced in paragraph 54 and detailed in appendix 6 are approved. |
|
Reasons for recommendation(s) |
To comply with accounting codes of practice and best practice which requires councils to have a rolling multi-year MTFP. To provide Cabinet with the latest high-level overview of the MTFP. To present a proposed financial strategy to support the delivery of a balanced budget for 2026/27. To ensure fees and charges decisions are taken in line with the Council policy. |
|
Ward(s) |
All |
|
Portfolio Holder(s) |
Councillor Jeremy Heron - Finance & Corporate |
|
Strategic Director(s) |
Alan Bethune – Strategic Director Corporate Resources & Transformation (Section 151 Officer) |
|
Officer Contact |
Paul Whittles Assistant Director - Finance 02380 285766 paul.whittles@nfdc.gov.uk |
1. The Council’s financial strategy seeks to achieve a medium-term financial position that creates additional financial resources through the crystallisation of efficiencies and the generation of additional income to ensure the alignment of overall resources to corporate priorities. Financial stability over the medium-to-long term has underpinned the Council’s financial strategy, with due consideration being given to the potential implications that the Fair Funding Review, Business Rate Reset, and national rent setting policy will have on this Council. The Council has understood the need to consider its overall organisational business model in order to ensure the future protection of its services whilst seeking to align the financial plan to ensure delivery of key priorities as outlined in the Corporate Plan and facilitate the orderly transition of services into the new unitary authority as part of Local Government Reorganisation.
2. Actions need to commence on the development of future years’ budgets. To support this work, it is necessary that an assessment is made of the likely financial scenario based upon latest available information. To help support the important work of Portfolio Holders and officers in developing future plans, the future outlook and the current uncertainties are set out within this report and a prudent forecast set out through the appendices.
3. As predicted the Government provided a one-year funding settlement for 2025/26. When setting the 2025/26 budget, the council also anticipated the impact on its total Government determined resources would be a significant reduction from £10.3 million in 2025/26 to £7.1 million in 2028/29 largely due to the impact of the Fair Funding Review. Subsequently, the Government has announced the first multi-year settlement in 10 years will be forthcoming from 2026/27 as part of a streamlined approach to funding local government. This in turn should provide councils with greater certainty and flexibility to plan and resource local requirements over the medium term. Furthermore, the initial outlook regarding the Fair Funding Review is significantly improved, with the latest advice forecasting a potential increase in total Government funding from £10.3 million in 2026/27 to £10.8 million in 2029/30. Whilst this represents a potential significant positive shift in the Council’s medium-term financial position, the government are currently analysing Fair Funding Review consultation responses, which will include significant representations from authorities who are now forecasting unplanned reductions in their financial settlement position. We cannot therefore be assured of any government backed financial position until the provisional settlement is released during December as illustrated by the potential range in Figure 1.
4. Figure 1 – Potential Range of Government Funding
5. Much of the Council’s focus since the release of the English Devolution white paper in December 2024 has been on the engagement in the development of a case for change document, due to be presented to the Council and Cabinet later this month. As we move through the LGR process, the future of the District Council will become clearer, until ultimately legislation confirms the end point of the Council and the forming of a new authority covering the New Forest’s administrative boundary. Until such a time as that change is backed by legislation, the Council must continue to plan its financial position over a medium-term period, on a going-concern basis.
Economic Commentary
6. The Bank of England’s base rate peaked from the historic low of 0.1% in March 2020 at 5.25% between August 2023 and July 2024. In the subsequent period the rate has steadily been cut by 0.25% on five occasions to its current 4.0% rate with further gradual cuts predicted.
7. Changes to the base rate can impact our investment returns and borrowing rates of interest. Furthermore, interest rate changes affect individual’s ability and motivation to borrow or save and can impact significant household costs such as mortgages and therefore the amount of disposal income available which may impact some of the council’s support costs and revenue streams respectively.
8. The National Employers Pay Award offer for 2025/26 has been agreed with all NFDC pay points increasing by 3.2%. The 2025/26 approved budget (both for General Fund and HRA) included adequate provision. A similar approach will be taken for 2026/27 with a pay award contingency of £249,000 in the General Fund and £111,000 in the HRA.
9. The General Fund Medium Term Financial Plan has been populated using the most up to date information currently available covering the period to 2029/30. The final implementation of the Fair Funding Review and final design of the Business Rate Retention Scheme including the timing of the initial reset, and frequency thereafter of partial or full resets, and the ultimate proportion of rates to be retained by the District Council, has the potential to significantly amend the funding figures currently forecast. However, at this stage the forecast from our financial advisory service regarding the total amount of government funding is potentially not as detrimental as previously envisaged.
10. The Housing Revenue Account section of the report sets out the specific and unique challenges faced by this ring-fenced account, and begins to introduce some of the key considerations, including rent levels, that need to be factored into the production of a balanced budget for 2026/27, and over the medium-long term.
11. The Council’s overall financial planning needs to take into account inflation and the current cost of living faced by its residents and tenants when making difficult decisions on proposed Council Tax, Rent and Fees and Charges. The Consumer Prices Index (CPI) was 3.8% as at July 2025.
12. The report hereafter is split into 2 distinct sections before concluding as a single item. The first considers the General Fund (paragraphs 13 to 60), and paragraphs 61 to 76 considers the Housing Revenue Account.
Funding Assumptions over the Medium Term (Appendix 1)
13. Ongoing annual funding support from Central Government is still uncertain albeit we expect a multi-year settlement to be announced this December. Furthermore, we await the outcome of the Fair Funding Review consultation undertaken by MHCLG this summer, which is due imminently[PW1] . The expected clarity regarding future arrangements will ultimately be provided in the provisional finance settlement, at some point in December 2025.
14. The 2025/26 final settlement included a grant regarding the increase to National Insurance costs (£155,000 to the General Fund) and a funding guarantee grant (£676,000). The Council also received New Homes Bonus (NHB; £36,000) in 2025/26. No specific further funding from these sources is currently included within the MTFP forecast. Retained business rate growth has also been removed. Instead, the forecast contains a single revenue support grant funding source, as the government intends to simplify local government funding as part of the Fair Funding Review and offer protection to authorities who have accrued business rate growth before any redistribution takes effect.
15. This anticipated simplification, plus increased confidence that the District shall not be as negatively impacted as previously forecast, means the previous tapering of Retained Business Rates has been removed. This provides the council with a £1.2 million improvement to the 2026/27 position alone, increasing to £3.6 million by 2029/30. This all remains subject to confirmation in the provisional settlement, which may be influenced by the government’s reaction to feedback from authorities who have seen a far more adverse impact to the revised methodology than NFDC.
16. The Council’s base budget for 2025/26 also includes Flexible Homelessness Support Grant and specific other homelessness prevention grants, totalling £1.732 million. For the time being, the base scenario assumes the grants will be static over the period, and in any case, at the point grants are reduced, fixed term resource positions would need to end (unless the Council takes the decision to continue and fund accordingly). Any reduction in resource in this area would be subject to evidence-based decisions based on costs of preventative measures, as against cost of statutory duty of care reactionary responsibilities.
17. In recent years, the Council has followed the central government directive that local tax should be used to support local services. As the cost of services increases, so must local taxation. The Council has no say on the setting of business rates but does have the statutory responsibility to set a level of Council Tax for the oncoming financial year. The outcome of the Fair Funding Review and subsequent finance settlement will determine the current allowable government parameter for an increase, before a referendum is necessary. For this Council, it is likely to be either £5, or 2.99% on a Band D equivalent. This updated MTFP follows on from the previously established position, assuming that the Council makes use of the allowable pre-referendum increases. The tables below show the impact of the £5 and 2.99% increase on the band D level, and the total impact this has to the Council Tax collected and retained by NFDC. At this time, until clarity is provided, the assumption in the MTFP workings is the lower threshold of £5.
18. Table 1a – Council Tax with ongoing £5 increases
|
2026/27 |
2027/28 |
2028/29 |
2029/30 |
|
|
Annual level £ |
209.79 |
214.79 |
219.79 |
224.79 |
|
Increase % |
2.44% |
2.38% |
2.33% |
2.27% |
|
Increase £ |
5.00 |
5.00 |
5.00 |
5.00 |
|
Value of increase £ |
365,485 |
367,313 |
369,149 |
370,995 |
19. Table 1b – Council Tax with ongoing 2.99% increases
|
2026/27 |
2027/28 |
2028/29 |
2029/30 |
|
|
Annual level £ |
211.92 |
218.25 |
224.78 |
231.50 |
|
Increase % |
2.99% |
2.99% |
2.99% |
2.99% |
|
Increase £ |
6.15 |
6.34 |
6.53 |
6.72 |
|
Value of increase £ |
449,723 |
465,485 |
481,800 |
498,687 |
Budget Requirements over the Medium Term (Appendix 2)
Pay & Price Increases
20. Increases in costs are expected to total £2.880 million over the next 4-year period.
21. The assumptions include the following areas of pay and price increases;
a. Annual Pay Award of 3.2% (based on latest 2025/26 increase)
b. Incremental progression
c. Insurance, Utilities, Fuel and Maintenance inflationary cost increases
Budget Adjustments Relating to one-off Items
22. There is a £40,000 budget reduction in 2026/27 following the removal of the one off investments in reviews associated with commercial waste and glass collection rounds, both budgeted to cost £20,000 in 2025/26.
Waste Collection
23. The budget shows a net reduction of £795,000 in 2026/27 albeit there are a number of changes to specific elements within the service outlined further below.
24. One off transitional funding will cease to be required following the significant investment in the new waste service during 2025/26, reducing by £688,000 in 2026/27 and a further £154,000 in 2027/28.
25. New permanent ongoing resources are budgeted to fund a narrow round service (£95,000) and a waste supervisor (£45,000).
26. To minimise disruption from staff turnover and recruitment and to ensure service delivery is maintained, the budget allows for the continuation of market supplements to be paid to Waste and Street Scene drivers (£116,000).
27. Subject to the outcome of the behind the gates collection trial and a review of the financial implications of any further actions, there may be an additional budget required to fund the full implementation of this revised policy position.
28. The budget takes into account the council’s expectation that new burdens funding totalling £1.5 million regarding food waste in 2026/27 will offset new costs to deliver the service. Furthermore, grant funding from the Extended Producer Responsibility (EPR) scheme is expected to continue. Correspondence from DEFRA suggests the amount received in 2025/26 shall be greater than the original £1.175 million minimum guaranteed amount. We await confirmation of the 2025/26 value and discussions are ongoing to understand the future value of this seemingly unstable funding source.
29. At this early stage, whilst crews are either still on the learning curve, or about to embark on new service rounds and routes, the service is not yet running at its most efficient point. Financial forecasting now is therefore difficult, but will become clearer as we get nearer to the formal setting of the budget in February.
New Budget Requirements, Alignment of Budget to Priorities and Other Matters Arising
30. An additional £45,000 is being invested to enhance the council’s complaint handling resources.
31. Additional ongoing cleaning resources regarding Public Conveniences, totalling £61,000 is included.
32. The Council must remain mindful of budget pressures faced by the Council County, as decisions by the County in order to address their budget deficit are very likely to have a direct effect on the district. The District Council must maintain a strong position in terms of statutory responsibilities and remain mindful that the District Council has its own budget deficit and corporate plan priorities to address.
Bringing together the Funding Assumptions and Budget Requirements
33. The overall forecast deficit across the MTFP, taking into the account the funding assumptions and necessary budget movements totals £547,000 by 2029/30. For valuable context, the General Fund budget set for 2025/26 was £25.509 million, so the deficit represents a gap equivalent to 2.14%. Conscious of the levels of uncertainty regarding future Government funding until confirmation is provided through the annual financial settlement, it is vitally important that the Council continues to pro-actively address this funding deficit and create valuable headroom for resources to be directed towards the delivery of corporate plan priorities, which will undoubtedly include difficult decisions on service delivery, Council Tax and Fees and Charges yield over the period.
34. Figure 2 – Cumulative Deficit to 2029/30
35.
Table
2 – Cumulative Budget
Deficit
|
2026/27 |
2027/28 |
2028/29 |
2029/30 |
|
|
Estimated Cumulative Budget Surplus (-) / Deficit - £ |
-755,000 |
-243,000 |
159,000 |
547,000 |
Financial implications yet to finalise / address
36. In the lead up to the creation of the new unitary council additional resources will be required to ensure safe and legal transition. Work is currently ongoing to determine the extra level of resource capacity required across all council functions.
37. As already documented from paragraphs 23 to 29, the new Waste service is establishing itself. Consequently, full clarity on the new budget requirement for future years is not yet known and resources may need to be significantly adjusted once the transition roll out has concluded and the new ways of working are fully defined. This will need to include any additional “behind the gate” collection costs which could be substantial.
38. Additionally, within the Waste service, there remains uncertainty regarding Food Waste new burdens funding and the ongoing Extended Producers Responsibility funding. The 2026/27 budget currently forecasts £1.5 million and £1.175 million respectively.
39. The level of investment in the Council Corporate Priorities need to be quantified and validated, including:
a. the implementation of the Strategic Asset Management Plan
b. the conclusion of the Local Plan
c. Capital Programme investment including CIL project delivery
40. Despite the steady reduction in the Bank of England base rate and the impact on investment interest rates, the Council has been able to achieve greater than budgeted returns from its treasury management activity. Further work is required to determine the ongoing level of interest the council shall receive
41. The council will need to invest significant resources to support the Nationally Significant Infrastructure Project (NSIP) within the Waterside area. The current strategy is to recoup this investment from matched funding but there remains the risk that this may not be fully achieved.
Financial Strategy and Options Identified to Address the Budget Deficit (Appendix 3)
42. In order to address the forecast deficit, ensure available resources to support the activity in paragraph’s 36 to 41, and provide additional headroom for investment to 2029/30, the Council’s financial strategy over the medium-term period extends to:
a. The development and delivery of a structured approach to Council wide Transformation. Delivering a more customer centred and cost-efficient Council, focussing on digital capability, consistency and a skilled and motivated workforce. This will include, for example;
i. digital and cost-effective corporate back-office solutions to our customers, whilst maintaining customer choice in how services are accessed
ii. Providing capacity across the organisation by streamlining and joining up activities to enable the adjustment of resources to meet corporate plan priorities
iii. Identifying commercial opportunities to improve income
iv. Getting best value from Council assets and considering the impact of new ways of working in accordance with adopted people and asset strategies.
b. The release of accrued short-term reserve balances to provide funding for additional fixed-term resource requirements, and the supporting of a balanced budget over the MTFP period as necessary,
c. The utilisation of reserve balances (and when necessary external borrowing) to invest in assets and assist in supporting a vibrant and robust New Forest Economy, whilst targeting valuable additional income,
d. Ensuring strategies developed through the corporate framework appropriately feed into the Council’s financial strategy; and
e. Investment in an approach to financial planning and spending that reflects the Council’s declaration of a Climate and Nature Emergency.
43. The options identified to close the forecast deficit include:
a. Exploring the generation of additional investment income through the delivery of the enhanced treasury returns and Property Strategies.
b. A pro-active fees and charges yield programme.
44. There is plenty to be done to crystalise the options that will ultimately support the delivery of a balanced budget over the Medium Term.
45. The Budget Equalisation Reserve balance of £2.699 million is available in principle to plug short term budget gaps. Use of this reserve is only a short-term fix however, as reserves can only be used once, they do not represent a long-term fix to the deficit over the period.
Council Tax Assumptions and the Application of Premiums
46. The base assumption in the MTFP is that the Council continues to apply maximum allowable discretion on Band D Council Tax increase, before the referendum limits set in. These increases over the period have the potential to generate an additional annual income of £1.473 million by 2029/30.
47. Council in February 2024 approved the formal determination as required by the Levelling up and Regeneration Act 2023, to apply Council Tax premiums to dwellings occupied periodically and long-term emptydwellings, for implementation from 1 April 2025. Based on the 2025/26 available data, the MTFP includes an additional £100,000 in 2026/27.
48. The MTFP assumes that the Council will look favourably on revenue raising powers made available to it by Central Government and will seek to include the positive financial impact of any legislative changes within future iterations.
Fees and Charges
49. Fees and Charges have a significant role to play in assisting the Council achieve a balanced budget, and in providing the necessary finance for service delivery and enhancements. The Council aspires to continually develop and improve front line service delivery and continues to offer more to the residents and visitors of the New Forest.
50. The Fees and Charges policy agreed February 2024 to support the MTFP assumed that growth in Fees and Charges over the period 2024/25 to 2026/27 will amount to 20% (broadly equating to 6.3% per year if annualised). Specific requirements were placed on Portfolio Holders to:
a. review their discretionary fees and charges to ensure they remain competitive, to ensure they account for increased costs in running and delivering services, and to ensure that the fee increases in 2024/25 have improved income levels as intended and will provide income growth to the Council over the 2 next financial years (2025/26 and 2026/27) equivalent to 20% across the 3 year period.
b. review their fees and charges which are the subject of cost recovery regulations, to ensure that proposed charges meet the increased costs of running services and provide for full cost recovery.
51. Fee decisions for 2026/27 for implementation from 1 April 2026 will be included within the February 2026 Budget setting report, with a decision on charges being made by the Council.
52. Fee decisions for 2026/27 for implementation after 1 April 2026 (an in-year decision), up to a cumulative 20% on the 2023/24 baseline fee will be taken as a Portfolio Holder Decision. Any proposals outside of this rate will be referred to the Council for a decision. The decisions taken by Portfolio Holder will be reported to the Council at the earliest opportunity.
53. In support of the MTFP fees must look to keep abreast of inflation, and local benchmarks.
54. The MTFP currently includes adjustments reflecting the net additional contractual income arrangements regarding leisure and glass recycling of over £400,000 across the period. Additionally planning income is forecast to increase by £170,000 over the medium term.
55. A recommendation to increase car parking fees and charges broadly in line with CPI from 1 January 2026 is included in this report with full details contained in Appendix 5. The revised fees and charges are anticipated to generate around £132,000 of additional income which will support the current in-year variation, and the overall yield target included in the MTFP. The overall income budget has been rightsized to the new total income figure.
56. A recommendation to increase Keyhaven river fees and charges from 1 January 2026 is included in this report with full details contained in Appendix 6. The proposed fees for implementation from 1 January 2026 are forecast to deliver £8,000 of additional income to the 2026/27 financial year. The overall income budget has been rightsized to the new total income figure.
57. These fee increases and their financial benefits will contribute to the council’s fees and charges growth target of £300,000 per annum.
58. The council’s treasury management activity has resulted in interest earnings greater than budget in recent years. This is due to the relatively high interest rates that have been experienced. Whilst these interest rates are steadily reducing the council is confident it shall still meet its budgeted amount in 2026/27.
Budget Consultation
59. The Resources and Transformation Overview and Scrutiny Panel established a Financial Strategy Task and Finish group when the panel met 26 June 2025. The group is set to run between September and November. Feedback from the Group will be given to the Overview and Scrutiny panel at its meeting in November.
60. In keeping with prior years, prior to the adoption of the budget by Council in February, the panel will also receive an overview of a few specific and key variable elements within the budget, namely the asset maintenance and replacement programme, and Capital programme.
61. The Council is required to run an annual budget consultation with business rate payers. A consultation is planned take place during November / December 2025.
The Housing Revenue Account (HRA)
Budget Requirements over the Medium and Long Term (Appendix 4)
Pay & Price Increases (Medium Term)
62. Increases in costs are expected to total £3.560 million over the next 4-year period.
63. The assumptions include the following areas of pay and price increases;
a. Annual Pay Award of 3.2% per annum (based on latest 2025/26 increase)
b. Incremental progression.
c. Fuel and Energy Cost increases
d. An increase in materials and hired services
Greener Housing (Long Term)
64. The Greener Housing Strategy 2022-2032 was adopted by the Council on 11 July 2022. While final costs are still uncertain, assuming an average £25,000 cost per property the total bill could be upwards of £125 million through to 2050. Funding for this programme of works has been factored into the 30-year HRA Business Plan.
Housing Delivery Plan (Medium - Long Term)
65. The Council has a target to deliver 600 new affordable homes by March 2026, which represented an expectation of District Council ownership of around 50% of affordable homes supply brought forward by developers from the local plan sites. 375 NFDC owned homes have been delivered to date with 88 in the pipeline for 2025/26, and a further 117 scheduled for completion by 2028/29. External / Internal financing of this programme has been factored into the medium-term forecast.
Other New Budget Requirements (Medium Term)
67. An internal review to understand increased expenditure on the turnaround of empty (void) council properties for re-letting has now completed. The outcome of this review has resulted in a reduction of the time taken to relet empty properties. This will have medium term impacts on existing budgets with increased rental income and less expenditure. [PW2] [RK3] [4]
Income Assumptions over the Medium Term and their Longer-Term impact
68. Current indications are that Government guidelines will allow rent increases of CPI +1% until 2035/36.
69. The level of proposed rent for the 2025/26 financial year will ultimately be a Council decision in February 2026, to take effect from 5 April 2026.
70. As the budget preparation cycle progresses, factors such as the number of tenants in receipt of Housing Benefits and Universal Credit, which ultimately seek to cover the cost of accommodation, as against tenant numbers who do not, will be carefully considered. At present, approximately 66% of all housing tenants receive index linked state support.
71. External factors, such as rent levels currently applied across the district within the private rental market will also be considered as social and affordable rent should fundamentally be set in the context of the wider housing market.
72. Energy and other communal costs incurred within the HRA are generally largely recovered by service charges to individual tenants.
Overall Summary and the 30 Year Business Plan
73. The forecast budget adjustments and expenditure priorities as outlined above create a potential for reduced Capital Financing Headroom within the HRA (how much the HRA revenue budget can support the financing of the Capital Development Programme), equivalent to circa £590,000 in 2026/27 compared with 2025/26 available resources. This will necessitate a review of the overall capital programme even before building in the full impact of the greener housing programme requirements to 2050.
74. Figure 3 – Forecast Expenditure with Capital Financing Headroom
75. The Council engages with an external consultant to assist with the preparation of its 30-year HRA business plan. The 30-year business plan was summarised as part of the budget setting for 2025/26 and is under further review now that clarity has been gained on long -term major repairs, replacement programmes and decarbonisation costs. The Plan itself will come forward separately, but it continues to help shape the forecasts as we look forward over the longer-term.
76. The Greener Housing Budget will need to take account of projected additional spend of over £9 million required to upgrade homes by 2030, and an additional circa. £125 million to decarbonise the stock ahead of 2050. Following recent structural changes in the housing maintenance service this decarbonisation work is being amalgamated with replacement programmes (kitchens, bathroom etc.) to gain maximum efficiencies in property upgrades. Whilst there is scope to offset some of these additional costs with grant funding there has been no announcements of future Government funding schemes beyond 2025. The Council continues to lobby the government to make significant grant funding available.
77. There are clearly significant competing demands on HRA resources at this time, whether that be regulated maintenance quality standards, health and safety compliance standards, the projected required spend of over £9 million to meet the EPC C 2030 target, the net zero carbon 2050 target, or the continued priority to deliver additional Council owned homes. In light of the significant external factors placed on the HRA, including an interest rate that has steeply risen from a 13-year average of less than 0.5% to a new level in the region of 5% and high inflation, internal discussions are ongoing to ensure the Council correctly align financial resources available and decisions taken through the Council’s decision making process, working towards the achievement of a sound budget for 2026/27 in February 2026, with the 30-year HRA Business Plan to follow.
Budget Consultation
78. New legislation regarding social housing reform is not likely to significantly impact budgets for 2026/27, although there will be a requirement to increase the training budget due to the requirement to have qualified managers and staff in key roles. However, future years spending and budgeting for the HRA will need wider review, scrutiny and consultation with tenants as part of our commitments in the Tenant Engagement Strategy.
79. The Housing and Communities Overview and Scrutiny Panel will consider the HRA Medium Term Financial Plan and the detailed 2026/27 HRA budget in January 2026.
80. The Tenant Involvement Group will consider the HRA Medium Term Financial Plan in the Autumn and the detailed 2026/27 HRA budget in January 2026.
General Fund and HRA Reserve Balances carried into 2025/26
81. The Council holds a number of reserves on its balance sheet for a variety of purposes. Reserves that support the Council’s future planning and financial sustainability are summarised below;
a. Budget Equalisation Reserve - £2.699 million (General Fund)
i. Available to protect the council against any unforeseen budgetary pressures. Given the uncertainty regarding the level of Government funding over the medium-term and the additional resources required to support a successful Local Government Reorganisation this remains a key reserve to ensure the council’s financial stability.
b. Corporate Priorities Reserve - £1.846 million (General Fund)
i. Supporting our Waste service rollout (£346,000) and Strategic Asset Management Plan implementation (£1.5 million).
c. Capital Programme Reserve – £8.432 million (General Fund)
i. To fund the council’s capital programme, which is to be determined for 2026/27 as part of this setting budget process, noting the council already has an ongoing commitment to replacement of vehicles.
d. Capital Receipts Reserve £5.142 million (HRA) and;
e. Acquisitions and Development Reserve £5.787 million (HRA)
i. Both are used to support the Housing Public Sector Capital Programme
82. Use of reserves are only a short-term fix, as reserves can only be used once, consequently they do not represent a long-term funding source for ongoing council activity.
Reporting Timeline
83. It is important that the Medium-Term Financial Planning of both the General Fund and HRA supports the ambition of the Council and remains driven by the objectives set out in the Corporate Plan. The organisation must be able to support both and must remain vigilant and susceptible to change. A timeline is set out in Table 3, paragraph 82, for Overview and Scrutiny and Cabinet which supports the development of the MTFP, through to the final setting of the 2026/27 budget.
84. Table 3 – Reporting Timeline
|
Item |
Date |
Meeting |
Report |
|
1 |
20 November 2025 |
Resources and Transformation Overview and Scrutiny |
· Financial Strategy Task and Finish Group feedback |
|
2 |
25 November 2025 |
Housing portfolio holder briefing |
· Budget update |
|
3 |
3 December 2025 |
Cabinet |
· Medium Term Financial Plan (MTFP) Update |
|
4 |
Tenant Involvement Group (TIG) |
· Budget update |
|
|
5 |
21 January 2026 |
Housing and Communities Overview and Scrutiny |
· Proposed Housing Revenue Account (HRA) Budget 2025/26 |
|
6 |
22 January 2026 |
Resources and Transformation Overview and Scrutiny |
· Asset Maintenance and Replacement Programme (AMR) and Capital Programme 2026/27 · Capital Strategy 2026/27 · Budget update |
|
7 |
23 January 2026 |
Audit Committee |
· Investment Strategy · Treasury Management Strategy |
|
8 |
4 February 2026 |
Cabinet |
· Capital Strategy 2026/27 · Community Grants 2026/27 |
|
9 |
18 February 2026 |
Cabinet |
· AMR and General Fund Capital Programme 2026/27 · MTFP and Budget 2026/27 · HRA Budget and the housing sector capital expenditure budget |
Corporate plan priorities
85. The Council’s Medium Term Financial Plan sets out to align the financial resources available to meet and deliver on Corporate Plan Priorities. More will be done on this as the budget preparation process evolves, heading towards the February 2026 adoption date.
Options appraisal
86. The Council’s Medium Term Financial Plan sets out to provide options in the ultimate achievement of a balanced budget. As noted, some options will be more or less palatable than others as the process evolves, but key to a sound MTFP is that decisions are taken in the context of the medium-long term, not the short-term.
Consultation undertaken
87. Internal consultation between finance officers, service managers and budget holders has informed the latest assumptions included in the report and will continue throughout this process.
88. Additional consultation with the Financial Strategy Task and Finish Group and portfolio holders will occur throughout September, October, and November 2025.
Financial and resource implications
89. This is a financial report; therefore, all financial and resource implications are contained within the body of the report.
Legal implications
90. The council has a fiduciary duty to its taxpayers to be prudent in the administration of the funds on their behalf and an equal duty to consider the interests of the community which benefit from the services it provides.
91. It is the responsibility of councillors to ensure the council sets a balanced budget for the forthcoming year. In setting, such a budget councillors and officers of the council have a legal requirement to ensure it is balanced in a manner which reflects the needs of both current and future taxpayers in discharging these responsibilities. In essence, this is a direct reference to ensure that Council sets a financially sustainable budget which is mindful of the long-term consequences of any short-term decisions. This is still the case as we work through the current LGR timeline.
92. As a billing authority, failure to set a legal budget by 11 March each year may lead to intervention from the Secretary of State under section 15 of the Local Government Act 1999. It should however be noted that the deadline is, in reality, the 1 March each year to allow sufficient time for the council tax direct debit process to be adhered to.
93. Upon approval of the revised fees and charges for the Council’s car parks, the Council will follow a legislative requirement to openly advertise the proposed new fees, before ultimately amending the Councils Parking Order. This will be overseen by the Council’s legal department, working with instruction from the Service Manager with responsibility for Car Parks.
Risk assessment
94. None at this stage.
Environmental / Climate and nature implications
Equalities implications
96. None at this stage.
Crime and disorder implications
97. There are no direct implications regarding crime and disorder as a result of this report.
Data protection / Information governance / ICT implications
98. There are no direct implications regarding data protection, information governance or ICT as a result of this report.
|
Appendices Appendix 1 – Medium Term Financial Plan 2026-2030 - Summary of Resources Appendix 2 – Medium Term Financial Plan 2026-2030 - Summary of Budget Requirement Appendix 3 – Medium Term Financial Plan 2026-2030 – Options Identified to Close Budget Shortfall Appendix 4 – Housing Revenue Account Medium Term Financial Plan 2026-2030 - Summary of Budget Requirement 2026/27-2029/30 Appendix 5 – Car Parking Proposed Fees and Charges from 1 January 2026 Appendix 6 –Proposed Keyhaven river fees and charges from 1 January 2026 |
Background Papers: Cabinet 19 February 2025 – Budget Reports 2025/26 Housing Revenue Account Budget and the Housing Public Sector Capital Expenditure Programme 2025/26 Medium Term Financial Plan and Annual Budget 2025/26 |
