Issue - meetings

The Cabinet considered a report of the Director of Corporate Resources which provided an update on the Spending Review and Fair Funding consultation, both issued in June, and their potential impact on the County Council’s financial position.  An update was also provided on the approach to updating the Council’s Medium Term Financial Strategy (MTFS) ahead of the budget setting process for 2026/27 and approval was sought to commence a procurement process to commission external support for identifying further savings.  Copies of the report and supplementary report, both marked ‘Item 4’, are filed with these minutes.

Miss. H. Butler CC commented that the recent Spending Review posed a challenge for local government.  Most of the Council’s projected core spending power was expected to come from higher Council Tax and Business Rates, based on the assumption that these would be increased to the maximum, which was not felt to be sustainable or fair on local residents. 

It was noted that the Government was currently consulting on a new funding formula; this did not provide the clarity required and unlike previous years, no example figures had been released alongside the consultation.  As a result, it would be more difficult for the Council to plan and for residents to understand any real impact.  If multi-year settlements were implemented, no gains or losses would be fully realised until Year 4 of the MTFS.

Members noted that, at present, the Council’s MTFS would still show a gap of £90m.  In addition, the Council faced a separate High Needs deficit of over £100m by 2028/29.  Whilst the Government had extended the statutory override, this would only delay the issue and unless extra Government support became available, there could be a risk to the Council’s financial stability.

Miss Butler CC noted that Leicestershire remained the lowest funded County in the country and work would take place with all Leicestershire MPs to try to get a fairer deal.  However, in the meantime, a procurement exercise would be undertaken to commission a Council-wide savings review.  Assurance was given that, at this stage, there had been no commitment to anything and all options were being considered.

RESOLVED:

a)    That the update on the Spending Review be noted;

b)   That the update on the Fair Funding consultation be noted, and approval be given for the Director of Corporate Resources, following consultation with the Lead Member for Resources, to submit a response to the consultation;

c)   That the ongoing uncertainty be noted around the impact that recommendations a and b above will have on the Council’s position and that Leicestershire’s Members of Parliament be engaged to lobby on the Council’s behalf;

d)   That the commencement of a procurement process to commission a Council-wide savings review be approved, with a report being brought back to the Cabinet prior to any award being made.

REASONS FOR DECISION:

To inform the Cabinet of the key announcements arising from the Spending Review and Fair Funding consultation and, where possible, give indications of the likely impact on the County Council’s financial position.

The Council needs to continue to make progress in closing the current MTFS gap to allow a balanced budget position to be presented to the County Council for approval in February 2026.