While based on high-level assumptions which are subject to change, given the stage of the financial cycle, the Medium-Term Financial Strategy makes clear that without significant changes to the level of funding, the council will continue to need Exceptional Financial Support from government to become sustainable over the medium-term.
Government support received so far, in a capitalisation direction of £103m, has allowed the council to spread the shortfall in funding for day-to-day services over the next 20 years, alongside permission to raise council tax for 2025/26 by 8.99% to enable the delivery of key services.
However, the outcome of the government’s Spending Review in June indicates that the next settlement, due in November, will be tough - with much smaller increases than in recent years.
This, coupled with potential government plans to shift resources to more deprived areas of the country, as part of their Fair Funding Review 2.0 from next year on a three-year basis, will not be beneficial to the borough.
With government calculations based on a notional level of council tax, rather than the amount actually charged - the continued impact of the failure to increase council tax in previous years, coupled with the impact of the government’s Fair Funding Review - will likely leave the council with an on-going shortfall of £35m each year.
With demand pressures continuing for adults and children’s social care, and housing services – it’s predicted that over 70% of the budget will be spent on these services and around 14% used to cover the cost of all borrowing.
This means that, despite work being done at pace to transformation services in line with the council’s Financial Improvement and Sustainability Plan to address these challenges and a robust roadmap for budget setting being in place, the council will need to agree a package of exceptional financial support from government for next year and over the medium term- in the form of a further capitalisation direction and an increase in council tax above the current cap.
Financial modelling, within the medium-term plan, shows if borough council tax was increased by 8.99% for 2026/27, matching the rise agreed for 2025/26, the council would still need £31m exceptional government support for next year – demonstrating that recurring increases at this level over the term of the five-year plan would reduce the need for exceptional support but not eliminate it altogether.
The council’s Deputy Leader and Cabinet Member for Finance, Cllr Lynne Jones, said: “While we continue to do everything we can to become sustainable over the medium-term, including this comprehensive plan, robust budget setting and through our recovery and improvement work, it’s clear that the ongoing structural deficit – caused by historical sustained cuts to borough council tax - means we will need more government support.
“Our council tax is lower than any unitary authority outside London, so low that our recent increase of 8.99% was almost the same in cash terms than our neighbour Reading increasing their bills by 4.99%. On that basis we will likely also fare poorly from the government’s funding review, further compounding our financial situation – and we are making that case to government.”
With council tax having to be agreed by Council as part of the approval of the annual budget in March 2026, formal conversations with government on support have begun, alongside the council continuing to demonstrate that all levers are being pulled to reduce council spend.