Agenda item

Financial Strategy 2026/27 to 2030/31

Meeting of Budget Executive, Executive, Tuesday, 27 January 2026 5.30 pm (Item 193.)

To receive a report from the Director of Finance which presents the financial strategy 2026/27 to 2030/31, including detailed revenue budget proposals for 2026/27, and asks Members to recommend to Council approval of the proposals.

Decision:

Resolved – That Executive recommends to Council approval of the budget proposals as outlined in this report. In particular:

a) The net revenue expenditure requirement of £187.009m.

b) A council tax requirement of £127.181m.

c) The revenue growth proposals as outlined in paragraphs 75 to 77 of the report.

d) The 2026/27 revenue savings proposals as outlined in annex 2 of the report.

e) The fees and charges proposals as outlined in annex 3 of the report.

f) The Housing Revenue Account (HRA) 2026/27 budget set out in annex 5 of the report.

g) The Dedicated Schools Grant (DSG) proposals outlined from paragraph 168 of the report.

h) The Flexible Use of Capital Receipts Policy set out in annex 7 of the report, including delegation to the Director of Finance to determine the costs that can be charged to the transformation programme.

Reason: To ensure a legally balanced budget is set.

In addition, that Executive

i) Approves the average rent increase of 4.8% to be applied to all rents for 2026/27.

Reason: To ensure the ongoing financial stability of the HRA and allow work on improving the quality of the council’s affordable housing to continue.

Minutes:

The Director of Finance submitted a report which presented the financial strategy 2026/27 to 2030/31, including detailed revenue budget proposals for 2026/27, and asked Members to recommend to Council approval of the proposals.

Debbie Mitchell, Director of Finance, presented the report.

The following annexes were attached to the report:

- 2026/27 Budget Summary

- 2026/27 Savings Proposals

- 2026/27 Fees and Charges

- Impact Assessment

- Housing Revenue Account (HRA) 2026/27 Budget

- Risk Analysis

- Flexible Use of Capital Receipts Policy.

The key areas of discussion were:

· The Director of Finance reported that whilst not unexpected, the severe negative impact of the Fair Funding Review meant that the council's financial position remained incredibly challenging. Members were also referred to an error in the report. In paragraph 162 the figure quoted in relation to the overall Housing Revenue Account (HRA) reserve forecast at the end of 2026/2027 should have read £10,494m (as stated in annex 5) and not the £3m figure stated.

· The Opposition Group Leader expressed concern about the budget consultation process and the lack of engagement with members of the public and businesses. That with a three-year settlement and just over 10 months to the announcement of the 2027/28 budget, there was a need to start consulting the public now on the next budget setting process.

· The Executive Member for Environment and Climate Emergency highlighted the positive investment in neighbourhood caretakers. That it reflected pride in local communities, in public spaces and overall pride in the city. Reference was also made to increased investment to bring weed control in-house. This was to ensure better control and more bespoke possibilities to respond in a more agile way.

· The Executive Member for Transport highlighted the positive work that had been undertaken to work through the backlog of res-parking applications. Additional areas had been approved that had enabled parking charges to remain the same for this year. In relation to car parking fees, the £3 fee for community car parks also remained the same. A parking review was underway, and all feedback was being considered. In the city centre, parking fees were to increase by 3% in line with inflation. In addition, the structure of the fees had been maintained so that the first two hours of parking remained in line with the cost of a family bus ticket. This continued to support transport strategy objectives to reduce congestion and increase bus use.

· The Executive Member for Health, Wellbeing and Adult Social Care reported that an additional £10.8m was being invested in adult social care. Demand was rising sharply, and the complexity of people's needs was increasing year on year. And this was driven by national policy requirements, demographic change, and a growing number of residents living longer with multiple health conditions. These were real pressures that shaped the daily experience of the workforce and the lives of the people we support. At the same time, cost inflation in adult social care consistently ran ahead of inflation measures. The price of residential placements, supported living and specialist provision had risen far faster than general inflation. Workforce costs had increased significantly, and the fees paid by individuals did not come close to the growth in expenditure. In practical terms, this meant that even to stand still, there was a need to spend significantly more every year. Adult social care had been asked to deliver within its means, avoid further overspending, and implement both its improvement plan and its cost reduction plan. The funding set out in the report was about stabilising it so it could meet its statutory duties and deliver the improvements that the administration and residents expected.York faced an ageing population. Increasing diagnoses of neurodiversity, rising mental health needs and pressures in relation to residential care and learning disability services where complexity was increasing, and costs were escalating. Adult social care could not refuse care. It was a statutory duty. York had a higher average number of people who chose to retire here and as their needs grow CYC must also respond. An outcome following the Care Quality Commission (CQC) review was that CYC was heading in the right direction but there was more work to do, and the investment set out in the report enabled that work to continue. But improvement was not only about spending more. It was about spending better. Costs had been reduced through stronger contract management, better commissioning, and a focus on value for money. Early intervention and prevention were the most effective ways to reduce long-term demand. When people were supported earlier, when they remained connected to their community, and people lived independently for longer, outcomes improved, and costs fell. This funding was therefore not only the right thing to do but also a strategic investment.

· The Executive Member for Children, Young People and Education reported that one of the main challenges was responding to the significant level of change and policy that was being driven by central government that needed to be addressed, dealt with and implemented in the city. That CYC delivered an outstanding service and Department for Education (DFE) officials were coming to CYC to discuss how to run things. Central government recognised the level of changes required and had awarded additional grants to tackle these changes. One specific additional grant was £664,000, added to the £400,000 of CYC investment to review casework capacity and oversight to support young people in our care system and their families. This was to prevent young people entering the care system in the first place with early help and preventative services. Reference was also made to £20,000 funding for the continuation of the film making in schools’ project. This project had been running for a couple of years. The intention of the project was for school children in secondary schools to be offered the opportunity to work with industry leading specialists in schools to develop five-minute films. These were opportunities that children in state schools would not ordinarily get and represented a positive step forward.

· The Executive Member for Finance, Performance, Major Projects, Human Rights, Equality and Inclusion reported on the process leading up to submission of the budget reports to Executive. That there had been a Fair Funding Review that had taken longer than anticipated since development of the new funding formula was not straightforward. The key issue was that overall funding for local government was not enough, which had resulted in a difficult outcome for CYC. Reference was also made to the positive work undertaken by the Scrutiny Task and Finish Group to review the budget process, which included a recommendation to communicate more widely with residents, business and stakeholders about the budget process. This had been acknowledged and was to be acted upon. It was reported that most of the budget was spent on services for children and adults. That more resources were being invested in both services to meet demand for the good of everyone in our communities. But that did come at a cost. A transformation programme was in place focussed on cutting waste, cutting inefficiency, and delivering more for less money.

· The Deputy Leader of the Council and Executive Member for Economy and Culture wished to point out on behalf of the Executive Member for Housing, Planning and Safer Communities that an additional £1m was being invested in council estates, particularly focussed on communal areas. He also highlighted the positive work undertaken in ensuring a balanced budget, with no cuts to services and some important areas of investment referred to earlier in the meeting.

Resolved (unanimously) – That Executive recommends to Council approval of the budget proposals as outlined in this report. In particular: