To present the draft 2026/27 revenue budget, Medium Term Financial Strategy and the Treasury Management Strategy. 

Councillor Stoddart, cabinet member for finance and corporate services introduced the report.  It was noted that the budget had been developed during a time of significant financial pressure, particularly due to changes in Government funding for rural areas. Despite these challenges, the council was proposing a balanced budget that protected essential services whilst investing in the county’s future.

Recent changes to the national Fair Funding Review meant that Herefordshire will see a £17.3m reduction in Government funding over the next three years. The new funding formula gives greater weight to urban pressures and does not fully recognise the higher cost of delivering services in rural areas. By 2028/29, Herefordshire’s Government funding per person is expected to be 40% lower than that received by urban councils.

To help protect services, the council proposed a 4.99% council tax increase made up of 2.99% core council tax and 2% adult social care precept. For a Band D property, this would mean a rise to £2,067.63, an increase of about £1.89 per week.

To balance the budget for 2026/27, the council proposed £20m in savings across all service areas, a new Contract Inflation Fund to manage rising costs and £3.2m from the Business Rates Risk Reserve to offset reduced Government funding.

Despite the financial challenges, the council would continue to support vulnerable adults and older people, improve children’s services following recent progress and a ‘Good’ Ofsted rating, deliver major projects and invest in the local economy, manage increasing pressure in waste services and home-to-school transport.

From April 2026, the council will introduce 30 minutes of free parking in all council-operated car parks, supporting shoppers, residents and local businesses. Parking tariffs will be adjusted by an average of 8–10% to help maintain car parks and transport infrastructure. Even with this change, prices remain below where they would have been had charges risen with inflation since 2023.

Every ward councillor will also receive £1,000 to support local community projects aligned with the Council Plan.

The Medium-Term Financial Strategy (MTFS) highlights further pressures ahead, including an estimated funding gap of £20m in 2027/28 and £83m over the full period to 2029/30.

The council will begin work immediately on its Future Financial Strategy to address these gaps.

External auditors have confirmed that the council has robust financial management and effective arrangements in place to identify and manage risks.

Lastly, it was noted that the Fair Funding Review had resulted in a substantial reduction in Government support for Herefordshire, creating a £30m funding gap. This shortfall was attributed to decreased national investment in rural areas rather than local financial mismanagement. Members were advised that the county now receives around 40% less funding per resident compared with urban authorities, and that the reduction in the Government’s contribution to core spending power has increased pressure on local taxpayers and businesses.

Despite these challenges, it was highlighted that the Conservative?led council had set a balanced budget for the year, prioritising the protection of vulnerable residents, the maintenance of essential services, and  ...  view the full minutes text for item 57