To recommend to Council the proposed 2026/27 revenue budget, Medium Term Financial Strategy and the Treasury Management Strategy. 

Appendices E, G and H to follow. 

Councillor Stoddart, cabinet member for finance and corporate services introduced the report

The Cabinet received an update on the consultation undertaken during the development of the 2026/27 draft revenue budget. Members were advised that extensive briefings had been provided to Group Leaders, political groups, Scrutiny Committees and council employees throughout the process.

The public consultation ran from 9 December 2025 to 4 January 2026, generating 359 responses, an increase from 201 in the previous year. Feedback indicated strong opposition to reductions in highways maintenance and street lighting, and significant support for asset development and digital service improvements over service reductions. A majority favoured increased charges for non?statutory services.

The Scrutiny Management Board considered the budget proposals at its meeting on 23 January. Cabinet noted the additional assurances provided and the formal responses set out at Appendix G to the report.

Cabinet noted the provisional local government settlement published on 19 December, confirming significant reductions arising from the Fair Funding Review. The final settlement was awaited.

The draft balanced revenue budget for 2026/27 totals £234.1m and includes a council tax increase of 4.99%, resulting in a Band D charge of £2,067.63. Savings proposals of £20m, use of £3.2m from the Business Rates Risk Reserve, and establishment of a Contract Inflation Fund were included.

Cabinet acknowledged that local authorities continue to face significant pressures due to rising demand for statutory services and reductions in central government funding. Analysis indicated a £17.3m reduction to Herefordshire’s allocation following the Fair Funding Review, with rural councils significantly disadvantaged compared with urban authorities.

Members noted that although 30 councils received Exceptional Financial Support (EFS) in 2025/26, Herefordshire Council would not seek such support, instead maintaining responsible financial management.

The Cabinet considered the proposed base budgets for 2026/27:

Community Wellbeing: £89.667m, reflecting pressures linked to rising complexity of needs, temporary accommodation demand, and inflation.

Children & Young People: £58.413m, with continued delivery of multi?year savings and stable workforce arrangements following an underspend in 2024/25.

Economy & Environment: £38.291m, supporting major projects, waste contract pressures and the new public realm operating model.

Corporate Services: £22.496m, including £1,000 per Ward Member for community projects and £0.6m capital receipts for transformation.

Central: £25.253m, driven by increased interest payments and capital programme commitments.

Cabinet noted a total of £19.954m in savings proposals across all Directorates, covering cost control, demand management, income generation and efficiencies. It was reported that £6.9m (35%) was expected to be delivered from 1 April 2026.

The Cabinet noted that external auditors had identified no significant weaknesses in financial planning arrangements and that all financial planning measures were assessed as green. Herefordshire continued to be one of the first authorities nationally to publish audited accounts.

Cabinet received the Medium-Term Financial Strategy (MTFS) for 2026/27 to 2029/30, noting an estimated cumulative funding gap of £83.418m, largely attributable to the Fair Funding Review. Work to address the 2027/28 gap would commence in April 2026.  Key areas of future focus include maximising commercial income, efficiency improvements with specialist partners, review of  ...  view the full minutes text for item 65