To receive apologies for absence.

Apologies had been received from Councillor Simeon Cole and Councillor Graham Biggs.

To receive details of members nominated to attend the meeting in place of a member of the board.

No named substitutes had been received.

To receive declarations of interests from members of the board in respect of items on the agenda.

Cllr Ben Proctor (Chair) pointed out he was a city councillor and represented Hereford City Council on its Stronger Towns Board, which administered some capital funding.

Cllr Toni Fagan pointed out she was a trustee for Llanwarne Village Hall, which was in receipt of the Capital Spaces Grant.

To receive the minutes of the meeting held on 8 December 2025.

The minutes of the previous meeting were received.

Resolved: That the minutes of the meeting held on 8 December 2025 be confirmed as a correct record and be signed by the Chairperson.

To receive any written questions from members of the public.

One question had been received from a member of the public, which had been published, along with a response, as a supplement to the meeting agenda on the Herefordshire Council website.

To receive any written questions from councillors.

There had been no questions received from members of the council.

To seek the views of the Scrutiny Management Board on the draft revenue budget proposals for 2026/27.

The Chair took the 2026/27 Draft Budget -Revenue report as read and opened the item up for debate. The key points of discussion included:

Medium-Term Financial Strategy (MTFS): Overall Position and Assumptions

1.     Cabinet members clarified that the MTFS was a forecast, not a budget proposal. It presented the most likely scenario based on current information and did not assume future savings, which resulted in a large headline gap.

2.     Officers explained that the £82m headline funding gap represented a worst-case forecast. The council was legally required to set a balanced budget each year, and delivery of recurrent savings in earlier years reduced the base budget, which in turn reduced gaps in later years.

Reliance on Growth and Economic Assumptions

3.     Cabinet members acknowledged growth is uncertain but stated that declining central government funding requires the council to grow council tax and business rates alongside delivering savings and efficiencies.

4.     Officers outlined ongoing phosphate mitigation measures being employed to address housing delivery constraints and stimulate economic growth, which included wetland schemes, engagement with developers and monitoring of national planning reforms. Some factors were noted to be outside the council’s direct control.

Recurrent Savings and Use of Reserves

5.     In response to a question about whether reserves were being used in place of recurrent savings, officers confirmed that reserves were treated as one-off measures - the MTFS explicitly reinstated reserve usage in future years and did not assume reserves as a permanent solution.

6.     It was confirmed by officers that the reduction in the funding gap from £82 million to approximately £11 million was based on the assumed delivery of recurrent savings and their cumulative impact on the base budget -- not on ongoing reserve usage.

Deliverability of Savings

7.     Cabinet members and officers acknowledged the unprecedented scale of the savings challenge. It was stated that planning had begun early, proposals had been developed collaboratively, and robust governance and monitoring arrangements were in place. A proportion of savings were expected to be delivered from the start of the financial year.

8.     The committee heard that the delivery of savings would be monitored through monthly cost controls, savings boards, and quarterly reporting arrangements to Cabinet and scrutiny.

Undelivered Savings and Rolling Risk

9.     Officers explained that the £1.4m undelivered saving linked to Hoople was identified as at risk in the current year outturn. The draft budget assumed delivery of all current-year savings; any shortfall would present as a budget pressure in the following year.

10.  Officers acknowledged the risk of undelivered savings rolling forward and compounding future pressures, and emphasised the importance of delivering savings in-year. Current monitoring indicated a small proportion of savings remained at risk.

11.  Members enquired why the MTFS did not include scenario planning where savings were not delivered. Officers explained that the MTFS presented the most likely and robust position, supported by sensitivity analysis. The approach had been reviewed by external auditors and was consistent with practice in other authorities.

Fair Funding Review

12.  Cabinet members confirmed  ...  view the full minutes text for item 7.

To seek the views of the Scrutiny Management Board on the draft capital investment budget and capital strategy proposals for 2026/27.

The Chair took the Draft 2026/27 Capital Investment Budget and Capital Strategy Update Report as read and opened the item up for debate. The key points of discussion included:

Western Bypass / Southern Link Road

1. Cabinet stated that borrowing to fund the Western Bypass was necessary following the cancellation of the previous scheme. The bypass was described as essential infrastructure to enable economic growth, housing delivery, and increased council tax and business rate income.

2. Members enquired as to why borrowing should continue for a scheme previously approved when financial circumstances may have changed? Cabinet members advised that circumstances had changed due to the cancellation of the scheme, which had increased costs. It was stated that further delay would continue to raise costs and constrain future growth.

3. Officers confirmed that the additional £5m provision for the bypass in the current capital programme was to allow for updated design checks, compliance with current standards, and contractor engagement prior to contract award. Cabinet stated that updated costs would be reviewed once contractor pricing and design compliance work was complete, and the business case would be reassessed at that stage.

4. Cabinet members confirmed that a full business case would be brought forward before construction commenced. Current expenditure related to preparatory and compliance activity. In response to a question as to whether the scheme still met Department for Transport value-for-money requirement, Cabinet members advised that a business case had previously been approved when external funding was secured and that an updated full business case would be produced in line with current requirements.

Alignment of Capital Programme, Revenue Budget, and Treasury Management

5. Cabinet confirmed that the additional £44 million capital allocation had been assessed with a focus on revenue impact, with lower-priority schemes removed and new schemes selected to mitigate future revenue pressures.

6. Members enquired as to whether the Treasury Management Strategy was sufficiently flexible to support additional borrowing if it reduced long-term revenue pressures. The Section 151 Officer advised that borrowing capacity was monitored against prudential indicators and reported quarterly. Any change in risk appetite would require full Council approval.

7. The committee asked if revenue savings associated with capital investments were reflected in the MTFS. Officers clarified that many benefits related to future costs avoided rather than immediate savings and as such were not yet reflected in the base MTFS.

Housing, Education, and Service Investments

8. Cabinet members explained that that the £10 million investment in housing would reduce the use of expensive bed and breakfast, and hotel accommodation, with estimated annual revenue savings of approximately £480,000. Officers advised that acquiring and repurposing existing buildings was intended to improve deliverability of pupil referral unit and alternative provision schemes compared with new-build options, while acknowledging risks related to site availability.

9. Officers stated that out-of-county alternative education provision was significantly more expensive than in-county provision and that the business cases for in-county settings projected payback within approximately five years.

Historic Buildings and Asset Strategy

10. Officers advised that the £5million historic building allocation was supported by an outline strategic  ...  view the full minutes text for item 8.

To consider the board’s work programme.

The committee approved the attached work programme, but agreed to revise it in an informal planning session before the next meeting.

Resolved that:

a) The committee agree the draft work programme for the Scrutiny Management Board contained in the work programme report attached as appendix 1, which will be subject to monthly review, as the basis of their primary focus for the remainder of the municipal year.

b) The committee note the work programme for the other scrutiny committees and identify any opportunities for collaboration or alignment of work.

Thursday 19 March 2026, 10am

Monday 30 March 2026, 2pm