The Budget and Finance Scrutiny Committee met to scrutinise the draft budget for 2026/27, discussing proposals across all directorates including significant investment in SEND services, managing the council's long-term investment portfolio, and addressing demand pressures in adult social care. Key decisions included the approval of a 3.8% council tax increase, the creation of a Working Capital Enhancement Reserve, and recommendations to Cabinet regarding investment in care homes and day centres.

Draft Budget 2026/27

The committee engaged in a detailed review of the draft budget for 2026/27, which aims to balance the council's finances amidst significant pressures from rising demand, inflation, and national funding challenges. The overall net budget is £1.324 billion, with a proposed council tax increase of 3.80% (1.80% general and 2.00% for adult social care) to help balance the budget.

Key Strategic Issues and Financial Challenges

The budget addresses four key strategic issues:

• Special Educational Needs and Disabilities (SEND): An additional £29.954 million is allocated for 2026/27 to address demand pressures, including £7 million for the Inclusion Service, £17.7 million for Home to School Transport, and £5.254 million for borrowing costs related to the Dedicated Schools Grant (DSG) deficit.
• Dedicated Schools Grant (DSG) Deficit: The council faces a growing DSG deficit, projected to reach £171.41 million by 2026/27. The budget accommodates borrowing costs associated with this deficit, with plans to develop a DSG Reduction Plan.
• Very Long Term Investment Portfolio (VLTIP): The council holds £519 million in government and commercial bonds with long maturity dates. While these generate £16.9 million annually, their current market value has fallen, potentially crystallising a £350 million loss if sold. A strategy is being developed to manage this, including the creation of a Working Capital Enhancement Reserve (WCER) funded by £15 million in 2026/27, with plans to increase this over the next three years.
• Demand Pressures: Significant increases in demand and costs are noted in Adult Social Care (£53.891 million in 2026/27 for demand growth and £39.493 million for inflation) and Children's Services (£21.122 million for demand growth in 2026/27).

Savings Proposals

The draft budget includes £62 million in savings over three years, with £21.6 million of new savings for 2026/27. These savings are intended to be reinvested in frontline services. Key areas for savings include:

• Adult Social Care: Proposals focus on prevention and early intervention (£10.3 million over three years), more efficient contract management (£13.7 million over two years), helping people leave hospital (£8.4 million over two years), ensuring care is appropriately charged for (£2.7 million over two years), workforce role redesign (£1 million over three years), and better use of grants (£6 million).
• Education and Children's Services: Savings are targeted through improved contract sourcing (£2 million over two years), workforce redesign (£2 million over three years), redesigning early help services (£3.4 million over two years), reviewing buildings (£400,000 over two years), services to schools (£600,000), reviewing grants (£4.3 million), developing in-house provision for children in care (£2 million over three years), and reducing funding for housing-related services (£200,000 over two years).
• Place Directorate: Savings are identified through service reviews (£7.235 million), highway and transport maintenance efficiencies (£1.732 million), increased income generation from fees and charges (£2.874 million), property rationalisation (£1.932 million), and winter maintenance adjustments (£0.1 million). Waste management is projected to save £4.3 million over three years through modernisation.
• Resources Directorate: Savings are expected from service redesign (£3.821 million), income generation (£0.642 million), and technical budget adjustments including salary sacrifice and insurance reviews (£4.1 million). A 1% saving across supplies and services (£1.7 million) is also included.

Council Tax

A 3.80% increase in council tax is proposed for 2026/27, comprising a 1.80% general increase and a 2.00% adult social care precept. This is below the government's referendum limit of 4.99%. The increase translates to an additional £0.85 per week for a Band A property and £0.99 for a Band B property.

Capital Programme

The General Fund Capital Programme for 2026/27 to 2030/31 totals over £1 billion. Key investments include:

• Highways and Transport: Over £70 million annually for maintenance, improvements, and active travel schemes.
• Schools: Significant funding for basic need, condition, and high needs provision.
• Adult Social Care: Investment in the Disabled Facilities Grant, with £20.740 million allocated annually.
• Corporate Property: £20.918 million in 2026/27 for the Premises Condition Programme and £2.5 million for a property review fund.
• Economic Development: Funding for the Farington cricket facility, Samlesbury Enterprise Zone, and an Innovation Hub.
• Waste Management: Investment in anaerobic digestion facilities and waste recycling centres.

Recommendations and Decisions

The committee made several recommendations to Cabinet:

• Care Homes and Day Centres:
  • Urge Cabinet to explore different not-for-profit models for upgrading care homes and day centres, considering value for money.
  • Recommend Cabinet establish a cross-party working group on the modernisation of care homes and day centres to report to the relevant scrutiny committee.
  • Recommend Cabinet include an indicative capital sum in the budget for the modernisation of care homes and day centres.
• Mental Health Provision: Urge Cabinet to consider concerns regarding mental health outcomes for adults and children, ensuring timely assessments and adequate funding, including the use of the public health grant.
• CQC Improvement Plan: Recommend Cabinet considers funding required to implement the improvement plan resulting from the Care Quality Commission report on adult social care.
• Social Care Support Officers Dispute: Ask Cabinet to intervene to encourage a resolution to the social care support officers dispute.
• Council Tax Clarity: Recommend the Leader write to the relevant Secretary of State to seek written clarity on whether setting council tax below the maximum precept would lead to future financial penalties.
• Treasury Management: Request officers provide a breakdown of borrowing costs per service.
• Efficiency Review: Request a summary of changes to the Medium-Term Financial Strategy (MTFS) assumptions be circulated to the committee.
• In-Year Savings: Request an update on in-year savings delivery, similar to previous quarterly reports.

The committee also noted the draft budget papers, the Section 151 Officer's report on the robustness of estimates and adequacy of reserves, and the proposed council tax increase. The committee's work programme was also reviewed and updated.