The Scrutiny Commission is scheduled to consider the Provisional Medium Term Financial Strategy (MTFS) for 2026/27 to 2029/30, which outlines the council's financial plans and budget proposals for the coming years. The Commission will also review the draft revised Investing in Leicestershire Programme Portfolio Management Strategy for 2026 to 2030, detailing the approach to asset management and investment.

Provisional Medium Term Financial Strategy 2026/27 - 2029/30

The Scrutiny Commission is set to examine the provisional Medium Term Financial Strategy (MTFS) for the period 2026/27 to 2029/30. This strategy details the council's financial planning and budget proposals for the upcoming four years. The report highlights a projected budget gap, with a shortfall of £23 million anticipated in the first year, which is expected to be covered by earmarked reserves. This gap is forecast to increase to £49 million in the second year and £106 million by the fourth year, assuming a 2.99% Council Tax increase.

The strategy outlines significant growth in service demand, particularly in social care, necessitating an investment of £131 million by 2029/30. It also includes a provision for pay and price inflation, estimated at £79 million over the period, largely driven by increases in the National Living Wage. The council is facing a substantial savings requirement of £199 million, with £45 million identified and £48 million related to Special Educational Needs, leaving a shortfall of £106 million to be found.

The report details proposed revenue budgets for various departments, including Children and Family Services, Adults and Communities, and Environment and Transport, outlining planned growth and savings. It also addresses the capital programme, which totals £456 million over the four years, funded through grants, capital receipts, external contributions, revenue reserves, and prudential borrowing.

The strategy acknowledges the challenging financial environment and the need for innovative solutions, including an ongoing Efficiency Review commissioned by Newton Impact. This review aims to identify opportunities for cost reduction, service redesign, and income generation. The report also touches upon the potential impacts of Local Government Reorganisation and the uncertainty surrounding government funding.

The Chief Executive's Department's proposed revenue budget for 2026/27 is £15.6 million net. Growth is requested for Legal Services to support the Children's Social Care legal team due to increased demand in care proceedings, and for membership of the Local Government Association and County Council Network. Proposed savings include efficiencies in Trading Standards, increased Registrar fees, staff vacancy management, and reductions in hospitality functions.

The Corporate Resources Department's proposed net budget for 2026/27 is £37.8 million. Growth is planned for ICT Cyber Security and Commercial Services, while significant savings are anticipated from the use of office space, customer programmes, energy efficiency initiatives, ICT efficiencies, and property service efficiencies. The report also details proposed savings from a Minimum Revenue Provision review and increased dividend yield from ESPO.

The capital programme for the Chief Executive's Department totals £0.2 million over four years, primarily for a Legal Case Management System. The Corporate Resources Department's capital programme totals £7.14 million, with significant investment in ICT and Property Services, including boiler replacements and energy efficiency initiatives.

Draft Revised Investing in Leicestershire Programme Portfolio Management Strategy 2026 - 2030

The Commission will also consider the draft revised Investing in Leicestershire Programme (IiLP) Portfolio Management Strategy for 2026 to 2030. This strategy outlines the council's approach to managing and investing in its property portfolio and other financial assets. The primary aims are to support the council's strategic objectives, address areas of economic and social market failure, and generate income to support front-line services.

The strategy emphasizes alignment with the Council's Strategic Plan 2022-26, focusing on outcomes such as a clean and green future, great communities, improved opportunities, a strong economy, and ensuring people are safe and well. It details investment criteria, including security of capital, contribution to strategic objectives, financial return commensurate with risk, and legal and planning considerations. Environmental, Social, and Governance (ESG) standards are to be integrated into investment decisions, aiming for sustainable developments with reduced emissions and enhanced biodiversity.

The strategy proposes a target rate of return of 7% per annum for the portfolio, with an Internal Rate of Return (IRR) of at least 7% as a key metric for investment appraisal. It also outlines a commitment to regular independent reviews of the portfolio's performance, with the most recent review by Hymans Robertson in January 2024 recommending a rebalancing of the portfolio to increase industrial/distribution investments and private debt, while potentially reducing office and development allocations.

The strategy details a three-stage appraisal process for direct property investments, including initial assessment, financial appraisal, and business case preparation, with independent external assessment and approval stages. For non-direct property diversifier investments, a similar appraisal process will be followed, including compliance with treasury guidance and consultation with external advisors. Risk management is a key focus, with direct property risks mitigated through lease terms, tenant covenants, and portfolio diversification. The strategy also addresses financing, reputational, and development risks.

The report includes quantitative performance indicators for the portfolio, such as commercial income to net service expenditure ratio and target income returns. It also outlines the governance arrangements for the Investing in Leicestershire Programme Board, which will oversee the strategy's implementation and performance monitoring. The strategy emphasizes the importance of staff resources and the need for experienced personnel to manage the portfolio effectively.