The Cabinet of Worcestershire County Council met on Tuesday 24 February 2026 to discuss the council's financial position and future budget. Key topics included an updated report on the robustness of the 2026-27 budget estimates and the adequacy of reserves, as well as the proposed budget and medium-term financial plan for 2026/27 to 2028/29.

Section 25 Report - 2026-27

This report, presented by the Chief Financial Officer, was scheduled to address the robustness of the estimates made for the 2026-27 budget calculations and the adequacy of the proposed financial reserves. This is a statutory requirement under Section 25 of the Local Government Act 2003. The report aimed to provide context for the budget and Medium-Term Financial Plan (MTFP) by bringing together issues from the 2026-27 budget report and financial monitoring of the 2025-26 Revenue Budget and Capital Programme.

The report highlighted significant national and local financial risks, including increasing costs and demand for services, particularly in Children's and Adult Social Care. It also noted the ongoing process of Local Government Reorganisation (LGR) in Worcestershire, with proposals to end the two-tier system and create unitary authorities. The report detailed the council's reliance on Exceptional Financial Support (EFS) and the potential implications of issuing a Section 114 Notice, often referred to as a bankruptcy notice, if a balanced budget could not be set.

The Chief Financial Officer's assessment, as outlined in the report, concluded that the estimates used for the 2026-27 budget and capital programme were based on reasonable assumptions. However, it stressed that general balances were only just about adequate and that the level of risk reserve was lower than desired. The report recommended accepting EFS, including maximising council tax flexibility, and implementing a transformation plan at pace to address the significant budget gap.

Updated 2026/27 Proposed Budget and Medium-Term Financial Plan 2027-2029

This comprehensive report provided an update on the council's financial position for 2025-26, following the receipt of the Final Local Government Finance Settlement. It detailed the proposed precept for 2026-27, which was to be considered by Full Council, along with approved savings opportunities, amendments to the Capital Programme, and an updated draft of the Medium-Term Financial Plan (MTFP) for 2026-27 to 2028-29.

The report detailed significant financial pressures, particularly in Children's Social Care and Adult Social Care placements, which are experienced by many local authorities nationally. Despite efforts to manage these pressures, a significant overspend was forecast for 2025-26, partially mitigated by investment income and reduced borrowing requirements, alongside the use of reserves and EFS.

The report outlined a remaining budget gap of £59.933 million for 2026-27, even with an assumed 8.98% Council Tax increase. This gap was after accounting for approved savings and indicative increases in grants and other funding. The council had applied for EFS in the form of a capitalisation directive and additional council tax flexibility. The report noted that confirmation of the capitalisation directive had not been received at the time of publication.

The report also detailed the proposed Net Budget Requirement of £619.964 million for 2026-27 and recommended setting the Council Tax Band D equivalent at £1,760.80, representing an 8.98% increase. This increase included a 6.98% rise for general services and a 2.00% Adult Social Care Precept. The Capital Programme for 2026-27 was proposed at £644.816 million.

The report included detailed analysis of grant funding changes, savings proposals, and the projected use of reserves. It highlighted the Dedicated Schools Grant (DSG) deficit, particularly in the High Needs budget, which was identified as a significant financial risk. The report also discussed the council's Treasury Management Strategy and Capital Strategy for the period 2026-29, outlining policies for managing borrowing, investments, and capital expenditure.

The consultation outcomes on the 2026/27 budget were also presented, indicating that while increasing Council Tax by the maximum of 5% received the most support, a significant proportion of respondents were comfortable with higher increases. Respondents were least comfortable with spending reductions in Children's Social Care, Adults and Older People, and Schools, High Needs and Early Years.

The report concluded with comments from the Overview and Scrutiny Performance Board and individual scrutiny panels, which provided feedback and recommendations on various aspects of the budget proposals, including the need for a revised Corporate Plan and continued scrutiny of savings delivery.

The meeting's agenda also included items on Apologies and Declarations of Interest, Public Participation, and the Confirmation of the Minutes of the previous meeting.