Decision Maker: Cabinet

Outcome: Recommendations Approved

Is Key Decision?: Yes

Is Callable In?: Yes

Date of Decision: November 19, 2025

Purpose: To provide an update on the 2026-2027 Budget and the Medium Term Financial Strategy and agree the next steps that will be taken in order to address the financial pressures faced by the Council over the medium term.

Content: That Cabinet approved: 1.    The Our Future Council Programme and its continued direction of travel, specifically the strategy to address the projected budget challenge for 2026-2027, as outlined in Section 7 of the report.   2.    The updated draft Medium Term Financial Strategy, including changes to inflation, demand, and development as set out in Section 8 of the report.   3.    The approach to public consultation as set out in Section 12 of the report.   4.    Delegated authority to the Cabinet Member for Resources, in consultation with the Section 151 Officer, to finalise the specific questions with regards to the public consultation exercise in line with the approach outlined in Section 12 of the report.   5.    Delegated authority to the Cabinet Member for Resources and the Cabinet Member for Children, Young People and Education, in consultation with the Executive Director of Families and the Section 151 Officer to approve changes to the local funding formula for Schools including the method, principles and rules adopted, outlined in Section 10 of the report.   That Cabinetnoted: 1.    There is significant financial challenge over the medium term, and as at February 2025, the projected budget deficit was £17.2 million for 2026-2027, rising to £23.5 million in 2027-2028, after the delivery of £31.8 million of approved recurrent savings.   2.    The Council had made good progress against the budget strategy outlined in the July Cabinet report.  Which, combined with the outcome of the triennial actuarial pension valuation and the Government’s Fair Funding Review, is that we would use one-off resources, that have consciously been set aside to smooth the financial challenge over the medium term.   3.    The updated budget deficit currently stands at £7.1 million for 2026-2027. Our aim is use up to £5.0 million of one-off resources to balance the 2026-2027 budget.  However, there continues to be significant risk and uncertainty for 2026-2027 and over the medium term.   4.    Whilst the outcome of the Fair Funding Review is expected to be favourable for Wolverhampton, until the local government provisional finance settlement is announced in December, there continues to be significant uncertainty on the resources that will be made available over the medium term.   5.    As reported to Cabinet in July, the strategy to address the budget deficit for 2026-2027 allows us time in order to fully understand the outcome of the multi-year settlement.   6.    There continues to be considerable amount of risk with regards to the Council’s finances, particularly in relation to increased costs and demand.   7.    The budget strategy outlined in the report is reliant of the delivery of existing approved savings targets and any reprofiling or non-delivery would impact on the projected financial position.   8.    In line with Government referendum limits and in line with what was reported in the February 2025 Our Future Council Budget and MTFS report, our working assumptions are that Council Tax would increase by 4.99% for 2026-2027, as set out in Section 6 of the report.   9.    Due to external factors, budget assumptions remain subject to change which could, therefore, result in alterations to the financial position of the Council.  This includes assumptions with regards to the level of resources that would be available to the Council.    10.The Council has a good track record of strong financial management, and significant progress has been made in responding to the Council’s financial challenge. Whilst the Council has a strategy to set a balanced budget for 2026-2027, there continues to be considerable uncertainty over the medium term in respect of the Council’s finances, in particular in relation to demand and inflation.  Therefore, the overall level of risk associated with the Medium Term Financial Strategy continues to be assessed as Red.