The Finance Panel of Powys Council met on Friday, 10 October 2025, to discuss financial strategies, budget updates, and responses to previous panel recommendations. The meeting included consideration of the Medium Term Financial Strategy, a review of the capital programme, and an end-of-year transformation portfolio report. The panel was also scheduled to discuss public sector pay awards and a sustainable communities for learning programme plan.

Medium Term Financial Strategy (MTFS) Financial Planning Update

The panel was scheduled to discuss the Medium Term Financial Strategy (MTFS) and financial planning for 2026/27 and beyond. Councillor David Thomas, Portfolio Holder for Finance and Transformation, Mari Thomas, Head of Finance, and James Chappelle, Chief Accountant, were expected to present the report. The purpose of the report was to provide an update on the latest economic projections and their impact on the council's budget and MTFS. The report pack noted that the economic situation continued to challenge the council, with inflation impacting the cost of delivering council services.

The report pack stated that the MTFS, approved by the council on 20 February 2025, set out the financial strategy for Powys County Council for the period 2025 to 2030, aligned with the council's Corporate Plan. The report pack quoted the Office for Budget Responsibility (OBR) report Economic and Fiscal Outlook published on 5 March 2025:

The economic and fiscal outlook has become more challenging since the Autumn Budget. Domestic output stagnated in the second half of 2024 and business and consumer confidence have trended lower recently. European energy prices have risen again, and government bond yields are up by around ½ a percentage point. The outlook has also become more uncertain with two geopolitical risks highlighted in our 2022 Fiscal risks and sustainability report beginning to crystallise: upward pressure on defence spending and a tightening of global trade restrictions. And recent UK population, labour force, and output data do not provide a clear signal about domestic economic prospects.

The report pack also quoted Mark Drakeford MS, the Finance Secretary, who set out the Welsh Government's approach to the 2026-27 Budget:

I want to ensure we provide a stable and reliable outcome for our public services and all who rely on them.

I also want to ensure the new Senedd we have worked so hard to create has the best possible platform from which to carry out its work, to make an early start on aligning budgets with its priorities and the development of a new Programme for Government.

This approach to the 2026-27 Budget is a responsible one. It will provide for the next government to deliver on the promises it makes during the election from the outset while also providing certainty to public services in an election year.

The report pack noted that the economic context had significant implications for the council's financial planning, including the impact of inflation, energy costs, interest rates, economic growth, and the labour market. The report pack stated that the MTFS previously assumed a 2% general inflation uplift across non-pay expenditure, but these assumptions had been reviewed and reconsidered.

The report pack stated that the indicative budget plan for 2026/27 was estimated at £10.3 million, a decrease of £3.5 million from the £13.9 million gap projected in February 2024. The report pack also included a table showing the impact of the change for the most significant elements of the council's budget.

The report pack stated that the council's capital strategy set out the council's capital priorities for the next 5 years, with the provisional Capital Programme totalling £557 million (including the Housing Revenue Account (HRA)). The report pack noted that construction and material price increases affected the capital programme and revenue budget, and that there remained a significant risk of increased costs well into the long term.

The report pack stated that the council had circa 650 assets (excluding housing) with a value of £492 million, and that it was essential to continue to maintain and invest in those assets. The report pack also noted that the Schools Transforming Education Plan would play a key part in the successful delivery of Sustainable Powys over the coming years.

The report pack stated that capital receipts were a fundamental element of maintaining the affordability of the Capital Programme, and that the council had approved a target of £10 million per annum for the generation of capital receipts to support this. The report pack noted that a motion approved by the council on 10 July 2025, calling for a moratorium on the sale of council-owned farms and scrapping the arbitrary £10 million/annum asset sales target, would reduce the amount of capital receipts available to support the capital programme.

The report pack stated that the council was required to provide funding to support both the Mid and West Wales Fire Authority (MAWWFRA) and the Bannau Brycheiniog National Park (BBNP) via a levy, and that assumptions for future years were budgeted at a 5% increase per annum.

The report pack stated that the net revenue budget requirement was the amount of budget the council required to fulfil its functions, and that the financing of the net budget came from the WG settlement and Council Tax income. The report pack noted that Council Tax increase was currently modelled at 5% year on year increase, but that Cabinet had not yet discussed the level at which Council Tax would be set.

The report pack stated that the council was embarking on a programme of change to transform the shape of the council for the future, to ensure that it could remain financially stable and provide sustainable services in the long-term. The report pack noted that delivering Sustainable Powys meant reviewing what services the council provided and how they were provided, to meet current needs whilst ensuring innovative solutions to provide the best services adapted for future generations.

The report pack stated that the council must put financial resilience at the forefront of its financial activities, and that the council continued to draw upon CIPFA's pillars of financial resilience and indicators of financial stress as a framework for improvement within its Finance Transformation plan.

The report pack identified a number of risks in terms of the council's financial planning, including budget delivery risks and funding risks. The report pack stated that the council's position on reserves remained in line with its Reserve Policy, and that reserves should be maintained at a prudent level.

The report pack included a budget timetable for 2026-27, setting out the key dates and activities for the budget process.

Cabinet were asked to acknowledge the changing environment in which the council's plans were being developed, and agree with the revised assumptions that were being used to support the development of the MTFS. Cabinet were also asked to agree that the Senior Leadership Team continue to work with the relevant Portfolio Cabinet Member(s) to identify potential savings to assist in addressing the indicative budget gap across the period of the Medium-Term Financial Plan.

Cabinet Responses to Panel Recommendations

The panel was scheduled to note the responses from Cabinet to the panel recommendations of the 11 September meeting. The report pack summarised the panel's observations in respect of the Q1 Revenue Forecast Report 2025/26, the Q1 Capital Forecast Report 2025/26, and the End of Year Transformation Portfolio Report.

The report pack noted that the panel had requested that future reports should include commentary comparing expected outcomes with actual impacts, particularly in relation to school closures and other significant transformation projects. The report pack also noted that the panel had requested that the impact of transformation on learners be monitored and reported, including both educational outcomes and wellbeing indicators.

The report pack stated that Cabinet accepted the panel's recommendation that future reports should include commentary comparing expected outcomes with actual impacts, and that a Benefits Realisation Plan was usually prepared for all Sustainable Communities for Learning projects, following approval of the Full Business Case. The report pack also stated that Cabinet accepted the panel's request that the impact of transformation on learners be monitored and reported, and that a more detailed evaluation of the impact of Transforming Education proposals/changes on pupils would be undertaken following the implementation of changes.

Public Sector Pay Awards Settlement Update

The panel was scheduled to receive an update on public sector pay awards settlements. The report pack noted that a 3.2% pay increase had been agreed for staff covered by the NJC for Local Government Services, and that Welsh Government had confirmed a 4% pay award for teachers. The report pack also noted that pay negotiations had not yet concluded for Solbury staff and JNC for Youth and Community Workers.

The report pack stated that the Council had budgeted for a 3% pay award, meaning that the additional 0.2% would be drawn from the Council's dedicated pay reserve. The report pack also stated that Welsh Government had committed to funding the teachers' pay award, although confirmation was still awaited on whether this would be added to the base budget or provided as a one-off grant.

Forward Work Programme

The panel was scheduled to note the forward work programme, including the schedule of meetings and topics for discussion. The schedule included a Sustainable Powys Update, the MTFS update and Financial Resilience Report Confidential Session, and a Draft Overarching Impact Assessment.