Agenda item

1.

Title of Item/Report

Medium Term Financial Plan Update and Strategy

2.

Record of the Decision

Consideration was given to a report on the Medium Term Financial Plan Update and Strategy.

This was the final report in setting the Council’s 2026/27 Budget and Council Tax and outlining the Medium Term Financial Plan (MTFP) position to 2029. The report also included an update on the financial performance for 2025/26.

The report outlined the budget for 2026/27 and indicative MTFP for future years. The provisional finance settlement was announced on 17 December 2025, and this indicated the funding for 2026/27 along with provisional allocations for 2027/28 and 2028/29, with the final allocations to be confirmed in February.

The MTFP provided an indicative financial envelope to support sustainable decision making and prioritisation over the planning period. It would be reviewed and refreshed annually to reflect updated demand, inflation, funding assumptions and delivery progress.

Like many councils across the country, the Council continued to see greater demand for council services and rising costs which had resulted in overspending against it’s budget. The areas that were experiencing the greatest budgetary challenges were Adults Social Care, Children’s Social Care and Home to School Transport. As a result, the Council had needed to use reserves to dampen the impact; the Council needed to ensure it had healthy reserves to mitigate for future unpredicted pressures and therefore these need to be replenished. The report included a Reserves Policy outlining the plan of how this would be achieved.

Across the MTFP the Council was predicting the continued rising demand and cost pressures seen in recent years, which would exceed the increase in funding available. This had resulted in a budget gap of £6.7m in 2026/27, with a predicted budget gap of £13.8m in 2027/28 and £18.4m in 2028/29.

In response to bridging this gap, a renewed Phase 2 of the Powering Our Future programme encompassing Outcome based reviews, Council wide initiatives and efficiency reviews had been identified. This programme built on the positive progress made through the Powering our Futures Phase 1 transformation reviews already identifying £9.9m of savings by 2028/29. Residents feedback through the Let’s Talk Money budget consultation had been used to help identify the areas for review.

The scale and pace of savings required, particularly in the later years of the plan, represented a significant delivery challenge. While the Council had a strong track record through Phase 1 of Powering Our Futures, Phase 2 would require early validation of assumptions, rigorous governance through the established gateway process, and regular reporting to Members. Given the low level of reserves, timely corrective action would be required where delivery risk emerges, including adjusting sequencing, scope or mitigations as necessary.

RECOMMENDED to Council that:-

1. In accordance with the Local Government Act 2003, Members note that the Section 151 Officer confirms that the following recommendations:

a)       represent a robust budget which has been prepared in line with best practice;

b)       provide adequate working balances;

c)       set out that reserves and provisions are adequate for their purpose.

General Fund Budget

2.       A 2026/27 Council Tax requirement for Stockton-on-Tees Borough Council of £134,206,810 be approved.

3.       A 2026/27 Council Tax requirement for Stockton-on-Tees Borough Council inclusive of Parish Precepts £135,318,668 be approved.

4.       The 2026/27 budget and indicative 2027/29 MTFP be approved as outlined in paragraphs 54-129 of the report, the level of General Fund Balances and the release of reserves to balance the 2025/26 in year financial position as set out in paragraphs 13-43 of the report.

5.       The outcome of the Let’s Talk Money Budget Consultation be noted as set out in paragraphs 44-46 and in Appendix A to the report.

6.       The reserves policy at Appendix B to the report be approved.

7.       £1.428m of capital receipts be applied to the capital programme, as set out in paragraphs 39-41 of the report, for the following interventions:

•         Therapeutic Children’s Home

•         Xentrall ICT Network

•         Accommodation

•         Replacement Vehicle Ramps

•         Parks Improvements Programme

•         Foster Carer adaptations

8.       This will allow £1.428m of Council resources previously earmarked for the above schemes to be transferred into the Transformation Reserve.

9.       Prudential borrowing of £6.5m be approved to fund vehicle replacement purchases over the next three years, with members noting the borrowing repayments will be variable each year reflective of annual spending requirements, described in paragraphs 61-69 of the report and call on the MTFP outlined at paragraph 99 of the report.

10.      Prudential borrowing of £1m be approved to fund the resurfacing of Wellington Square Car Park with annual borrowing repayments of £80,000 per annum, provided for within the MTFP, and modify the pre-existing borrowing approvals accordingly.

Taxation

SBC 

11.      The Council Tax for Stockton-on-Tees Borough Council prior to Parish, Fire and Police Precepts be increased by 4.95%, which includes the Government Levy of 2% in respect of Social Care, ie to £2,139.91 at Band D (£1,426.61 at Band A).

Fire, Police & Parish

12.      The Council note the Police & Crime Commissioner is yet to set their precept for 2026/27. This information will follow for Council.

13.      The Council note the Fire Authority is yet to set their precept for 2026/27. This information will follow for Council.

14.      The Council note the Parish precepts as set out in paragraph 143 of the budget report.

Capital

15.      The Capital Programme attached at Appendix G & H to the report be approved.

Council Tax - Statutory Requirements

16.      Members approve the statutory requirements for Council Tax as shown in Appendix I - to follow for Council.

17.      The Council must set its Local Council Tax Reduction (CTR) scheme annually by 11 March of the preceding financial year. Cabinet therefore recommends to Council that the current Local Council Tax Reduction Scheme be retained for the financial year 2026/27 incorporating the updates for the prescribed requirements in regulations and to reflect updated income figures in the table at Schedule 1. The scheme is available here www.stockton.gov.uk/CTR.

18.      The Chief Finance Officer be given delegated authority, in consultation with the Cabinet Member for Resources and Transport, to make further adjustments to the income table and/or disregard additional funds should the government issue revised publications with regards to these matters after 18 February, to ensure that Government’s intentions for additional support is maintained.

Capital Strategy

19.      The Capital Strategy as set out at Appendix J of the report be approved, including the Flexible Use of Capital Receipts Strategy and the Minimum Revenue Provision Strategy.

Treasury Management/Prudential Code

20.      The Treasury Management Strategy as set out in Appendix K to the report be approved.

Investment Strategy

21.      The Investment Strategy as set out at Appendix L to the report be approved.

Organisational and HR

22.      The Pay Policy Statement including the pay and grading structure at Appendix M to the report be approved.

Members Allowances

23.      Members allowances be frozen for 2026/27. This will mean that these allowances have been frozen since 2013/14.

Cabinet RESOLVED that:-

24.      The Fees and Charges Policy attached at Appendix C to the report be approved.

25.      Cabinet recommend to Council the estimates of income generation included within the Fees and Charges Policy.

3.

Reasons for the Decision

The report outlines recommendations to Cabinet in respect of Cabinet and Council decisions in relation to:

•         2026/27 budget, MTFP and Capital Programme

•         Council Tax

•         Reserves Policy

•         Fees and Charges Policy

•         Capital Strategy, Treasury Management Strategy and Investment Strategy, Organisational and HR, Members Allowances

4.

Alternative Options Considered and Rejected

None

5.

Declared (Cabinet Member) Conflicts of Interest

The meeting was advised that each Cabinet Member had been granted a dispensation for a 4-year period in respect of all decisions relating to the setting of the Council Tax and precepts and Members Allowances and did not need to individually declare those interests.

6.

Details of any Dispensations

None

7.

Date and Time by which Call In must be executed

Midnight, 17 February 2026 for recommendation 24 only.