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.