The Economy Overview and Scrutiny Panel met on Friday, 23 January 2026, to discuss the draft budget for 2026/27, the economic challenges facing small towns in Worcestershire, and to review the panel's work programme. Key discussions revolved around the significant financial pressures facing the council, the strategies for supporting smaller town centres, and the ongoing work to improve digital connectivity across the county.

Budget Scrutiny 2026/27

The panel engaged in a detailed review of the draft budget for 2026/27, focusing on the impact of Exceptional Financial Support (EFS) and the proposed Council Tax increase. The council faces significant financial challenges, with projected pressures and investments totalling £111.148 million for 2026/27. This gap is to be partially funded by an assumed 4.99% Council Tax increase, which would generate £18.004 million. However, even with this increase and identified savings of £9.145 million, a substantial gap of £71.937 million remains. The council has applied for EFS of up to £71.9 million and permission to increase Council Tax by 5% above the referendum limit, which would generate an additional £18 million annually.

The report highlighted a cumulative deficit in the Dedicated Schools Grant (DSG) for High Needs, projected to reach £194.1 million by March 2026 and £321.7 million by March 2027. A statutory override is in place until March 2028 to defer the problem of funding this deficit. The council is urged to work at pace with partners to develop and agree a deficit management plan.

Savings identified to date total £9.145 million, with the largest contributions coming from Home to School Transport (£4.640 million) and Finance, Commercial & Performance (£2.111 million). The report stressed that these savings are nowhere near enough for an organisation of this size and that transformation is the only viable route to deliver savings at the scale and speed required. The panel was asked to consider the impact of EFS and the Council Tax proposal, any further savings opportunities, and any other issues related to the 2026/27 budget and Medium-Term Financial Plan (MTFP).

Small Towns

The panel received a report detailing the economic challenges faced by small towns within Worcestershire, including Droitwich, Pershore, Evesham, Upton upon Severn, Tenbury, Bewdley, and Stourport-on-Severn. These challenges are attributed to factors such as the rise of online shopping, out-of-town retail, demographic shifts, variable transport connectivity, and a lack of local business diversification.

Wychavon District Council has developed vision documents for its main town centres—Pershore, Droitwich, and Evesham—aiming to secure future investment by building on their unique strengths. Droitwich is exploring opportunities to enhance its evening economy and capitalise on its canal, while Pershore is noted for its thriving retail area, though it faces traffic issues due to its narrow High Street. Evesham's primary redevelopment priority is the Riverside Shopping Centre, and the town is also addressing transport issues through a package of schemes.

Malvern Hills District Council has also produced Town Centre Plans for Upton-upon-Severn and Tenbury Wells, focusing on themes such as tourism, improved accessibility, and flood risk management. Wyre Forest District Council's Economic Development and Regeneration Team is working on regeneration plans for Bewdley and Stourport-on-Severn, with Bewdley addressing flooding concerns and Stourport focusing on improving town centre appeal and economic viability.

Countywide initiatives include improvements to public realm, flood risk management, and active travel schemes. The Worcestershire on Demand bus service has been expanded to cover several small towns, and traditional bus services have seen timetable enhancements. Business support programmes like Enterprising Worcestershire, Elevate Worcestershire, and Mentoring Worcestershire have been extended. Visit Worcestershire is providing consultancy services to support tourism businesses, with a focus on small towns and rural offerings. The report also highlighted the increasing availability of 'Gigabit Capable' broadband infrastructure across the county.

Work Programme

The panel reviewed its work programme for 2025/26, which includes ongoing scrutiny of the economy, workforce skills, strategic infrastructure, and broadband and communications. Key items for future scrutiny include the Worcester Six Business Park Development, Growth Hub Activity, and the Malvern Hills Science Park. Standing items include annual updates on Digital Infrastructure and Connectivity, Worcestershire Local Enterprise Partnership, and Tourism, as well as quarterly performance and in-year budget monitoring. The panel agreed to retain flexibility to address any urgent issues that may arise.