Agenda item

Executive agreed that:

a) The draft General Fund Budget for 2026/27 is proposed for consultation purposes and a Band D Council Tax of £207.03 (assuming a 2.99% Council Tax increase).

b) The updated position on the General Fund Medium Term Financial Plan (MTFP) as shown in Appendix A be noted.

c) the proposed fees and charges, as set out in Appendix B, be approved for consultation.

d) The minimum level of General Fund balance of £3.649 Million, based on the 2026/27 risk assessment of balances as shown in paragraph 6.3, is approved.

e) The pressures identified in section 4 of the report is noted.

f) The savings identified in section 5 of the report is noted.

g) The Section 25 Statement of Robustness of Estimates and Adequacy of Reserves as set out in Appendix D is noted.

h) The decisions taken on recommendations a) to g) above be referred to the Joint Meeting of Scrutiny Committees on 28 January 2026 for consideration.

The Leader of the Council presented the report on behalf of the Executive Member for Financial Sustainability. The report provided the draft budget for 2026/27 and the updated Medium?Term Financial Plan. It highlighted that whilst Government funding would continue to decline, it was less sharply than expected. Budget reviews identified new financial pressures, including costs linked to Local Government Reorganisation and slower than expected BEAM income, requiring additional contingencies. Savings from the positive pension fund revaluation significantly improved the financial position and supported a balanced 2026–27 budget, with some of the benefit placed in reserves to manage future risks. A new reserve was also to be created to give the council flexibility to respond to emerging priorities.

The Leader of the Council proposed the recommendations as set out in the report. The Executive Member for Wellbeing seconded the proposal.

A question was raised about section 3.13, noting that homelessness, rough sleeping and domestic abuse grants had been consolidated into a single grant and temporary accommodation funding had been moved into the Revenue Support Grant, which could result in less money being available. Officers confirmed that approximately £400,000 had been previously allocated for temporary accommodation and that the Council would allocate the same amount in 2026/27. Officers reassured Members that work was ongoing with the service in relation to the grant for homelessness and rough sleeping and that the funding had been split 49% for temporary accommodation and 51% for other homelessness support.

In response to a question from a non-executive Member in relation to the BEAM contingency, Officers explained that the 2026/27 budget had included a planned £200,000 surplus from BEAM, however, the food and beverage facilities had only begun operating in September to October 2025 and was still in the early stages of growth. It was therefore recognised that BEAM might take longer than 2026/27 to deliver the surplus assumed in the business plan. A review of the business plan was planned to determine whether the original assumptions remained viable or needed adjustment. The £200,000 contingency was included to give the Council flexibility should BEAM’s growth take longer than expected.

Following a question from a non-executive Member with regards to the £1m pension savings, officers explained that the pension fund was valued every three years by actuaries through the Hertfordshire Pension Fund, with the most recent valuation work completed during 2025. Based on the actuaries’ assumptions regarding  the fund’s position over the next three years, contribution requirements were recalculated. The fund was around 107% funded, which allowed the council’s primary contribution rate to fall from 19.8% to 17.1% for the next three years. The secondary rate, an annual lump sum linked to past early retirements or ill?health costs, was no longer required as the fund was fully funded. As a result, the Council no longer needed to make that payment, generating the significant savings. Recognition was given to the Pensions Team at Hertfordshire County Council.

A non-executive Member recognised that the employer contribution to the Local Government Pension Scheme was around 17%, which was unusually high compared with most sectors. Concern was expressed about whether the Council reported employment costs in a way that made them clearly visible to residents and taxpayers, especially given the additional pressure from a 4% salary increase and the overall significance of staffing costs. Officers explained that the Council did not currently present this information in a detailed way. Reporting was produced at a high level based on service expenditure and the budget papers did not break down employment costs in detail. Further consideration would be given to the reporting breakdown.

In response to a question from a non-executive Member with regards to fees to Broxbourne Borough Council, officers advised that £15,000 related to Broxbourne providing one day a week of support to monitor key performance indicators (KPIs) and the corporate plan, enabling more regular performance updates for Members and the leadership team to ensure transparency and maintain performance reporting. It was noted that the Council already shared other services, such as Human Resources (HR) and were exploring further reciprocal arrangements.

In response to a Member question regarding whether the three?year fair funding settlement was masking the ongoing decline in Central Government support and whether the additional pension funding risked giving a misleading sense of security when underlying financial pressures remained, officers confirmed that it was a fair assessment. The unexpectedly large pension fund contribution had enabled the Council to set a balanced budget for the current and following year. Officers emphasised that this did not remove the longer?term challenges. From 2027/28 onwards, further financial pressures were expected and the Council would still need to deliver significant savings or identify alternative options to remain sustainable.

Members commented on the source of the unexpected pension fund gains and queried whether it had arisen from stronger equity performance or higher interest rates compared with the COVID period. Officers confirmed that the actuaries considered a wide range of assumptions, including mortality projections, changes to pension rules, such as the retirement age rising from 55 to 57 in 2028 and the improved performance of pension fund investments. In addition, assumptions about future CPI, RPI and other rates also played a significant role and these factors contributed to the unexpected improvement in the pension fund’s position.

A non-executive Member queried whether in relation to Local Government Reorganisation, the new authority might have to assume the existing debts of other councils and manage them indefinitely. Officers confirmed that any new body would become responsible for whatever debt was carried into the new structure. It was noted that most Chief Financial Officers across Hertfordshire were comfortable with the levels of general fund debt, which were not considered problematic. The greater concern related to Housing Revenue Account (HRA) debt, which was significantly higher.

The motion to support the recommendation, having been proposed and seconded, was put to the meeting and upon a vote being taken, was declared CARRIED.

RESOLVED - Executive agreed that:

(A) The draft General Fund Budget for 2026/27 is proposed for consultation purposes and a Band D Council Tax of £207.03 (assuming a 2.99% Council Tax increase).

(B) The updated position on the General Fund Medium Term Financial Plan (MTFP) as shown in Appendix A be noted.

(C) the proposed fees and charges, as set out in Appendix B, be approved for consultation.

(D) The minimum level of General Fund balance of £3.649 Million, based on the 2026/27 risk assessment of balances as shown in paragraph 6.3, is approved.
 

E) The pressures identified in section 4 of the report is noted.

F) The savings identified in section 5 of the report is noted.

G) The Section 25 Statement of Robustness of Estimates and Adequacy of Reserves as set out in Appendix D is noted.

H) The decisions taken on recommendations a) to g) above be referred to the Joint Meeting of Scrutiny Committees on 28 January 2026 for consideration.