Agenda item

For decision. 

ORDERED that Executive approve the budget development approach and timetable, set out in Appendix 1 of the report, for developing the 2027/28 Budget and Medium-Term Financial Plan (MTFP) to 2030/31.

AGREED that the Executive note the update of the Council’s Medium Term Financial Plan (MTFP).

The Executive Member for Finance submitted a report for Executive's consideration. The purpose of the report was to provide an update on the Council’s Medium-Term Financial Plan (MTFP) and sought approval of the proposed budget development approach and timetable for developing the 2027/28 Budget and Medium-Term Financial Plan to 2030/31.

The Executive was advised that approval of the proposed timetable was required to ensure that the Council complied with its constitutional and statutory responsibilities in setting a balanced annual budget and Medium-Term Financial Plan. Members heard that Full Council retained responsibility for approving the budget and policy framework, whilst the Executive was responsible for developing and recommending proposals for consideration.

The Executive noted that the budget-setting process would be delivered through the Council’s Performance and Financial Management Framework (PFMF), which provided an integrated approach to financial planning, performance monitoring and risk management. Members were informed that the framework embedded a structured cycle of planning, monitoring, review and improvement, ensuring that financial decisions were informed by service performance, demand pressures and risk management considerations.

The Executive heard that the financial context for 2027/28 had improved in the short-term following the introduction of a three-year Local Government Finance Settlement covering the period 2026/27 to 2028/29. Whilst this provided greater certainty than previous one-year settlements, Members were advised that final funding allocations for 2027/28 had yet to be confirmed and remained subject to future Government announcements.

Members were advised that, despite the improved funding outlook, significant financial pressures remained. Key risks included demand-led pressures within Adult and Children’s Social Care, rising placement and workforce costs, waste service pressures arising from changes to national recycling requirements, risks to commercial property income, uncertainty regarding future digital investment requirements and the ongoing financial risks associated with the Dedicated Schools Grant deficit.

The Executive noted that wider economic factors continued to influence the Council’s financial position. Inflation remained above the Bank of England target, labour market conditions remained uncertain, and geopolitical developments continued to place pressure on energy and supply chain costs. Members were advised that these factors could have implications for commissioned services, contractual inflation uplifts, transport costs and service delivery expenditure.

The Executive further noted that some previously approved savings were now considered unlikely to be achievable in the manner originally intended, including contractual spend review savings and digitised procurement savings, and that these would be further reviewed as part of future updates to the MTFP.

Members heard that the Council’s budget strategy would focus on maintaining a balanced and sustainable budget, ensuring alignment with the Council Plan, supporting financial resilience through adequate reserves, strengthening demand management, embedding continuous improvement and ensuring that resources were prioritised in accordance with corporate priorities and Best Value principles.

The Executive was advised that the proposed timetable included ongoing engagement through the Policy Development Group, Financial Resilience Working Group, Member briefings and Executive reports throughout 2026 and early 2027, culminating in consideration of the final budget, Council Tax and revised MTFP by Full Council on 24 February 2027.

Executive was advised that an update on the issues discussed in the report were also presented to Members as part of a Member’s briefing. It was clarified that the matters discussed in the Member’s briefing were procedural rather than budgetary spending. It was clarified there were no issues raised at the Member’s briefing and that if Members of any political persuasion had questions on this issue, the Section 151 was prepared to answer them.

OPTIONS

The Council was required by law to set a balanced budget and to operate robust and meaningful financial planning arrangements. The report set out the development process and timeline for achieving that objective. Therefore, no other options were submitted as part of the report.

ORDERED that Executive approve the budget development approach and timetable, set out in Appendix 1 of the report, for developing the 2027/28 Budget and Medium-Term Financial Plan (MTFP) to 2030/31.

AGREED that the Executive note the update of the Council’s Medium Term Financial Plan (MTFP).

REASONS

The forward planning for, and setting of a robust budget and balanced MTFP, enabled the Council to provide and deliver services within its overall corporate and financial planning framework. The MTFP underpinned the delivery of the Council’s vision for Middlesbrough to be a thriving, healthier, safer, and more ambitious place where people wanted to live, work, invest, and visit, and where the Council would support residents to live fulfilling lives, to ensure that its communities thrived.

All Council elected Members had a legal obligation to agree a balanced robust budget and set the Council Tax by 11 March 2027. In addition, the Council had a Best Value duty to demonstrate financial sustainability through the delivery of a balanced MTFP over a period of at least three years. The setting of the budget was part of the Performance and Financial Management Framework and therefore required Full Council approval scheduled for 24 February 2027.

The Council was required to take a systematic, coherent, and controlled approach to addressing its ongoing financial challenges over the medium-term, while enabling the delivery of the Mayor’s vision and priorities for Middlesbrough through delivery of the wider Council Plan.