Agenda item

Medium Term Financial Strategy

A presentation will be given in respect of the Council’s Medium Term Financial Strategy, with reference to the report submitted to Cabinet on 9th September 2025.

 

Contact: Kevin Mulvaney – Service Director Finance

Minutes:

Kevin Mulvaney, the Service Director, Finance gave a presentation on the Medium-Term Financial Strategy (MTFS), with reference to the report submitted to Cabinet on 9th September 2025.

 

The Portfolio Holder for Finance and Regeneration, Councillor Graham Turner, was present and introduced the item.

 

The presentation went through:

·       The basis of the Government’s Fair Funding Review 2.0.

·       The Key Funding and Pay Assumptions.

·       An explanation of the 2026-27 Funding.

·       2026-27 MTFS Build Up, including a breakdown by directorate.

·       MTFS Summary Position 2026-27 to 2030-31

·       Next Steps.

 

The following points were highlighted:

·       The MTFS established the financial framework for the Council’s budget planning for 2026/27 to 2023/2031 and reflected assumptions in relation to funding, inflation, service demand, and national policy changes.

·       A budget gap of £18 million was forecast for 2026/27 which would require some reduction in budget pressures and new savings to deliver a balanced budget.

·       The recent changes in the Department of Levelling Up, Housing and Communities (DLUHC) were noted and advice was awaited on whether this would change the approach in terms of funding local government.

·       The Government’s Fair Funding Review consultation had concluded in August 2025 and the Government response was expected in mid to late October.

·       The MTFS assumed Kirklees would gain funding but the Government had stated that the figures were not confirmed. A prudent position had been taken of 60% of the figure from the modelling, which equated to £6.7 million.

·       The assumptions in terms of Council Tax increase and pay inflation.

·       The position in respect of the Collection Fund and Reserves.

·       The key cost and income pressures, across the directorates.

·       A cumulative gap of £56.3 million over five years.

·       The report would be submitted to Council on 17th September 2025.

·       Future action, in the short term:

-          Review and update pressures based on latest information

-          Finalise Capital Plan review

-          Give Services three-year savings targets.

-          Await Government response, Local Government Policy Statement, and Chancellor’s budget (26th November 2025).

-          Budget proposals to be submitted to Cabinet on 2nd December 2025.

Questions and comments were invited from Committee Members, with the following issues being covered:

·       The assumed gain from the Fair Funding allocation was welcomed but was insufficient given the scale of the challenges faced by the Council. It was noted that the gain from Fair Funding was a one-year figure, with potential to rise over the three years if 100% of the modelled gain was realised.

·       In response to queries about the Council’s contributions to the West Yorkshire Pension Fund, it was explained that:

-          The fund was currently in surplus and a consultation was underway (closing 3rd October) regarding potential reductions in employer contributions.

-          Representations would be made to support significant savings, whilst recognising the need for sustainability. 

-          A 1% reduction in employer contributions could equate to savings of over £2 million.

-          No assumptions had been built into the MTFS, pending the outcome of the consultation.

-          There would not be an impact on members’ pensions.

 

RESOLVED –

(1) That the Cabinet Member and Service Director – Finance be thanked for attending to present the Medium-Term Financial Strategy to the Committee.

(2) That it be noted that the Medium-Term Financial Strategy was considered by Cabinet on 9th September 2025 and would be submitted to Council on 17th September 2025.

(3) That the proposed engagement with Scrutiny on the budget proposals for 2026/27, at a dedicated meeting in January 2026, to help inform the development of the proposals in advance of consideration by Cabinet and Council in February 2026, be welcomed.

 

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