Agenda item

To review the draft Budget proposals for 2026-2027 and make any recommendations to Full Council

The DFR introduced the item and thanked the Committee for their suggestions during pre-scrutiny to which they had tried to incorporate those changes suggested. Cllr Shires warned the Committee that Government may make further changes but, barring that, these would be the papers that would go to Full Council. If there were any changes Cllr Shires would verbally update Members at that meeting.

Cllr Hankins asked if, and if so where, the fair funding review had been reflected within the budget in relation to the Provisional Local Government Finance Settlement for 2026/27. Cllr Shires believed Government did not understand how services in rural councils worked. A minimum guarantee of 95% core spending power was significantly less than urban, metropolitan, councils. She felt shire districts had been penalised and they believed that it was the intention of the Government to reduce their funding by a further £700k next year. That would be reflected when they did the Budget Monitoring in period 4 and that would have a grave impact on the 27/28 budget where they expected to see a deficit in the region of £1.6m. Cllr Shires felt that the fair funding review was only fair if you were not a shire district.

It was queried by Cllr Heinrich as to what point they would have clarity on the Community Reserve. Although he was aware a working group would make recommendations on purpose and governance, he queried how Members would know how to apply for that funding and when that would happen. Cllr Shires explained that they couldn’t form the working group until the decision was agreed at Full Council but envisaged, within 8 weeks that cross-party, working group to have agreed purpose and governance. The working group, made up of two officer and two members would determine if the applications met the criteria that they set out. No money would be spent until they had the governance in place. Cllr Shires also reiterated that no money would be going directly to Members but to the schemes that were agreed. Cllr Shires would like the decisions being turned around in approximately 6 weeks from when an application was made to ensure local communities were benefiting as quickly as possible, most likely spilt between people and place and for investing in assets.

Cllr Rouse asked if any money not spent would roll-over into the following year, but Cllr Shires felt that the steering group may need to consider that nearer the time as the recent fair funding review by Government meant they were, potentially, unable to continue the scheme beyond that current year. 

The initiative was welcomed by Cllr Bayes who believed it would greatly help many rural communities but asked for guidance for Members on what type of schemes they could apply for. Cllr Shires was eager to run an all-member briefing so she could offer some collective ideas to what type of projects could benefit. Cllr Shires wished the groups they supported would become self-sustainable as that was their member legacy and they needed to ensure what they left behind had a life beyond the end of the Council, so it needed to add value and be impactful. Cllr Shires preference was to consult with leaders of the groups to seek clarity on what types of initiatives they would like to see benefit.

Cllr Hankins suggested a correction on Pg.50, bullet point 3. He felt it should be line 4 and not line 6. The ADFA said it had been corrected for the Full Council papers.

The Chair was curious as to where the second home council tax was going and if it was rolled into line 15 of the General Fund Summary. The ADFA confirmed it was, although some of the share of money they got back from Norfolk County Council (NCC) did go into reserves to fund their works. Cllr Shires noted that they were also keeping the second home council tax reserve topped up to a level in case there was a revenue overspend, in which case there was something there to cover it.

In response to a query from the Chair as to where the £750k reserve to fund Local Government Reorganisation (LGR) was coming from, the DFR explained it was revenue. A debit to income to create a reserve that was released against the incremental costs of LGR. Cllr Hankins queried from where that figure had been derived from and the DFR outlined estimates varied based on several factors but compared to other Norfolk districts the cost ranged between half a million and a million pounds

Cllr Shires was disappointed that Government were choosing LGR and asking local communities to pay for it. It was a decision they were having to make; they didn’t want to make it.

At the Chair’s request, the ADFA outlined, why the report had slightly different budget figures for council tax; this was due to it being a moving picture on such things as non-collection estimates and similar estimations as they moved towards a final number for the Full Council papers.

It was explained by the DFR, in response to a query by the Chair, that the extended responsibility grants figure they were given at the start of 2025/26 was subsequently reduced by the Government, in December 2025, by £300k. A figure for 2026/27 had been included in the budget, in good faith, trusting the Government wouldn’t reduce that figure again but it was not part of the financial settlement or core spending power as it was through a separate body. That body collected a levy from producers of packaging and then distributed that out to collection and disposal authorities. Cllr Shires noted that money had gone into an extended responsibility reserve.

Cllr Cushing asked if domestic food waste collection was included on the General Fund Summary. Cllr Shires confirmed it was and like other Norfolk Councils she questioned the Government funding on the scheme and the financial burden it would put on the authority. It was a concern to Cllr Shires for the following year as it would be a full year of food waste collection to account for. She believed the Government didn’t consider the geography of many local authorities when making their decisions.

The Committee Agreed to support the following recommendations to Full Council.

1. That Cabinet consider the proposed balanced budget including movement in reserves and recommended approval to full Council.

2. To approve the use of the Communities reserve to fund a revenue budget of £4,000 per Member to allow the award of small local grants.

3. To approve the creation of an £0.75m Ear Marked Reserve to mitigate the Revenue costs of Local Government Reorganisation.

4. That an alternative option for balancing the budget should be agreed to replace costs or savings not taken forward if there are any.

5. That Cabinet agree that any additional funding announced as part of the final Local Government Settlement announcement be transferred to reserves.

6. That Cabinet decide which proposed new capital bids should be recommended to full Council for inclusion in the Capital Programme.