Agenda item

To present the draft Budget proposals and estimates for 2026/27 for the General Fund.

The Budget Proposals for 2026/27 and Indicative Budgets for 2027/28 and 2028/29 – General Fund was introduced by the Leader of the Council.

 

The report brought together the conclusions of the budget preparatory work and covered a number of areas:

 

• The funding position for the General Fund (section 3)

• Draft General Fund budget proposals (section 4)

• The draft Capital Programme 2026/27 – 2028/29 (section 5)

• Capital Financing (section 6)

• Reserves and Balances (section 7)

 

The funding position for the General Fund

 

The provisional settlement was announced on 17th December 2025 and included:

·       a full baseline reset (for the first time since the Business Rate Retention were introduced in 2013-14), 

·       major changes to all the Relative Needs Formulas (RNFs), and

·       the simplification of many grants.

 

This was a three-year settlement with each of the latter two years subject to an annual settlement process and therefore considered to be indicative.

 

The core principle of the Fair Funding Review was to maintain an equal balance of local authorities Core Spending Power (CSP) which took into account Core Government Grants, Specific Grants and Council Tax. The Government modelled the base CSP for 2025/26 at £20.592m which has formed the base over the next 3 years.

 

The Government stated there was funding certainty over the 3 year

period although this was only achieved by assuming maximum Council Tax

increases. As such, a Council Tax increase of 2.99% was suggested. If Council tax increases were excluded, the Council’s actual funding from Government reduced from £10.711m to £9.893m in 2028/29 – a reduction of £0.818m. Without confirmation that sufficient funding had been made available to fund the new weekly food waste collection service, the decrease was even greater.

 

Lincolnshire authorities had intended to apply for Pool Status for 2026/27 as this had been financially beneficial for all Lincolnshire Councils over previous financial years.  However, following the provisional settlement announcement and clarification of the business rate reset guidelines whereby the Government was providing a 100% safety net, there was no financial business case to remain in the Lincolnshire Pool.  This decision was confirmed by the Councils financial advisors who had confirmed there was no financial benefit for being part of a Pool.

 

General Fund Budget Proposals

 

The Council was legally required to produce a balanced budget each year and Table 5 showed this could be achieved for 2026/27 without reliance on reserves. However, the 3-year outlook remained difficult as the Council transitioned towards its newly established baseline funding levels following the Fair Funding Review and Business Rate Reset. It was therefore recommended that a transfer was made to the Budget Stabilisation Reserve to ensure financial resilience if the financial outlook remained difficult.

 

The budget proposals for 2026/27 incorporated a number of service changes

required to meet operational demands. These proposed increases were

formulated in response to a combination of Cabinet priorities, changes in statutory responsibilities and service delivery pressures. The proposals were set out in Tables 7 and 8 of the report.

 

Capital Programme 2026/27 – 2028/29

 

The schemes included within the capital programme were designed to

deliver the Council ambitions for growth and investment in its assets to support the delivery of quality services.  The capital programme contained key investments across General Fund assets including:

 

• Vehicle replacement £1.046m

• Wheelie Bin Replacement £0.155m

• River Witham Footbridge £0.050m

• Grantham Canal £0.200m

• Car Park Improvements £0.120m

• Wharf Road Car Park Refurbishment £0.650m

• Disabled Facilities Grants (100% grant funded) £0.975m

 

Capital Financing

 

The proposed schemes have been funded by a combination of external grants as well as capital and revenue reserves.  No further internal borrowing was necessary although the Council continued to carry the cost of internal borrowing.

 

It was proposed that the General Fund Capital Programme for 2026/27 be financed from the following funding sources:

 

£1.201m Capital Receipts Reserve

£0.975m Grants and Contributions

£1.245m Local Priorities Reserve

£0.088m ICT Reserve

£0.055m Climate Change Reserve

 

At the time of compiling the report, the £0.975m grant funding for Disabled

Facilities Grants was not yet confirmed (but was anticipated as part of the

settlement) and therefore the financing or level of the 2026/27 investment may have needed to be amended when the level of grant funding was confirmed.

 

Reserves and balances

 

Table 12 of the report outlined a summary of the proposed General Fund Revenue Reserve Movements.

 

During discussions, Members commented on the following:

 

-       The Section 151 Officer explained that the Government had confirmed funding for the Food Waste rollout had been factored in within the funding settlement, however, the Section 151 Officer expressed disappointment about the transparency of the explicit funding amount.

-       It was confirmed the Ministry for Housing, Communities and Local Government were considering additional funding for areas affected by Internal Drainage Boards.

-       Regarding the one-off proposed budget increases, it was confirmed that the figures costed for the body-worn cameras included the operating costs.

-       Clarification was sought whether there had been a reliance on reserves, contrary to the wording in 4.2, given the reserve movements demonstrated in Table 5. It was confirmed these movements were earmarked reserves and demonstrated funds being transferred into reserves, rather than out of.

-       It was confirmed there had not been any cuts to the Leisure and Culture Services, instead the net service cost reduction was due to changes in depreciation charges and the carried remaining budget and Government grant from the previous financial year. 

-       A Member suggested creating a £100,000 training and development reserve for apprenticeships. The Leader agreed to take the suggestion to Cabinet for consideration.

-       It was confirmed that £500,000 had been moved into the Pension Reserve in readiness for costs associated with Local Government Reorganisation.

-       In view of the likely upcoming LGR changes, modelling had taken place on the financial impact on local government employee pensions.

-       Clarification was sought about the £850,000 set aside for renovation of the Deepings Leisure Centre site. The Leader confirmed there was still the intention and the means to renovate the site and the Leader had been engaging with the local MP.

-       Referring to the proposed recurring budget increase in table 7, the remit of the proposed Enforcement Officer role was questioned. It was confirmed this role was within the Public Protection team, overseeing issues such as littering and street trading. It was noted a new Corporate Enforcement Policy was being considered by Cabinet on 15 January 2026.

-       Referring to the proposed one-off budget increases in table 8, the purpose of the mobile CCTV cameras was questioned. It was confirmed that these were intended to gather evidence and information at known fly-tipping hotspots. The Leader noted that the primary intention of the cameras was to deter fly-tipping rather than generate revenue. An officer informed Members that a fly-tipping penalty matrix was included within the new Corporate Enforcement Policy being considered by Cabinet.

-       A Member suggested a Member Briefing could be held about fly-tipping within South Kesteven.

-       A visiting Member suggested a 1.99% council tax rise with savings instead made to non-statutory roles. The Leader welcomed greater detail of the cost savings.

 

11.38am – Councillor Max Sawyer arrived.

 

-       A visiting Member requested greater transparency of the analysis and data behind the decision to disband the Lincolnshire Business Rates pool. The Section 151 Officer noted this was an annual decision and that SKDC reserved the right to opt-in in 2027/28. He also confirmed the budget proposed not to opt into the pool for 2026/27 because the growth within the pool expected during 2026/27 was insignificant and the Government were pledging 100% safety net reimbursement should any authority drop below their baseline. Were SKDC in the pool then they would have to subsidise partnering authorities in these circumstances rather than the government.

-       Reassurance was sought that council tax increases were not intended to reimburse previous poor decision making. The Leader stated there was an element of financial recovery required due to the decisions of previous administrations.

-       The Head of Paid Service confirmed there was not currently support from Government for a four-day working week.

-       It was queried why there weren’t any funds allocated to the A1 reserve. The Cabinet Member for Environment and Waste confirmed this was because SKDC could not enforce the closure of the road for the street teams and, as such, it was unsafe to carry out work whilst the A1 was open. Closure of the A1 was the prerogative of Highways England. Despite this, the Cabinet were committed to safe maintenance of the A1 where possible and encouraged knowledge of any instances of litter or fly-tipping to be reported on ‘Fix My Street’ or to the Cabinet Member directly.

 

Members noted the Budget Proposals for 2026/27 and indicative budgets for 2027/28 and 2028/29 - General Fund.

 

The meeting adjourned at 11.56.