Issue - meetings

Background:

The report provided the Cabinet with details of the Provisional Local Government Finance Settlement 2026 to 2029 announced by the Government on 17 December 2025.

The Provisional Settlement was built on the Fair Funding Review 2.0 and included a reset of the business rates retention system from 2026/27, accompanied by the phased introduction of new Revenue Support Grant allocations over each year of the multi-year settlement and the gradual phasing out of legacy grant funding allocations. Overall, these changes would benefit Medway and the Core Spending Power would increase above the average rate, by 16.2% from 2024/25 to 2026/27 and by 31.9% from 2024/25 to 2028/29.

Although the settlement headlines were positive for Medway, a significant increase in funding had already been assumed as part of the draft budget. The announcements and their impact on Medway’s 2026/27 budget were summarised in the report and amounted to a potential decrease in funding for the Council of £7.920million compared to the assumptions in the Draft Budget presented to the Cabinet on 18 November 2025.

Whilst additional funding was welcomed, it was clear that the Provisional Settlement alone would not be sufficient to meet the pressures on statutory services and close the Council’s projected budget gap for 2026/27, without further support from the Government through the Exceptional Financial Support scheme.

The report also provided details of the impact on other grants.

Reasons:

The provisional levels of funding announced are a fundamental component of the 2026/27 budget, and their announcement is a further stage in the process to prepare a balanced budget for the coming financial year.