Decision details

RESOLVED:

That the Cabinet:

1)    Notes the circumstances that have led to the council’s current financial position and the assumptions used in producing the medium-term financial strategy (MTFS) as set out in this report;

2)    Notes the key risks and mitigations associated with this budget strategy as set out in this report;

3)    Approves the draft General Fund and Housing Revenue Account budgets, including growth and savings proposals, fees and charges, and Capital Programme proposals for 2026/27 and beyond (as detailed in Appendices B to F) as the basis for consultation with Select Committees and other stakeholders;

4)    Authorises officers to commence consultation on the budget and notes that this will commence on 24th December for a period of 6 weeks, with the results to be reported for consideration by Cabinet at the February 2026 Cabinet meeting;

5)    Notes that the final General Fund Revenue Budget, Capital Strategy, Capital Programme, HRA 2026/27 Budget and Business Plan and Treasury Management Strategy Statement will be presented to Cabinet on 19 February 2026 to be recommended for approval to the Full Council meeting taking place on 26 February 2026.

Furthermore:

6)    Authorises officers to action where possible any efficiency and invest to save proposals at the earliest opportunity in 2025/26 where operational savings are not public facing and so not subject to formal consultation and where assessed not to have any equality impacts. All other proposals subject to public consultation and equality impact assessment will only be implemented after Cabinet considers the consultation feedback, and subject to Full Council approval;

7)    Notes that the Final Local Government Finance Settlement (LGFS) is awaited from HM Government and that officers will continue to review and update the 2026/27 MTFS up until the point that EFS is confirmed and the final budget setting report is submitted to Cabinet in February 2026;

8)    Notes the material scale of the increase in rateable values for Hillingdon businesses and that officers are taking proactive and urgent communication with relevant parties to determine the veracity of those increases and risks to future income and cashflow of the council if those increases are successfully appealed;

9)    Authorises the Corporate Director of Finance, in consultation with the Cabinet Member for Finance & Transformation, to respond on behalf of the council to the consultation on the Provisional LGFS and to the Mayor of London’s budget consultation;

10)Notes that support will be required from government in the form of Exceptional Financial Support in order to set a balanced budget for 2026/27, and indicatively for later years in the MTFS period, and authorises officers to continue to work with MHCLG representatives to make the appropriate arrangements to get this in place.

In respect of the 2025/26 budget:

11)Approves the new fees and charges for the council’s leisure centres operated by GLL with effect December 2025, as set out within Appendix F.

Reasons for decision

The Cabinet Member for Finance and Transformation introduced the Cabinet’s budget proposals for 2026/27 and future years. It was proposed to release the consultation budget for a six-week period, after which it would return in February before being presented to full Council for approval. The proposals included a three-year revenue forecast and a five-year capital programme. The 2026/27 capital programme totalled £75 million following a review to reduce borrowing, while the HRA programme of £133 million included major works to improve social housing stock.

The Cabinet Member highlighted the continuing financial challenges caused by years of underfunding, recognised in the Fair Funding Review, and explained that transitional relief would leave the Council underfunded until 2028/29 at a net cost of £44 million. Exceptional financial support would be required in later years to achieve a fully balanced budget by 2028/29. Inflationary pressures, rising costs in adult social care, children’s services and homelessness, and additional responsibilities as a Port Authority were noted as key drivers of demand. The proposed Council Tax increase was 4.99%, including the social care precept, and fees and charges were assumed to rise by 10% with resident discounts retained. The current gap for 2026/27 was £59 million, largely due to transitional funding arrangements.

The Cabinet Member confirmed that service modelling and new delivery models were being developed to contain costs, including changes in adult social care, children’s homes and temporary accommodation. The HRA was forecast to maintain £15 million in reserves and continue major works programmes, including the significant housing regeneration project in Hayes.

Business rates revaluation for Heathrow Airport was highlighted as a potential risk by the Cabinet Member, requiring further engagement with Government and the airport operator.

The Cabinet Member thanked the Corporate Director of Finance and his team for their extensive work on the proposals. The Vice-Chair supported the proposals, acknowledging the ongoing pressures in adult social care, SEND and homelessness, and thanked officers and Members for their work in producing a robust consultation budget.

Cabinet, therefore, agreed the proposed 2026/27 budget for consultation.

Alternative options considered and rejected

Alternative proposals considered but rejected by the Cabinet were set out in the public report.