Appendix 2
Medium Term Financial Plan (MTFP) Update
|
|
Ref |
Estimate (£m) |
|||
|
|
|
2026/27 |
2027/28 |
2028/29 (LGR) |
Total |
|
Annual |
Annual |
Annual |
Cumulative |
||
|
Council 11 February 2025 DEFICIT |
|
25.916 |
18.731 |
0.000 |
44.647 |
|
CARRY FORWARD OF 2025/26 DEFICIT |
|
11.449 |
|
|
11.449 |
|
Total After Carry Forward |
|
37.365 |
18.731 |
0.000 |
56.096 |
|
Normal Updates: |
|
|
|
|
|
|
Council Tax |
A |
(14.231) |
(14.322) |
(29.436) |
(57.989) |
|
Removal of previous Business Rates estimates |
B |
103.709 |
2.195 |
|
105.904 |
|
NEW Baseline Funding from 2026/27 - Business Rates top up and retained rates |
(87.614) |
(2.009) |
(1.808) |
(91.431) |
|
|
CSD Home to School Transport - grant rolled into Revenue Support Grant (RSG) 2025/26 |
C |
0.992 |
|
|
0.992 |
|
Removal of previous estimates for RSG and other consolidated grants |
76.961 |
0.089 |
|
77.050 |
|
|
NEW RSG and consolidated grants from 2026/27 |
(96.987) |
8.175 |
8.312 |
(80.500) |
|
|
Inflation |
D |
0.786 |
(1.591) |
18.570 |
17.765 |
|
General Contingency |
E |
1.010 |
0.160 |
0.600 |
1.770 |
|
Pay Awards and National Insurance |
F |
6.470 |
0.050 |
5.745 |
12.265 |
|
Local Government Pension Scheme: revaluation impact |
G |
(5.957) |
|
|
(5.957) |
|
Levies and grants |
H |
0.012 |
0.021 |
0.037 |
0.070 |
|
Treasury Management |
I |
0.594 |
1.630 |
3.424 |
5.648 |
|
Pressures added to / (removed from) the MTFP: |
|
|
|
|
|
|
ASC Growth and Demography |
J |
14.217 |
3.106 |
22.479 |
39.802 |
|
CSD Growth and Demography |
K |
18.146 |
1.539 |
6.693 |
26.378 |
|
Orbis Review |
L |
1.700 |
|
|
1.700 |
|
CET Waste Housing Growth |
M |
(0.225) |
0.077 |
0.405 |
0.257 |
|
CET Waste additional income |
N |
0.500 |
(0.500) |
0.300 |
0.300 |
|
CET Waste PFI Credits |
O |
|
0.125 |
2.871 |
2.996 |
|
GCS Elections |
P |
|
1.500 |
(1.125) |
0.375 |
|
Pressures bids approved by CMT |
Q |
1.234 |
0.030 |
(0.166) |
1.098 |
|
Savings |
R |
(3.051) |
(0.464) |
(0.008) |
(3.523) |
|
DEFICIT AFTER UPDATES |
|
55.631 |
18.542 |
36.893 |
111.066 |
Updates:
A Council Tax
The Government has provided local authorities in England additional flexibility in setting Council Tax by increasing the referendum limit for increases in Council Tax to 3% and the ability to increase the Adult Social Care Precept by up to 2%. Council Tax inflation is therefore assumed at 4.99% for all years.
Council Tax base growth is being estimated at 1.5% for all years. The impact of additional collection fund deficit/surpluses will be managed through the collection fund reserve.
B Business Rates
Business Rates estimates have now been replaced by new Baseline Funding, allocations of which were announced at the Local Government Provisional Settlement (LGPS) for 2026/27 to 2028/29.
C Revenue Support Grant (RSG) and Consolidated Grants
A number of grants were rolled into RSG for 2025/26 including: Election Integrity Programme New Burdens, Extended Rights for Home to School Transport, Island Funding, Tenant Satisfaction Measures and Transparency Code.
More grants have been rolled in from 2026/27. The previous estimates have now been replaced by the; allocations of which were announced at the Local Government Provisional Settlement (LGPS) for 2026/27 to 2028/29. More detail is set out in Annex 2.
D Inflation
The inflation model as per the approved pressures protocol allows for contracts to be uplifted annually per the contract conditions but does not provide inflation for utilities and other running costs e.g. building maintenance, communications and software. Contractual negotiations, e.g. Foster Care and Concessionary Bus Fares are considered for inclusion within the MTFP by CMT.
The OBR published its updated forecast inflation rates as part of its latest outlook for the economy and public finances in November 2025. It is usual practice to use this forecast to update inflation; however, given the current high inflation rates it is considered prudent to use the rates at July 2025 for the 2026/27 financial year, and OBR forecast rates thereafter.
The table below shows the changes in OBR inflation estimates from its previous publication plus the actual rates for July 2025:
|
|
OBR Forecast March 2025* |
OBR Forecast November 2025* |
Actual Rates July 2025 |
||||
|
2026/27 |
2027/28 |
2028/29 |
2026/27 |
2027/28 |
2028/29 |
||
|
CPI |
1.81% |
2.00% |
2.00% |
2.29% |
2.02% |
2.09% |
3.80% |
|
RPI |
2.99% |
3.03% |
2.82% |
3.51% |
3.11% |
2.88% |
6.50% |
*Inflation estimates are as of September of each calendar year to provide the best mid-point within each financial year.
The inflation estimates also includes updates from the Highways and Waste Models based on industry-specific inflation rates.
E General Contingency
This is calculated at 1% of net budget less treasury management, rounded to the nearest £0.1m. The figures reflect the addition of 2028/29 and impacts of other changes.
F Pay Award and National Insurance
Provision has been made for the addition of 2028/29 and award of 2.5% in all years of the MTFP. Adjustment has also beenmade to reflect the late pay award for 2024/25, the 3.2% pay award agreed for 2025/26, plus allocation of the National Insurance Grant.
G Local Government Pension Scheme: valuation impact
The triannual review of the local government pension scheme for 2026 to 2029 has been undertaken, resulting in a reduction in Employers pension contribution from 19.7% to 15.4%.
H Levies Increase
The figures are reflective of the latest estimates of the Flood & Coastal Protection Levy and Sussex Inshore Fisheries Levy.
I Treasury Management (TM)
The TM Model has been updated for latest estimates, a breakdown of the key movements is shown below.
|
2026/27 |
2027/28 |
2028/29 |
TOTAL |
|
|
Capital Programme Borrowing |
2.159 |
1.767 |
0.625 |
4.550 |
|
SEND Deficits |
0.968 |
0.788 |
1.203 |
2.960 |
|
MTFP Deficit |
1.170 |
1.570 |
2.740 |
|
|
Other technical updates and debt restructuring |
(0.465) |
(0.028) |
0.027 |
(0.466) |
|
Total Updates |
2.662 |
3.698 |
3.424 |
9.784 |
|
Already included in MTFP Feb 2025 |
(2.068) |
(2.068) |
|
(4.136) |
|
Total Movement |
0.594 |
1.630 |
3.434 |
5.648 |
J ASC: Growth and Demography
Figures for ASC Growth and Demography have been updated following the overspend projected at Q1. Whole year equivalent clients have been increasing by around 5.5% per year since 22/23. ESCC now supports 1,000 clients more than the client base prior to the COVID pandemic of around 7,000. Growth projections have been based at the annual trend from 23/24 to 25/26. Note that this increase excludes inflation on provider fees, which is included in E.
K CSD: Growth and Demography
Figures for CSD Growth and Demography have been updated following the overspend projected at Q1. For Looked After Children (LAC), numbers are projected to remain stable, but there will be a 15.56% increase in high-cost agency children’s homes placements. Home to School Transport figures have increased to reflect current demand plus an additional calculated increase in numbers of SEND clients.
L Orbis Review
Potential impact of the review of IT&D, Procurement and Internal Audit and future service delivery models.
M CET: Waste Housing Growth
The forecast pressure for 2028/29 has been added to the current plan and estimates have been updated for the latest available housing numbers.
N CET: Waste Additional Income
The forecast risk has been reprofiled across 2026/27 and 2027/28 (nets nil), and a forecast added for 2028/29.
O CET: Waste PFI Credits
The Waste Disposal budget includes income of £2.996m per annum for Waste PFI Credit payments from
DEFRA which are due to end in 2028.
P GCS: Elections
Provision to enable the establishment of budget for future elections, noting that the decision around 2026/27 elections is awaited.
Q Pressures Protocol
A number of pressures bids have been approved in principle by CMT as follows:
|
Description |
2026/27 |
2027/28 |
2028/29 |
Total |
|
CET: Highways Streetlighting |
0.313 |
|
|
0.313 |
|
GOV: Coroners - mortuary services |
0.053 |
|
|
0.053 |
|
BSD: Payroll - loss of traded Services to Schools (S2S) income due to maintained schools converting to academies |
0.070 |
|
|
0.070 |
|
BSD: HR - loss of traded S2S income due to maintained schools converting to academies |
0.035 |
|
|
0.035 |
|
BSD: St Mary's House lease |
0.027 |
0.054 |
|
0.081 |
|
BSD: Cavendish House Rent and Service Charge |
0.056 |
|
|
0.056 |
|
BSD: St Mary's House Rates Revaluation |
0.058 |
|
|
0.058 |
|
BSD: Postal Hub |
0.172 |
|
|
0.172 |
|
|
|
|
|
|
|
AI-related bids: |
|
|
|
|
|
BSD: Power BI Fabric |
0.169 |
(0.022) |
(0.088) |
0.059 |
|
ASC: Formflow |
0.140 |
0.064 |
(0.078) |
0.126 |
|
CSD: Magic Notes |
0.141 |
(0.066) |
|
0.075 |
|
Subtotal AI-related bids |
0.450 |
(0.024) |
(0.166) |
0.260 |
|
|
|
|
|
|
|
Total Pressures Bids |
1.234 |
0.030 |
(0.166) |
1.098 |
R Additional Savings
Further savings have been identified by services, totalling £3.5m. A detailed breakdown is shown at Appendix 4a.
|
Department |
2026/27 |
2027/28 |
2028/29 |
Total |
|
|
£m |
£m |
£m |
£m |
|
Adult Social Care and Health |
1.454 |
0.183 |
|
1.637 |
|
Business Services |
0.355 |
0.132 |
|
0.487 |
|
Children's Services |
0.526 |
0.024 |
0.008 |
0.558 |
|
Communities, Economy and Transport |
0.636 |
0.125 |
|
0.761 |
|
Governance Services |
0.080 |
|
|
0.080 |
|
Total |
3.051 |
0.464 |
0.008 |
3.523 |
|
Medium Term Financial Plan |
2025/26 |
2026/27 |
2027/28 |
2028/29 |
|
|
Approved Budget |
Estimate |
Estimate |
Estimate (LGR) |
|
|
£million |
£million |
£million |
£million |
|
TAXATION & GOVERNMENT FUNDING |
|
(579.615) |
(637.602) |
(659.059) |
|
Council Tax |
(370.172) |
(13.551) |
(19.089) |
(20.342) |
|
Adult Social Care Precept |
(29.050) |
(7.991) |
(8.534) |
(9.094) |
|
Business Rates |
(102.987) |
102.987 |
|
|
|
Social Care Grant |
(59.640) |
59.640 |
|
|
|
ASC Market Sustainability and Improvement Grant |
(11.312) |
11.312 |
|
|
|
Children's Social Care Prevention Grant |
(1.485) |
1.485 |
|
|
|
National Insurance Grant |
|
0.000 |
|
|
|
Revenue Support Grant |
(4.452) |
4.452 |
|
|
|
New Homes Bonus |
(0.517) |
0.517 |
|
|
|
Revenue Support Grant - new |
|
(94.314) |
(18.691) |
7.341 |
|
Baseline Funding - Business Rates top up and retained rates |
|
(87.614) |
(2.009) |
(1.808) |
|
Consolidated grants rolled into Core Spending Power |
|
(34.910) |
26.866 |
0.971 |
|
TOTAL TAXATION & GOVERNMENT FUNDING |
(579.615) |
(637.602) |
(659.059) |
(681.991) |
|
|
|
|
|
|
|
SERVICE PLAN |
|
|
|
|
|
Service Expenditure |
515.467 |
548.095 |
649.881 |
680.218 |
|
Inflation |
|
|
|
|
|
Non-pay Inflation |
17.011 |
19.488 |
17.738 |
18.547 |
|
Allocation of pay award and NI increase to services |
1.948 |
16.953 |
|
|
|
Local Government Pension Scheme: revaluation impact |
|
(5.957) |
|
|
|
Adult Social Care & Health |
|
|
|
|
|
Better Care Fund - Discharge Funding |
5.088 |
|
|
|
|
Discharge Funding - New Burdens |
(5.088) |
|
|
|
|
Growth & Demography |
3.917 |
18.134 |
7.023 |
22.479 |
|
Transfer Public Health savings grant to Centrally Held Budgets |
1.444 |
|
|
|
|
Pressures approved via protocol in previous years |
10.350 |
0.580 |
|
|
|
Pressures approved via protocol 2026/27: Formflow |
|
0.140 |
0.064 |
(0.078) |
|
Consolidated grants rolled into Core Spending Power |
|
28.846 |
|
|
|
Children's Services |
|
|
|
|
|
Looked After Children Growth & Demography |
0.808 |
18.111 |
1.309 |
3.449 |
|
Home to School Transport Growth & Demography |
5.908 |
2.769 |
2.896 |
3.244 |
|
Looked After Children Placements Covid-related |
(0.519) |
|
|
|
|
Covid Grant Funding for Looked After Children Placements |
0.519 |
|
|
|
|
Family Safeguarding |
(2.075) |
(3.533) |
|
|
|
Net Operational Pressures incl. Careleavers and Locality |
0.475 |
2.929 |
|
|
|
Pressures approved via protocol in previous years |
5.444 |
1.940 |
0.680 |
|
|
Reprofile of Public Health Investment |
0.459 |
(0.586) |
|
|
|
Home to School Transport - grant rolled into RSG 2025/26 |
|
0.992 |
|
|
|
Pressures approved via protocol 2026/27: Magic Notes |
|
0.141 |
(0.066) |
|
|
Consolidated grants rolled into Core Spending Power |
|
3.364 |
|
|
|
Communities, Environment & Transport |
|
|
|
|
|
Waste Housing Growth |
0.307 |
0.189 |
0.419 |
0.405 |
|
Waste PFI Additional Income |
1.450 |
0.400 |
0.300 |
0.300 |
|
Waste PFI Credits |
|
|
0.125 |
2.871 |
|
Pressures approved via protocol in previous years |
0.445 |
0.745 |
|
|
|
Pressures approved via protocol 2026/27: Streetlighting |
|
0.313 |
|
|
|
Consolidated grants rolled into Core Spending Power |
|
0.027 |
|
|
|
Business Services |
|
|
|
|
|
Pressures approved via protocol in previous years |
0.779 |
(0.064) |
|
|
|
Oracle system support |
|
1.146 |
|
|
|
Pressures approved via protocol 26/27: Power BI Fabric |
|
0.169 |
(0.022) |
(0.088) |
|
Pressures approved via protocol 26/27: Payroll S2S income |
|
0.070 |
|
|
|
Pressures approved via protocol 26/27: HR S2S income |
|
0.035 |
|
|
|
Pressures approved via protocol 26/27: St Marys House lease |
|
0.027 |
0.054 |
|
|
Pressures approved via protocol 26/27: St Marys House rates |
|
0.058 |
|
|
|
Pressures approved via protocol 26/27: Cavendish House |
|
0.056 |
|
|
|
Pressures approved via protocol 26/27: Postal hub |
|
0.172 |
|
|
|
Governance Services |
|
|
|
|
|
Pressures approved via protocol in previous years |
0.148 |
|
|
|
|
Elections |
|
0.409 |
1.500 |
(1.125) |
|
Pressures approved via protocol 2026/27: Coroners |
|
0.053 |
|
|
|
Savings |
|
|
|
|
|
Savings 2024/25 |
(2.685) |
|
|
|
|
Savings 2025/26-2027/28 - approved Feb 2025 |
(13.505) |
(3.279) |
(1.219) |
|
|
Savings 2025/26-2027/28 - additional |
|
(3.051) |
(0.464) |
(0.008) |
|
NET SERVICE EXPENDITURE |
548.095 |
649.881 |
680.218 |
730.214 |
|
Corporate Expenditure |
|
42.969 |
43.352 |
53.014 |
|
Treasury Management |
14.780 |
2.662 |
3.698 |
3.424 |
|
General Contingency |
5.650 |
1.050 |
0.300 |
0.600 |
|
Contingency for Potential Pay Award, Recruitment and Retention |
12.353 |
(5.064) |
5.605 |
5.745 |
|
Orbis Review |
|
1.700 |
|
|
|
Inflation Risk Provision |
6.242 |
(1.098) |
0.024 |
0.023 |
|
Pensions |
4.874 |
|
|
|
|
Apprenticeship Levy |
0.600 |
|
|
|
|
Movement in Reserves |
(1.107) |
1.107 |
|
|
|
Levies & Grants |
1.021 |
0.026 |
0.035 |
0.037 |
|
Transfer Public Health savings grant to Centrally Held Budgets |
(1.444) |
|
|
|
|
TOTAL CORPORATE EXPENDITURE |
42.969 |
43.352 |
53.014 |
62.843 |
|
|
|
|
|
|
|
TOTAL PLANNED EXPENDITURE |
591.064 |
693.233 |
733.232 |
793.057 |
|
|
|
|
|
|
|
CUMULATIVE DEFICIT/(SURPLUS) |
11.449 |
55.631 |
74.173 |
111.066 |
|
ANNUAL DEFICIT/(SURPLUS) |
(2.895) |
44.182 |
18.542 |
36.893 |
|
One-off use of Financial Management Reserve |
14.344 |
|
|
|
|
One-off use of Waste Reserve |
(9.449) |
9.449 |
|
|
|
One-off use of Insurance Reserve |
(2.000) |
2.000 |
|
|
|
ANNUAL DEFICIT/(SURPLUS) AFTER USE OF RESERVES |
(0.000) |
55.631 |
18.542 |
36.893 |
|
Non-Council Tax Core Spending Power 2025/26 |
2025/26 (£m) |
Non-Council Tax Core Spending Power 2026/27 |
2026/27 (£m) |
|
2025/26 Revenue Support Grant |
5.434 |
Revenue Support Grant |
94.314 |
|
Compensation for under-indexing the business rates multiplier |
17.219 |
||
|
Social Care Grant |
59.640 |
||
|
Market Sustainability and Improvement Fund |
11.312 |
||
|
Employer National Insurance Contributions Grant |
4.470 |
||
|
New Homes Bonus |
0.517 |
||
|
Green Plant and Machinery grant |
0.019 |
||
|
Other Legacy Business Rates |
3.204 |
||
|
Virtual School Heads for children with a social worker and children in kinship care |
0.149 |
||
|
Biodiversity Net Gain Planning Requirement |
0.027 |
||
|
Local Reform and Community Voices: Deprivation of Liberty Safeguards Funding |
0.055 |
||
|
LGF Data Review |
0.001 |
||
|
Enforcement of Location and Volume Price Promotions Restrictions |
0.001 |
||
|
Enforcement of OOH Calorie Labelling Regulations |
0.001 |
||
|
War Pensions Disregard grant |
0.113 |
||
|
Social Care in Prisons grant |
0.108 |
||
|
Supported Accommodation Reforms new burdens |
0.744 |
||
|
Staying Put (part of the Children and Families Grant in 2025-26) |
0.270 |
||
|
Leaving Care Allowance uplift (part of the Children and Families Grant in 2025-26) |
0.089 |
||
|
Personal Advisors Extended Duty (part of the Children and Families Grant in 2025-26) |
0.081 |
||
|
Virtual School Heads (VSH)_Extension of the VSH role to previously looked after children |
0.067 |
||
|
Business Rates Retention |
13.562 |
Baseline Funding |
87.614 |
|
Tariff (-) / Top-up (+) |
67.881 |
||
|
Better Care Fund |
26.865 |
Better Care Fund |
26.865 |
|
Sub-Total Fair Funding Assessment |
211.829 |
|
208.793 |
|
Children's Social Care Prevention Grant |
1.608 |
Families First Partnership (within Children, Families and Youth Grant) |
6.655 |
|
Supporting Families (part of the Children and Families Grant in 2025-26) |
1.929 |
||
|
Domestic Abuse Accommodation Support |
1.389 |
Homelessness, Rough Sleeping and Domestic Abuse Grant |
1.389 |
|
Total non-Council Tax Core Spending Power |
216.755 |
|
216.836 |