Agenda item

To consider the report of the Strategic Director for Corporate Resources.

Agreed:

RECOMMENDED that Council

(1)   approve the Council’s overall revenue spending proposals in respect of the General Fund;

(2)   approve the Council’s General Fund Capital Programme;

(3)   notes and considers the budget assessment by the Section 151 Officer as set out in Section 11 of the report, when agreeing the recommendations;

(4)   approve for the General Fund minimum Balance to be set at £3.010 million for 2026/27;

(5)   approve the Council Tax for each Band as set out in section 12 of the report, subject to Devon County Council, OPCC Devon and Cornwall and the Devon and Somerset Fire Authority confirming their Band D levels respectively; and

(6)   approve the Council’s Flexible Use of Capital Receipts Strategy, as set out in Appendix 10 of the report.

RESOLVED that the Executive agree that once the actual Council Tax amounts for Devon County Council, the Devon and Cornwall Police and Crime Commissioner, and the Devon and Somerset Fire Authority are confirmed, the revised Council Tax levels be submitted to Council on 25 February 2026 for approval.

Reason for Decision: As set out in the report.

The Executive received the report on the General Fund revenue estimates for 2026/27 and to recommend the Band D level of Council Tax for 2026/27. The report also included the proposed Capital Programme for 2026/27 and future years.

Particular reference was made to:

• the provisional Local Government Finance Settlement had been received, with the final settlement expected in the next week;
• the business rates reset was anticipated, which would normally result in a significant reduction in council resources, but had been offset by a favourable outcome from the Government’s funding formula review, largely neutralising the impact of the business rates reset for Exeter;
• Exeter fell within 5% of its previous funding level, and as such, the Council would receive support through a funding floor grant, resulting in a cash-flat settlement;
• the settlement would result in Exeter receiving the same level of core spending power for 2026–27 as it did in 2025–26;
• the Government had confirmed a three-year, multi-year settlement, projecting a cash-flat settlement across that period;
• the cash-flat settlement assumed Councils would increase their Council Tax by the maximum permitted level each year., which for Exeter was 2.99%, in line with referendum principles;
• the budget had therefore been prepared on the assumption of a 2.99% Council Tax increase, subject to Member approval at Council on 25 February 2026;
• the General Fund minimum balance was proposed at £3.010 million, which was a reduction from the previous year, based on the removal of business rate risk for 2026–27;
• the Government were now providing a guarantee of 100% business rates income, compared to the previous 92.5% threshold;
• a provision of £500,000 was included in the revenue budget to support the transitional work associated with the Local Government Reorganisation (LGR);
• a new Appendix 10 for a flexible use of Capital Receipts Strategy had been included which enabled the Council to apply to Government to use capital receipts for specific revenue-type expenditure; and
• the Capital Receipts Strategy was intended solely to support work related to local government reorganisation and was not required to balance the budget, which was already balanced within the Medium-Term Financial Plan.

In response to the Leader’s clarification, it was confirmed that a 2.99% Council Tax increase equated to approximately £5 per year for a Band D property, or around 10.5p per week.

During the discussion, Executive Members raised the following points and

Questions:

• referencing Appendix 3 of the report, it was noted that income over-performance within Parks and Green Spaces, included £10,000 additional income from events and £23,000 additional rental income;
• the strong performance within Waste Operations was highlighted, with an additional £100,000 in recycling income, contributing to keeping Council Tax low;
• the recycling income totalled approximately £1 million per annum, and the teams involved were commended for their performance;
• clarification was sought regarding a budget change of £510,740 on page 45 of the report  shown against the Chief Executive line;
• the confirmation that future government funding was cost neutral, with no reduction in overall funding levels was welcomed;
• confirmation was sought that Exeter City Council only retained approximately 8% of the total Council Tax paid;
• finance officers were commended for achieving a balanced budget with minimal impact on frontline services; and
• the scale and effectiveness of the financial adjustments compared to previous years was highlighted.

In response to questions raised by Executive Members, the Strategic Director for Corporate Resources advised that:

• the £510,740 change in the Chief Executive’s budget related to the provision for Local Government Reorganisation (LGR) work, managed within the Executive Support team;
• the Council received approximately 8% of total Council Tax, with the remainder allocated to Devon County Council, the police, and fire services; and
• he commended the Operational Management and Finance teams for identifying budget adjustments to maintain a balanced budget despite inflationary pressures.

The Leader reminded Members that the 2026–27 budget was subject to Council approval on 25 February and that all Group Leaders had been contacted to provide input on other budget proposals or changes.

An opposition group leader made the following points and questions:

• clarification was sought on how the Executive intended to review the Community Asset Disposal Policy, particularly Part 3 on qualifying disposals and the objective of disposal;
• it was emphasised that including objectives such as improving community infrastructure allow assets to remain in community ownership or enable communities to bid or purchase assets, without necessarily giving them away for free;
• clarification was requested on the total expected LGR costs, referring to page 27 showing £27 million to 2029 and page 22 showing £500,000 revenue allocation in Chief Executive’s budget; and
• the report also showed £1.5 million capital receipt, creating a total of £2 million for 2026–27 and request that the budget and Medium-Term Financial Plan should clearly identify total LGR costs, council contributions, and anticipated government funding.

In response to questions raised by opposition Members, the Strategic Director for Corporate Resources advised that:

• the proposed 2026–27 budget included £500,000 revenue for LGR work;
• to use the £1.55 million capital receipts, Council approval was needed for the Flexible Use of Capital Receipts Policy and a successful application to central government;
• if approved by Council, a supplementary budget request would be submitted to add the £1.5 million to the LGR budget;
• currently there was no government approval or final strategy secured and the budget currently remained at £500,000; and
• for future years, transitional costs for any new unitary authority were expected to rise, and funding proposals would need to be identified.

The Leader advised that the cost for LGR would impact on all Councils, regardless of the option chosen by the Secretary of State.

The Leader moved the recommendations, which were seconded by Councillor

Wright, voted upon, and CARRIED unanimously.

RECOMMENDED that Council

(1)   approve the Council’s overall revenue spending proposals in respect of the General Fund;

(2)   approve the Council’s General Fund Capital Programme;

(3)   notes and considers the budget assessment by the Section 151 Officer as set out in Section 11 of the report, when agreeing the recommendations;

(4)   approve for the General Fund minimum Balance to be set at £3.010 million for 2026/27;

(5)   approve the Council Tax for each Band as set out in section 12 of the report, subject to Devon County Council, OPCC Devon and Cornwall and the Devon and Somerset Fire Authority confirming their Band D levels respectively; and

(6)   approve the Council’s Flexible Use of Capital Receipts Strategy, as set out in Appendix 10 of the report.

RESOLVED that the Executive agree that once the actual Council Tax amounts for Devon County Council, the Devon and Cornwall Police and Crime Commissioner, and the Devon and Somerset Fire Authority are confirmed, the revised Council Tax levels be submitted to Council on 25 February 2026 for approval.