To consider the report relating to the Budget & Financial Plan 2026/27 – 2030/31 (DFP/16/2526).

Director of Finance and Procurement, Mike Rea introduced the report noting that the report provided the essential information required to set a medium-term capital and revenue financial plan aligned to the Authority’s strategic aims.

Members were advised that this would enable a balanced budget for 2026/27 based on a £5 precept increase, in accordance with statutory requirements. It was highlighted that the opening sections of the report summarised the background to the proposed 2026/27–2030/31 financial plan.

Members were informed that the capital programme totalled £44.2 million, with £42.3 million funded through borrowing, and that the programme had increased by £8.9 million due to the addition of the 2030/31 financial year. It was noted that detailed capital expenditure proposals included provision for asset plan investments. The meeting was advised that the recommended approach to the Minimum Revenue Provision remained consistent with the current strategy, using the asset-life method, and that associated costs had been built into the updated plan.

It was further noted that the proposed borrowing remained within the required prudential indicators and that the Treasury Management Strategy set an authorised borrowing limit of £68 million while maintaining existing investment criteria. Members were informed that key revenue assumptions included a 3% pay award in 2026/27, 2.5% in later years, CPI at around 2.5% by mid-2026, and £5 precept increases for the next three years before moving to 2% annual increases. The meeting was reminded that the decision required on the day related specifically to approving the £5 increase for 2026/27.

It was reported that the 2026/27, 2027/28 and 2028/29 budget remained balanced, although small financial risks were expected in 2029/30 and 2030/31 due to uncertainties around pay and government funding. Members noted the review of reserves, including the recommendation to maintain the general fund at £3.9 million and approve the committed reserves. Finally, it was confirmed that £41.213 million needed to be raised from Council Tax in 2026/27, requiring an increase in the Band D charge from £96.25 to £101.25, with most Band A households seeing an increase of just over six pence per week.

The Chair, Les Byrom thanked all Officers involved for their hard work in preparing the budget. It was noted that although funding pressures had previously caused concern, recent lobbying had resulted in some improvements, which would continue, particularly around capital funding.

Members were advised that the Authority would be responsible for managing over £100 million of capital investments linked to National Resilience, major projects such as the redevelopment of Kirkby Fire Station and other estate improvements. It was noted that capital spending carried direct implications for the revenue budget, and these had been fully reflected in the proposals presented.

The Chair highlighted that changes to Pension fund contributions required a prudent approach over the next three years. It was observed that although the settlement was presented as a single-year allocation, it effectively operated as a multi-year settlement, providing some clarity for forward planning.

Councillor Bell highlighted that she was satisfied with the report provided and wished to ensure the public also understood the position. She asked how sensitive the Medium-Term Financial Plan (MTFP) was to changes in key assumptions, including higher pay awards, reduced income and movements in interest rates. She referred to the interest rate assumptions for unsupported borrowing and sought assurance on how the Authority had assessed affordability and risk should interest rates rise or funding fall. She noted that recent political instability had shown how markets react to uncertainty and asked how such volatility had been reflected in the Authority’s financial planning.

Mike Rea thanked Councillor Bell and explained that the Authority had increased the pay award assumption to 3% for 2026/27 and 2.5% for the remainder of the MTFP. It was acknowledged that pay awards could exceed 3% but emphasised that the key issue was affordability. He confirmed that the Authority held an inflation reserve, equivalent to around 1% per year over the next three years, which could be used to help manage higher-than-expected pay or inflationary pressures.

Councillor Knight referred to page 73, paragraph 13, and asked for clarification on the reference to “community-based safety,” requesting an explanation of what this term meant within the context of the report.

Mike Rea explained that the reference related to a combination of small reserves the Authority had maintained. The community-based initiatives had been funded through community donations received from various schemes. He confirmed that the intention was to reinvest those funds back into community initiatives. He added that, the Health and Safety reserve was separate to the community based initiatives.

Councillor Page thanked the Chair and referred to Item F on page 72 regarding the insurance reserve. He explained that he had already discussed the matter with officers and had received satisfactory clarification about the associated risks and claims. He requested only that the wording be amended so that the term “premium” was replaced with “policy,” noting that this would be a more accurate description.

Councillor Sam Gorst entered the meeting at 13:16pm.

The Monitoring Officer, Ria Groves, explained that the reference related to the “excess” on the insurance policy, and that the “premium” referred specifically to the amount paid to obtain that policy. She confirmed that the wording simply reflected this distinction.

Members were asked to agree the budget including all recommendations contained within the report. by a show of hands. All Members present voted in favour of the proposed budget and recommendations included within the report.

RESOLVED that;

a)    the report and proposed budget be noted;

b)    the 2026/2027 Fire and Rescue Authority budget as detailed in this report be approved;

c)    the Director of Finance and Procurement’s recommendation of maintaining the General Fund Reserve balance at £3.900m and maintaining the reserves as outlined in paragraphs 142 to 152 of this report be approved;

d)    the proposal to increase the precept by £5.00 for Band D properties in 2026/2027, raising the Band D Council Tax from £96.25 to £101.25 and confirm the strategy for future precept rises (the plan assumes further increases of £5.00 in 2027/28 and £5.00 in 2028/29 for the remaining years of the multi-year settlement and 2% in each year after that) be approved;

e)    the assumptions in developing a five-year financial plan outlined in the report and approve the 2026/2027 budget estimate of £86.039m be noted;

f)     the Capital Programme as summarised in Appendix B be approved;

g)    he 2026/2027 – 2030/2031 updated Medium Term Financial Plan (MTFP) outlined in the report and summarised in Appendix C be approved;

h)    the discretionary fees and charges uplift outlined in the report and summarised in Appendix E be approved;

i)     the Minimum Revenue Provision (MRP) strategy for 2026/2027, as this report outlines in paragraphs 81 to 91 be approved;

j)     the prudential indicators relating to the proposed capital programme, outlined in paragraphs 92 to 102 of this report be noted;

k)    the Treasury Management Strategy outlined in Section F and agree the Treasury Management indicators set out in the section for:

•      External Debt Prudential Indicators

•      Operational Boundary for Debt

•      Upper limits on fixed interest rate exposure

•      Upper limits on variable rate exposure

•      Upper and lower on the maturity structure of debt

•      Total principal sums invested for periods longer than 365 days be approved; and

l)     that the recommendations above provide an approved framework within which officers undertake the day-to-day capital and treasury management activities be noted.

m)   that the amendment to page 72, item (f), replacing the term ‘premium’ with ‘policies’, be noted.