Agenda item

From the Cabinet, 24 February 2026

Further to Minute 68 of the Cabinet, the City Council considered a report of the Director of Finance and Resources (Section 151 Officer) that followed on from the Pre-Budget Report approved by Cabinet on 16th December 2025 (Minute 44/25 referred) which has since been subject to a period of public consultation. The proposals within the report now formed the basis of the Council's final revenue and capital budget for 2026/27 incorporating the following details:

•  Gross budgeted spend of £1,035.3m (£73.5m higher than 2025/26).

•  Net budgeted spend of £422.9m (£126.0m higher than 2025/26) funded from Council Tax, Business Rates and Business Rates top-up of £56.5m due to the 2026/27 impact of the Fair funding redistribution.

•  A Council Tax Requirement of £199.9m (£10.4m or 6% higher than 2025/26), reflecting a City Council Tax increase of 3.95% detailed in the separate Council Tax Setting report on today’s agenda.

•  A number of new expenditure pressures, policy investments and technical savings proposals.

•  A Capital Strategy including a Capital Programme of £165.9m including expenditure funded by Prudential Borrowing of £33.9m.

•  An updated Treasury Management Strategy, Capital Strategy, and a Commercial Investments Strategy.

•  Amendments to the Council Tax Support Scheme.

The financial position in this Budget Report was based on the Final 2026/27 Local Government Finance Settlement published on 9th February 2026. This settlement was a result of the implementation of the Fair Funding systems, Council Tax equalisation and Business Rates reset. This settlement included a multi (three) year settlement which took the Authority through to the end of the current CSR (comprehensive spending review) period of March 2029.

This 3-year settlement enabled a much better medium-term view of the Council’s finances from a resource perspective. The Government would reserve the right to review allocations each year, but indicative allocations would allow Councils to plan more effectively.  Demographic pressures were still expected to continue to increase as cost-of-living issues continued to affect individuals’ experience and expectations of when local authorities and Government would intervene to protect them. The next 3 years would continue therefore to create a very challenging environment in which the City Council would need to ensure Government funding together with local taxation decisions were sufficient to cover existing cost and emerging pressures including inflation.

In response the additional resources received by Coventry in the Final settlement and in conjunction with the consultation responses, final proposals within the Budget Report proposed a Council Tax increase of 3.95%. This incorporated a 2.95% Council Tax increase plus a further 1% Adult Social Care (ASC) Precept. The precept was to enable councils including Coventry to manage increases in the costs of care. In total, the rise in Council Tax bills would be the equivalent of around £1.48 a week for a typical Coventry household including the expected rises in the precepts for Police and Fire.

At the point of the pre-budget stage, reported to Cabinet in December 2025, the 2026/27 settlement and the impact of the Fair Funding review were not known.  However, sector intelligence indicated that the local impact would be positive such that no new savings proposals would be required for 2026/27, and financial headroom could potentially be available such that some form of policy investment might be possible. 

On this basis, Cabinet approved a consultation process which sought views on investment options across 7 key Strategic themes.  Proposals within this 2026/27 Budget report have been categorised into these themes. Table 2 in Section 2.2 to the report summarised the resourcing position, expected pressures and technical savings, together with policy proposals for which approval was sought by Council.

The detail of these proposals was set out in Appendix 2 to the report. The proposals provided the Council with a balanced budget for 2026/27 as well as headroom to make strategic policy decisions that would support and enhance the city in future years. The Council’s current medium term bottom line incorporated a combination of future inflationary and service pressures and the fall-out of some specific grant resources. Some of the future pressure and income assumptions were estimated at this stage.

The Council’s Medium Term Financial Strategy (MTFS) included as Appendix 1 to the report, set out the financial planning foundations that supported the setting of the Council’s revenue and capital budgets, including the policy assumptions and financial management framework that underpinned the strategy. The purpose of the MTFS was to describe the environment within which the Council operated and bring together resource and cost projections to explain how the Council planned to use resources and manage costs pressures whilst focussed on its key strategic priorities over the medium term.

The recommended Capital Programme proposals were a key part of the Council’s approach and amounted to £165.9m in 2026/27. The proposals reflected the Council’s ambitions for the city and included: extensive highways infrastructure works including specific schemes relating to continued delivery of the City Region Sustainable Transport Settlement (CRSTS) Programme that included London Road corridor transport packages, the construction and operation of The Coventry Very Light Rail 800m long twin-track ‘City Centre Demonstrator (CCD)’ from the main Coventry Rail Station to the Coventry University Technology Park; the continuation of City Centre Cultural Gateway; continued implementation of the City Centre South redevelopment; and the completion of Woodlands School. Over the next 5 years the Capital Programme was estimated at a total of £437m as part of on-going investment delivered by and through the City Council.

The report also detailed the annual Treasury Management Strategy, incorporating the Minimum Revenue Provision Policy and the Commercial Investment Strategy. These covered the management of the Council’s treasury and wider commercial investments, cash balances and borrowing requirements. These strategies and other relevant sections of the report reflected the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Treasury Management Code and Prudential Code for Capital Finance, as well as statutory guidance on Minimum Revenue Provision (MRP) and Investments.

Three amendments were moved, seconded and lost in relation to this Minute and Minute 84 above, details of which are contained in the Appendices to the Minutes.

RESOLVED that Council:

1)  Approves the Medium-Term Financial Strategy in Appendix 1 to the report, as the basis of its medium-term financial planning process.

2)  Approves the Budget proposals in Appendix 2 to the report, after due consideration of the consultation responses set out in Appendix 7 to the report and the Equality Impact Assessment set out in Appendix 10 to 31 to the report.

3)  Approves the total gross 2026/27 revenue budget of £1,035.3m in Table 1 of the report and Appendix 3 to the report, established in line with a 3.9% City Council Tax increase and the Council Tax Requirement recommended in the Council Tax Setting Report 2026/27.

4)  Notes the Director of Finance and Resources (Section 151 Officer) comments confirming the adequacy of reserves and robustness of the budget in Section 5.1.4 and 5.1.5 of the report.

5)  Approves the Capital Strategy incorporating the Capital Programme of £165.9m for 2026/27 and the forward commitments arising from this programme totalling £437m between 2026/27 to 2030/31 detailed in Section 2.3 of the report and Appendix 4 to the report.

6)  Approves the addition to the Capital Programme of a new Capital Scheme for the delivery of Temporary Accommodation and Resettlement properties at a total cost of £9.2m. Funded from the acceptance of the capital grant of £4.9m from the Ministry of Housing, Communities and Local Government (MHCLG) specifically for the delivery of the Local Authority Housing Fund tranche 4 (LAHF) Scheme; £1.2m funded from capital receipts; and £3.1m revenue funding as part of the proposed policy priorities in this report: Increasing Family Temporary Accommodation provisions in Appendix 2 (lines 38 and 39) to the report and detailed in Section 2.3.4 of the report.

7)  Approves the award of a £2.3m capital grant from the Temporary Accommodation Programme (Recommendation 6) above) to a Registered Social Landlord (RSL) to deliver 19 properties for resettlement and delegate authority to the Director of Care, Health and Housing, following consultation with the Director of Finance and Resources and the Cabinet Member for Housing and Communities, to undertake such action as is deemed necessary to bring into effect this recommendation as referenced in Section 2.3.4 of the report.

8)  Approves the Council’s Treasury Management Strategy and Minimum Revenue Provision Statement for 2026/27 in Section 2.4 of the report and the Prudential Indicators and limits described and detailed in Appendix 6 to the report, the Commercial Investment Strategy for 2026/27 in Section 2.5 of the report and Appendix 5 to the report, and the Commercial Investment Indicators detailed in Appendix 6 to the report.

9)  Approves amendments to the Council Tax Support Scheme following the 6-week consultation period, as detailed in Section 2.6 of the report and Appendix 9 to the report, and in accordance with The Local Government Finance Act 1992 (as substituted by the 2012 Act).

The Councillors voting for and against the Recommendations as detailed in the report were as follows:

For: 35

Against: 9

Abstain: 0

Note:

In relation to Minutes 84 and 85 above, the following amendments were moved, seconded and lost. Details of the amendments together with the named votes for those amendments can be found in the Appendices to these Minutes: 

1)  Appendix 1 - Moved by Councillor P Male, seconded by Councillor G Ridley.

2)  Appendix 2 -  Moved by Councillor S Gray, seconded by Councillor E Reeves.

3)  Appendix 3  Moved by Councillor J Gardiner, seconded by Councillor M Lapsa.