Medium Term Financial Strategy 2026/27

1. Introduction and background
1.1The Medium-Term Financial Strategy (MTFS) provides the framework for the setting of the annual budget, the annual refresh of the strategy allows for the opportunity to review priorities and also take account of significant pressures that will impact on the financial position for the Authority in the short to medium term. It supports the preparation of the coming years budget by providing an update on the high level financial projections taking into account known local and national factors, spending pressures, commitments, forecast of future funding reductions along with the economic outlook ahead of the final budget being approved by Members in February.
1.2The MTFS is a strategic document that supports the delivery of The Plan 2025-2030 to support the following four strategic areas which will all service to support the financial sustainability for the Council:

a strong and growing economy
improved housing and strong communities
high-quality and sustainable environment
an efficient and effective council

1.3The refresh of the MTFS for the 2026/27 has been completed with the backdrop of a number of significant unknowns and changes to the system of funding for Local Government, namely the Fair Funding Review 2.0, the Business Rates Reset and the impact of Local Government Reorganisation, all of which will have a significant impact on the delivery of service for the Council over the next three years for which the Council will need to balance the challenges of continuing current service delivery at the same time as transition to a new unitary authority from 2028. For the purpose of the MTFS, this document services as a refresh of the current strategy to highlight those areas that will impact for the short to medium term.
1.4The MTFS outlines the demands on the capital programme from current projects, the impact on the revenue account (for both housing and non-housing) and on the level of reserves held by the Council. The Council continues to deliver against the externally funded regeneration projects that the Council has been successful in accessing namely Town Deal, Levelling Up and Heritage Lottery funding which are all significant in the capital programme. In addition the Pride in Place funding now forms part of the capital and revenue plans as the Council acts as the accountable body for the 20 year investment plan. All of these continue to deliver significant investments that support the delivery of the Corporate Plan through the regeneration of the Borough and the longer term aspirations for growth.
1.5Finally, the strategy addresses both the sustainability of the Councils financial position and examines the more significant risks inherent in the proposals along with the financial savings priorities and plans.
2.National context
2.1During the year there has been consultation on the long awaited review of funding for Local government. The Fair Funding Review 2.0 consultation was launched in the Summer of 2025, and the Policy Statement was published on 20 November. The policy statement is issued in advance of the provisional finance settlement and provides an outline of settings that will inform the settlement which is expected to be announced later in December.
2.2The aim of the Fair Funding Review is to replace the system of Local Government Funding that has been in place since 2013/14, targeting funding based on needs with a particular emphasis on deprivation and updating formulas for demographics.
2.3The review has sought to roll in grants to the funding that have been previously been allocated separately, for example the New Homes Bonus. This is a grant that has had significant inequity in the system since the introduction and rewards those authorities with high levels of housing growth. Other grants to be rolled into the system include Adult Social Care grant and Temporary Accommodation Funding.
The national economic picture plays a significant role on the local provision of services. Whilst the rate of inflation is below the rates seen over two years ago (illustrated in the figure below) it is still above the Bank of England's target of 2%.
Source: Consumer price inflation from the Office for National Statistics

Source: Consumer price inflation from the Office for National Statistics
2.4The twelve month CPI inflation to September 2025 remained at 3.8% (note there was a reduction to 3.6% in October 2025) The September CPI rates are used to index the business rates multipler. In previous years CPI has been used for Revenue Support Grant uplifts, for 2026/27 this will be part of the wider provisional settlement outcome.
2.5Following continued high levels of interest rates the Monetary Policy Committee (MPC) has made two cuts to interest rates in the current financial year. The lates cut to 4.0% in August 2025. There is potential for a further rate cut before the end of the current financial year.
2.6The current financial year (2025/26) saw first year of funding allocated for Local Government for Extended Producer Responsibility. This funding will continue in 2026/27 and will be allocated outside of the settlement funding. The level of funding can fluctuate each year and will be based upon factors including volume of waste and disposal cost, assumptions about the funding from EPR have been factored into the updated financial forecasts.
2.7Another significant area of change of funding is the impact of business rates reset. The business rates reset alongside the fair funding review will impact on the distribution of funding for local government. The reset will see a redistribution of retained rates income inline with relative need and resources. There will be new baseline funding levels for all authorities and top ups and tariffs from April 2026.
2.8The Council only keeps a proportion of the business rates it collects (40%) which is then reduced further by payment of a tariff to Government, which is redistributed across the sector in line with baseline needs. Under a levy system, the Council may keep 50% of any growth it generates in the income it collects, above a pre-set baseline and has previously taken advantage of pooling arrangements with other local authorities to increase this proportion. As baselines are being reset in 2026/27, alongside potential changes to the levy system, it is not considered advantageous to participate in pooling arrangements for next year, as there will be little ability to gain from the system immediately following reset.
2.9 The Council retains 40% of business rates collected, but this is reduced after paying a tariff to the Government, which reallocates funds based on baseline needs across the system. Under a pooling system (with other authorities in a pool in a local area), a Council can retain a proportion of the income growth above a set baseline. This is the levy that outside of a pool would be paid to central government. Due to the resetting of the baselines in 2026/27, the timeframe for the decisions for pooling and the risks outweighing any benefits, there is unlikely to be any pool for Norfolk in 2026/27.
2.10Due to the complexity of the Business Rates system holds an allowance within the general reserve and also and earmarked reserve that can be used to cushion the impact between years of the fluctuations in income.
2.11The Core Spending Power has been used to define the financial resources available to local authorities and cover for example government grants, council tax and business rates. The figure below illustrates the change in CSP for GYBC since 2016/17 compared to the movements for all local authorities in England. The increase for GYBC for 2025/26 was due to the allocation of the recovery grant included in the 2025/26 finance settlement which targeted to those authorities with high levels of deprivation and lower tax generating ability through council tax.
Core Spending Power - Annual Increases/Decreases

Note - the reason for the higher increase in 2022/23 was due to a higher reward of New Homes Bonus in 2022/23 of £495k (£456k higher than the prior year).
2.12It remains important that the Council continues to adopt a prudent approach for its medium-term financial strategy and budget setting processes to set priorities that will support and deliver savings, additional income and efficiencies for the Council.
2.13GYBC has received the greatest reduction since 2010/11 of Core Spending Power of any district Council. The issue is exacerbated by the lower than average band D tax base and the historic funding allocations. Whilst the fair funding review is seeking to adjust some of these issues and address funding for those areas of need and deprivation, the significant time that has elapsed since the pervious method of funding was introduced has only increased this gap. Whilst the confirmation of the continuation of the recovery grant in the policy statement has been confirmed, the wider impact on the re-allocation of the funding is not yet know, although the indication that funding is shifted from shire districts is still an area of concern.
3.Key budget pressures and resources
3.1As outlined in section two some of the announcements of the fair funding review 2.0 and the policy statement has allowed for a review of the high level financial forecasts along with other known spending pressures. However the detail of the provisional settlement will not be known until later in December and therefore only forecast until the detail of the budgets are
pulled together.
3.2This section presents those revised forecasts and the assumptions behind those for both internal and external funding sources. Internal resources are influenced by local decision making, for example the level that council tax and locally set fees and charges are determined at, these are also subject to demand and therefore consideration of the sensitivity to demand when setting the annual fees needs to be taken into account. Other internal resources from property rentals are also dependent on factors such as rent reviews and also collection of this income in the same way that council tax and business rate debt is susceptible to non collection and therefore there are processess that can be followed to mitigate this non collection. Capital receipts from asset disposals and use of available reserves also provide internal resources albeit one-off in nature.
3.3External resources include government grants and business rates although whilst the Borough Council collects the rates, it does not set them and has very little discretion over reliefs that can be granted, however local decisions that support future growth in business rates will see a direct benefit returned to the council through the business rates retention scheme.
3.4Government Grants - These will all be informed by the FFR2.0 with a number of grant rolled into the settlement as opposed to being allocated separately. Grants that are being rolled into the overall settlement funding include New Homes Bonus, Services Grant, National Insurance Grant.
3.5Historically GYBC has been the highest received of Revenue Support Grant for its tier of authority. The policy statement announcement did confirm the continuation of the Recovery Grant which was previously assumed to be a one-off in 2025/26, the Councils allocation in 2025/26 was £417,511.
3.6Pride in Place - The Pride in place funding (previously Plan for Neighbourhoods) will continue to be monitored and reported to the Town Board. As the accountable body for the funding and delivery of the projects this funding will form part of the councils revenue account and capital programme as applicable. It is a longer term priority programme of projects over 20 years in the region of £20 million investment for the place of Great Yarmouth.
3.7Business rates retention - The current system of rates retention system has been in place since 2013/24 and sees 50% of the business rates collected locally retained (40% for GYBC and 10% NCC) and 50% passed to Central Government. The implications of the business rates reset
will be detailed within the provisional settlement with new baselines and tariffs. The risks of the system still remain in that businesses have the right to appeal the valuation of their premises and if successful can be backdated. Local Authorities can mitigate some of the risks of the payment of successful appeals through the making of provisions against which payment of appeals are made. The risk is whether the provision raised is sufficient to cover refunds as they materialise.
3.8Council Tax - The current band D equivalent for the boroughs Council tax is £192.49. The current maximum annual council tax increase for a district council is set by government at 3% or £5 (band D) above which would trigger a referendum, no changes to this were included in the latest policy statement announcements. The current strategy and financial projections assume annual increases to the cap of 3% per annum. The current capping for Council tax for borough and district councils is the same irrespective of the current D, for 2025/26 the lowest Band D is £120.46 and the highest of £419.58 equating to maximum increases from £5 to £12.15 for a band D property for Shire Districts.
3.9The period covered by the MTFS assumes increases to band D to maximum Band D for the borough element, ie 2.99%, as outlined in the table below.

The period covered by the MTFS assumes increases to band D to maximum Band D for the borough element, ie 2.99%
	2025/25 (Current)	2026/27 (Forecast)	2027/28 (Forecast)
Band D	£192.49	£198.25	£204.17
Increase %		2.99%	2.99%
Increase £		£5.76	£5.92

3.10Council Tax Base - The Council tax base is an assessment of the number of dwellings expressed in Band D equivalents after allowing for non-collection, discounts and new property growth. The Council Tax Base Return (CTB1) was submitted to Government in October 2025 which gives the number of properties across all band and is used to inform budget forecasts. The tax base is approved by Council annually following the setting of the discounts and premiums for the coming year. Based on prior years and the assumptions of growth a forecast of tax base growth of 500 has been allowed for in the latest projections, the final tax base will inform the budget setting in February 2026.

3.11The level of council tax discounts has a direct impact on the net collectable council tax and therefore income that is received in the general fund. The Local Council Tax Support Scheme (LCTS) is essentially a discount that supports those households and individuals that are on low income.
3.12Sales, fees and charges - Sales, fees and charges income continue to be an essential source of funding for local authorities. These include income from demand led services for example, car parking, planning and building control and waste services. The Council has for a number of years set fees and charges in line with the Policy on fees and charges which allows for annual increases of CPI plus upto 3% to allow for cost recovery of the service where applicable. Where applicable they will also take into account demand for service, for example if the market cannot stand the increase then these factors will be taken into account also.
3.13For 2026/27 the policy can allow for increase upto 6.8% (3.8% CPI +3%). All fees and charges will be reviewed for the budget setting process and brought forward for recommendation.
3.14Interest rates - August 2025 saw the second cut to interest rates in the current financial year to 4%. The Council continues to be reliant on borrowing for financing the capital programme outside of the regeneration schemes that are funded by grant. The cost of borrowing and the resulting revenue impact needs to remain under review to mitigate against fluctuations in borrowing costs.
3.15The borrowing requirements for the Council continue to be undertaken in line with the treasury management strategy. Due to slippage in the capital programme some of the planned borrowing has been re-profiled to later years which has in turn mitigated the impact of the increased costs of borrowing costs in the year.
3.16Minimum revenue provision - The MRP is set annually based on prior and forecast capital spend to be financed by borrowing, it reflects the revenue account costs for the repayment of debt incurred for capital expenditure. New capital receipts identified and generated reduce the need for external borrowing for capital purposes to smooth the future MRP charges. This approach continues to be proactively explored for significant capital receipts in the medium term to reduce the call on the revenue account of the impact of financing capital spend from borrowing.
3.17Employee costs - The 2025/26 budget assumed an annual increase in the employee pay award of 4% per annum, the final offer was confirmed at 3.2%. Current forecasts assume 4% pay award increases for the next two financial years. The forecast also reflects the updated position of the triennial valuation of the Local Government Pension Scheme. A formal valuation of the fund is completed every three years and this informs the contribution rates for the following three years. The latest valuation will inform the contributions from April 2026 and the impact of this has been reflected in the latest forecast.
3.18Extended Producer Responsibility (EPR) and Food Waste - As part of the wider recycling changes EPR for packaging was introduced in 2025/26 and funding allocated for associated costs. This funding will continue in 2026/27 and whilst the funding is not ringfenced it is expected that it is utlised to support recycling measures and reduce wate packaging. The Council like others is required to roll out food waste collections in 2026/27, the funding for this is expected to be rolled into the overall funding of the finance settlement, therefore the additional cost of this and funding will need to be factored as part of the 2026/27 budget setting.
3.19Internal Drainage Board Levies (IDB) - The Council pay a levy to Waveney, Lothingland and Lower Yare IDB and the Broads IDB annually. Historically funding for IDBs came through government funding from Revenue Support Grant, since 2013/14 from reductions in RSG the burden of funding the IDB's has fallen to the Council Tax requirement when Council tax is capped. Nationally 2022/23 and 2023/24 saw significant increases in IDBs across the sector. For GYBC the increase in 2024/25 alone was £272,214 (98%), in comparison for that year this was only marginally less than the additional Council tax generated from the increase in Council tax (£298k) for that year. Some authorities are now seeing the IDB funding absorb in the region of 60% of their Council Tax Requirement.
3.20Additional funding of £5million was made available in 2025/26 (an increase from £2m in the prior two years) to mitigate the increase in the IDB levies for those most significantly impacted. For 2025/26 GYBC was allocated £206,000 whilst this has mitigated some of the increase there is no indication whether this funding will be made available to Local Government moving forward. The latest policy statement has confirmed that there will be £5million within the 2026/27 settlement although the basis of the allocations has not been confirmed.
3.21Funding increased IDB levies does continue to present a challenge and risk to the budget, the Council is a member of the IDB Special Interest Group that is actively lobbying for a change to the funding for IDBs that moves the burden away from local councils.
3.22Net cost of services (NCS) - The pressures on the day-to-day revenue account and capital programme are highlighted as part of the budget monitoring reports to Cabinet and Scrutiny. There continues to be pressure on the revenue account from areas such as increased cost for insurance which has an impact on both general fund and Housing Revenue Account properties, furthermore the budget for 2025/26 reflected the increased demand for temporary accommodation, whilst proactive alternatives to the use of bed and breakfast accommodation are being explored and implemented where possible, this still remains a pressure on the revenue account.
3.23As the work on the detailed budget for 2026/27 is pulled together the service budgets will be updated to reflect the latest position in respect of inflation and demand. It is prudent to assume that the inflation on expenditure will be greater than the increase in the corresponding income, resulting in anticipated net growth in the net cost of services.
3.24Updated Forecasts - Taking into account the above, the financial forecasts for the general fund have been updated for 2026/27 and onwards for known spending pressures and income forecasts and summarised in the table below.

Financial forecasts for the general fund have been updated for 2026/27 and onwards for known spending pressures and income forecasts.
£000	2026/27	2027/28	2028/29
Forecast Gap (before Savings Targets)	1,600	2,575	2,970

3.25The above position has been informed by the assumptions around future funding and reflects the known spending pressures and assumptions on these over the next two years, this is before the detail of the service budgets have been finalised with management team.
3.26Detailed work on the 2026/27 budget is underway with savings and additional income being identified as part of that process.
4.Housing Revenue Account
4.1Since the introduction of self-financing in 2012, the Housing Revenue Account (HRA) business plan has continued to be challenged by several changes in addition to the inflationary spend increases that it faces. The reduction of the Right to buy (RTB) discounts last year saw an increase in the number of RTBs ahead of the deadline, some of these are yet to be processed and since this time numbers of RTB's have stabilised.
4.2The current strategy for the HRA has been to maintain HRA reserves at a level sufficient to mitigate any loss of revenue. The Council continues to be prepared for further reductions in resources available to manage, maintain, improve and add to its housing stock. In the same way that savings and efficiencies are identified for the general fund the budgets and commitments are reviewed for the HRA. The implementation of Awaab's Law which came into effect from October 2025, will mean significant hazards relating to damp and mould must be investigated within a 10-day period. The full impact will need to be reflected in the ongoing budgets from 2026/27 and how this is managed as part of the delivery of the service.
4.3The repairs and maintenance service has been inhouse following the transfer from Great Yarmouth Norse (GYN) last year providing the Council with direct control over the provision of the service to the tenants of the housing stock.
4.4Fees and charges relating to the Housing Revenue Account are planned to increase in line with the corporate formula adopted by the Council of CPI +upto 3% ensuring cost recovery of the service.
4.5Rent setting policy -The budget confirmed the five year rent settlement or social landlords at
CPI +1% each year, this will be factored into the HRA business plan.
4.6Right To Buy discounts and retained receipts - The Council has set out a plan and ambition to use retained receipts to develop affordable council housing and to further increase the supply of affordable housing using a combination of four options:

grant contribution to Housing Association development
development of new build homes
purchasing empty homes on the open market
purchase of suitable properties on the open market

4.7HRA Borrowing - Whilst there is no cap on the borrowing for the HRA, it must be able to demonstrate affordability. The Council continues to actively review the best way to utilise the additional borrowing capacity within the HRA, to deliver further affordable homes within the Borough. Affordability of the borrowing remains a key priority and rates remain under review. Since June 2023, HRA is able to access the PWLB borrowing at PWLB standard rate less 60 basis points (0.60%). This rate is solely intended for use in Housing Revenue Accounts and primarily for new housing delivery. The aim is to increase the levels of new housing within the existing housing stock and to increase net rental income received. The HRA continues to model the implications to the housing business plan, as well as identifying potential sites for the delivery of additional housing. Increased borrowing for the HRA will need to be able to demonstrate affordability and informed decisions taken to understand the longer-term impact to the HRA funding.
4.8There are two key strands to the Council's HRA investment plans: maintaining and improving the housing stock new affordable council housing, including new housing to replace sales under RTB in line with Government guidance.
4.9The plans are prepared over the medium term and are reviewed and updated annually. Future investment decisions will be based on local decision making and local knowledge of the condition of the stock and the components.
5.Reserves
5.1This section provides an overview of the reserves held by the Council. The Council reviews the Policy Framework for Reserves annually alongside the setting of the budget. The reserves held fall within one of the following categories:

General Reserve
Earmarked Reserves (General Fund and Housing Revenue Account)
Capital Receipts Reserve
Housing Revenue Account Reserve

5.2The General Reserve serves as a buffer for uneven cash flows and acts as a safeguard against emergencies. A recommended minimum level is set and reviewed each year. Each year, setting the budget involves reviewing all reserves and determining the recommended general reserve level based on a risk assessment of the budget and its context, including the following factors:

sensitivity to pay and price inflation and fluctuations in interest rates
the level of savings that have been factored into the budget and the risk they will not be
delivered as anticipated, both level and timing
potential legal claims where earmarked funds have not been allocated
emergencies and other unknowns
impact of demand led pressures which impact on both income and expenditure
future funding for the sector
level of earmarked reserves held
a level of general reserve that is within a tolerance of 10% to 15% of net expenditure.

5.3The current recommended general reserve is £3.5million. As of 1 April 2025, the reserve balance stood at £6.2 million, projected to decrease to £5.7million by 31 March 2026. This leaves approximately £2.2 million available to address future budget gaps before earmarked reserves are needed. Further review of the recommended balance in the general reserve will be carried out as part of the budget report for 2026/27.
5.4Earmarked reserves include funds set aside for specific liabilities or projects, such as capital developments, asset purchases, or restructuring. They remain allocated until needed and can also cover future losses or finance capital expenditure. Additionally, these reserves allow underspends to be carried forward to the next financial year.
5.5For each earmarked reserve the following principles have been established:

the reasons for, or the purpose of the reserve
how and when the reserve can be used - short to long term
procedures for the reserve's management and control

5.6The following provides a commentary on some of the more significant reserves that the Council currently holds and maintains:
5.7Invest to save - This earmarked reserve provides resources to fund one-off/upfront costs for projects that will deliver future savings. For example officer restructures, where one-off redundancy or pension strain costs might be payable subject to a business case that delivers on-going revenue savings, for an investment in IT hardware, software or equipment which will deliver savings through more efficient ways of working. The balance at the beginning of the year was £1.3million and the forecast balance at 31 March 2026 is £1.28 million.
5.8Asset management reserve - This reserve was established to earmark funds that will support the provision of current and future assets, of the reserve £0.568m has been committed to smooth the impact to the revenue account of the new leisure facility with the remaining balance to be utilised to support the asset management plan.
5.9Capital receipts reserve - The Council holds a reserve which includes the balance of receipts generated from asset disposals - capital receipts. Capital receipts can only be used to fund capital expenditure (not for on-going revenue expenditure). Decisions on using capital receipts are taking as part of financing the capital programme annually to mitigate the impact of borrowing costs to the revenue account. The balance as at 31 March 2025 was £9.5million, although this includes an element for the HRA and some set aside for existing capital project spend, the forecast balance at 31 March 2026 is £12.5million allowing for anticipated receipts in the year and assumed financing in the year.
5.10There are a number of other reserves which have been established to hold balances from previous roll forward requests that are yet to be drawn down. These remain under review as commitments are fulfilled, in addition where balances remain uncommitted or not utilised for these are reviewed for re-allocation to strengthen the general reserve to be used to reduce future budget gaps. There will be a requirement to allocate funds from earmarked reserves in 2026/27 and 2027/28 to fund transition and costs in preparedness for Local Government Reorganisation in Norfolk. This will form part of the budget for 2026/27 and it is recommended that £500k be allocated from reserves as part of the finalisation of the budget.
5.11Reserves can fund one-off projects or be used to match fund external funding, offering flexibility for annual budget allocations. With ongoing pressure on the general fund, the financial strategy depends on operating efficiently to identify and deliver savings, generate income, and some reliance on reserves.
6.Capital
6.1The latest capital monitoring position was reported to Members as part of the quarter 2 financial monitoring report.
6.2The following sources of funding are available to finance the capital programme:

grants and contributions received from external sources including third parties and government, these include the allocations of Towns Fund and Levelling up funding, Pride in Place (formerly Plan for Neighbourhoods) funding for the four year regeneration plan as part of the longer term 10-yar vision
capital receipts - these are generated from asset disposals; proactive disposals identified as part of the asset management plan review could generate capital receipts that can be used to finance capital spend and reduce the reliance on external borrowing to finance
the capital programme; the decisions for asset disposals will also inform revenue savings for example to deliver efficiency savings and remains a priority within the business strategy
revenue - by making a revenue contribution to capital
prudential borrowing - financing by external loans eg PWLB

6.3Prudential borrowing to fund capital expenditure can only be undertaken when an authority can demonstrate the need to borrow through its Capital Financing Requirement, which is driven by the balance sheet of the authority and takes into account reserves (including general and earmarked) and is supported by a business case that demonstrates the affordability. Financing costs of the borrowing are charged to the revenue account and therefore any decision to undertake external borrowing would need to take account of the debt costs including interest and the Minimum Revenue Provision (MRP) and should be able to demonstrate affordability. The more that is borrowed to finance the capital programme, the greater the impact to the to the revenue account.
6.4As an example, if a £5m capital project is approved the revenue impact from an MRP charge to the revenue account will be made in line with the current MRP Policy - eg over the useful life of the asset - which would amount to £320,000 per annum (assuming a 50 year life).
6.5When financing the capital programme, the most financially advantageous approach will be taken. For example, finance shorter life assets, ie equipment and vehicles from capital receipts and reserves as the MRP over a shorter life increases the cost to the revenue account. Furthermore, as future capital receipts are generated, this provides an opportunity to reduce the revenue costs of borrowing in the future.
6.6The 2025/26 capital programme budget is £67.7 million and is financed approximately 50% from external grants from Town Deal, Future High Street and Levelling up. Whilst the forecast is currently expecting spend of £38.1 million by the year end the Council is still on target to defray the project spend in line with the funding profile for the externally funded projects.
6.7The housing revenue account capital programme continues to invest in the stock to deliver against the decent homes standard and provision of new affordable homes, financed by right to buy receipts, borrowing and grants. The capital budget for 2025/26 is currently £22.1million.
6.8Capital bids for 2026/27 and future years will be considered as part of the budget setting process, priority will take into account the following criteria:

bids accompanied by funding
linked to priorities of the business strategy
linked to the asset management plan
service delivery requirement
invest to save proposal

7.Financial and business strategy
7.1The Council has prioritised a number of key themes as part of the financial and business strategy as part of the work to reduce the forecast deficit over the short to medium term to reduce the forecast deficit. These themes should be seen as being a priority for the strategic direction for the next two years to support the budget setting process:
7.2Strategic asset management - The Council owns a significant portfolio of assets across the borough, ensuring these are kept under review, utilising its asset base in the most efficient way and managed via the asset management plan. This includes ensuring that it takes a proactive and commercial approach to generating income from these assets and also taking the decision to dispose of assets to generate either capital receipts or reduce inefficiencies.
7.3Regular review of all the Council's asset holdings in line with the asset management plan and the councils priorities with a view to adding value to strategic assets. The key aim is to identify the most efficient way to utilise the Council's assets and maximise the benefit that the Council receives from them.
7.4Economic and housing growth - Whatever the outcome of the fair funding review, income from homes and businesses within the borough from Council Tax and Business Rates continues to provide an essential source of income to fund the provision of local services. Maintaining the base and growing these remains a priority. A key aim must be to maximise income from housing and business rates through enabling growth and retaining existing baselines. The Council supports this priority by encouraging residential and business growth in the borough. Maximising the council tax base will increase revenue through property growth, improved collection rates, regular discount reviews, and proactive identification of all eligible properties.
7.5Property investment and commercialisation - This priority aims to take a proactive approach to asset management and to pursue external property investments that generate income or improve returns. The objective is not just profit, but also regenerating areas needing upfront funding, supporting wider growth opportunities. Investment may occur indirectly via treasury management or directly by the Council or a suitable vehicle. Such efforts align with the Borough's economic growth goals and require a business case considering all risks and revenue impacts, including borrowing costs. Opportunities are identified through the current asset management plan or appropriate decision-making processes.
7.6Technological investment - Investment in technology and IT systems are key to driving forward a change programme that will deliver efficiencies and improvement in service provision. Refreshing the digital strategy remains a priority that focuses on Digital Services, Digital Communities and Digital Workforce and the opportunities that Artificial Intelligence (AI) can deliver in terms efficient service delivery, which are supported by the following objectives:

to make our service provision more efficient via automation, reducing duplication of effort and reducing manual intervention
to increase the quality of our service, by increasing speed, reliability, and consistency
increase data sharing across services
review opportunities for AI in the provision of services and to support the provision of services
create a single view of residents, land, and property
to promote Great Yarmouth as a great place to live, work, do business and visit
to improve the accessibility and availability of our services
to provide up to date always available information online for our customers
to have a workforce that has the right information, equipment, systems, training, and
confidence to do their job in a digital workplace

7.7Investment in the digital programme must be accelerated to achieve efficiency and cost savings and in preparedness for Local Government Re-organisation. The Council's agile changes to ways of working will help rationalise office space and cut costs. Upgrading legacy IT systems is a priority; recent investments in the Housing system and projects for Environmental Services, Planning, and Licensing mark progress, though they cover only a small part of services. Greater opportunities exist for technology investment to improve customer service and deliver savings, making this a key focus of the MTFS to address future funding gaps and transform service delivery.
7.8Partnerships - Collaborate with local partners and organisations to identify practical opportunities, including shared services. Also, enhance engagement with communities and voluntary sector partners to work together to achieve the following:

drive better outcomes for local residents
reduce avoidable demand on council services
secure investment to drive new partnerships with partners and communities to deliver corporate ambitions
make better use of council assets and resources to offer greater social value to local communities and to develop a partnership approach with public sector partners to working with communities across the borough

7.9GYBC Operating Model - The Council aims to deliver services efficiently and cost-effectively, ensuring value for money and supporting accountability. The following elements, along with the MTFS, are essential to this approach and support other key strategy themes:

Organisational Development Strategy
Digital Strategy
Procurement and contract management

7.10Savings and additional income - Savings and additional income proposals are considered as part of every budget setting process. The Council has continued to deliver against a suite of savings and income targets annually. Whilst the updated forecasts for 2026/27 are improved compared to those originally expected in February 2025, there are still financial challenges and the need to identify efficiencies. Once the detail of the finance settlement is confirmed this will provide the framework to inform the planning for the short to medium term financial.
7.11Sustainability strategy - As part of the council's sustainability agenda, this should be seen as a priority to support the delivery of a balanced budget. For example, through more efficient use of assets and resources that is aligned to the longer-term sustainability ambitions.
7.12Use of reserves and invest to save - Use of reserves to balance the budget remains a short term solution only and is not sustainable and should only be used as a means to smooth the impact of reductions and fluctuations in funding over the short to medium term and to allow for longer term funding solutions to be developed and implemented. The reserves section of the document has flagged the need to use reserves to mitigate the impact to the general fund in the short term to produce a balanced budget.
7.13There is still work to be completed over the coming months as the detail for the 2026/27 budgets are finalised, this includes the following:

budget challenge - to include review of current spend commitments and savings
Fees and charges 2026/27
Capital bids 2026/27
capital programme and funding review
earmarked reserves review to re-allocate and re-lease to the general reserve uncommitted balances

7.14The following provides a high level summary of the forecast funding gap and current strategy to reduce the budget gap for the short to medium term. This still requires a small savings/income target in the coming financial year with a reduced reliance on reserves. If the general reserve balance goes below the recommended balance re-allocations will be required from earmarked reserves along with proactive action as part of the budget setting to reestablish to the recommended balance.

The summary below assumes a re-allocation of £300k uncommitted balance from earmarked reserves to the general reserve.
£000	2026/27	2027/28
Forecast Gap	1,600	2,575
Savings/Income target to be delivered 26/27	(600)	(600)
Future Savings and Income Target	n/a	(500)
Gap/Required use of Reserves	1,000	1,475
General Reserve Balance	4,683	3,508*
Earmarked Reserves	8,779	8,170

* After re-allocation from the earmarked reserve of uncommitted balances.

7.15Summary - The updated position above is ahead of the detail of the 2026/27 budget being completed which is currently in progress which is currently in progress to be presented to Members in January/February. Work is continuing with services to identify further options to reduce the forecast gap in the short to medium term.
8.Risk and sensitivity
8.1The Council is required to set a balanced budget annually. Achieving this requires continuous reviews for efficiency, meeting existing savings targets, and identifying new income sources to close funding gaps. Supporting local economic growth is essential to maintaining and growing tax bases and increasing direct income. Prioritising external investment through programmes like the Towns Fund and Levelling Up will strengthen services. However, limited short-term capacity funding for projects and core services poses an ongoing risk that must be managed within project budgets.
8.2The following outlines some of the specific risks of the MTFS.
8.3Reserves - Alongside approval of the budget, the level of reserves and robustness of the estimates are factors that are considered in full. Whilst reserves can be used to mitigate oneoff funding gaps, the use of the reserves should not be seen as a longer-term sustainable option to delivering robust budget and financial management. The recent reliance on reserves as part of the approval of the budget is not sustainable in the long term.
8.4The updated financial forecasts rely on several key assumptions. The council also faces significant financial risks and uncertainties that could affect the medium-term financial strategy, including:
8.5Future funding - The financial forecasts included in the MTFS have been informed by modelling carried out by independent financial advisors, they are therefore at this stage only forecasts and dependant upon the detailed work of the budget being finalised and further
announcements on the provisional settlement. Once he detail is confirmed the budgets will be finalised.
8.6Inflation - The Council faces inflationary pressures on both revenue and capital spend. Due to previous high levels of inflation a number of higher costs areas have now been factored into the base budget, for example previous utility increases. Future budgets and forecasts are
informed by contract inflation and the key assumptions are reviewed regularly as part of the monitoring and updated annually. In terms of the capital programme inflation risk is factored into project budgets along with contingency. A central capital contingency budget still remains for some of the more significant capital projects.
8.7Business rates - The current system is inherent with volatility and uncertainty due to the impact of appeals, vacant properties and non-collection. A 1% movement each year would result in approximately £50,000 additional income per annum being retained. The impact of
the business rates reset will be factored into the fair funding review and and outcomes for this will be known later in the year. The Council holds earmarked reserves to mitigate the fluctuation of business rates income between financial years.
8.8Council Tax - Collection rates of council tax has a direct impact to the level of income generated from council tax. In areas of higher deprivation and need, this can have an impact on collection rate. Increases to the tax base not only from growth in property numbers will
increase the locally collected element of the council tax, it is also dependent on levels of discount and rates of collection which with the increased cost of living pressures makes this inherently challenging. As a guide a 1% increase in council tax (band D) equates to approximately £55,000.
8.9Interest rate changes - Increases in the rates can make capital projects unaffordable, requiring to scale back and reduce the call on financing by borrowing. These are closely monitored to ensure that borrowing is taken out at favourable rates. In addition there is a
direct impact to the revenue account on the interest payable which is not always mitigated by interest receivable.
8.10Employee costs - Pay awards being in excess of the level budgeted for, the impact being ongoing. 1% equates to approximately £180,000 annually including oncosts. A prudent approach has been taken to forecasts for pay awards in line with previous years.
8.11Service Demand and Income - Services driven by demand continue to generate substantial revenue for the Council, including streams such as car parking, planning and building control, and crematorium operations. Budgets are determined based on both current and historical performance and are regularly monitored to support timely and proactive responses to budgetary impacts where necessary in year. Maintaining general and earmarked reserves is crucial to offset short-term fluctuations in income, an allowance s included in the general reserve for such events.
8.12Interest and MRP - The budget reflects the planned borrowing and financing of the current approved capital programmes. Slippage of capital schemes will impact on the level of borrowing required along with the associated financing costs, in most part deferring costs to
later years. As new schemes and projects are approved the revenue implications are considered as part of the options appraisal and business case.
8.13HRA - The insourcing of the repairs and maintenance service from October 2024 provides opportunity for further review of the service costs moving forward. Financial pressures face the HRA to the same extent as the general fund for example, increases insurance costs, pay and other inflationary costs. At the same time as ensuring compliance and delivery of the land lord function.
8.14Following the reduction of the discount for right to buy there is anticipated to be a reduction in the level of resource being generated from RTB receipts once the backlog of RTB sales have been processed.
8.15The extent to which the above factors will have an impact on the ongoing financial projections and funding gap will vary. Some will have an ongoing impact and some may be more short term. The above risks are considered as part of the budget setting process and routinely monitored during the year as part of the monthly budget monitoring processes.