Budget Engagement 2026/27

Background information

Unprecedented levels of demand for essential services this year has created significant budget pressures for Reading Council.

Despite having identified additional in year savings of £5.6 million this year, the latest in-year budget projections for 2025/26 still show an overall net pressure of £4.0 million. This includes a net deficit of £5.4 million on Children’s Services, mainly due to increased placement costs related to looking after vulnerable children and young people, many of whom are presenting with more complex needs.

The Council will finalise its budget for 2026/27 and the savings needed to deliver a balanced budget in February next year, following the publication of the Local Government Finance Settlement, which sets out how much funding councils will receive from central government.

At this time however, the increase in demand for Council services, combined with the increasing cost of meeting that demand, is driving a projected funding gap of £4.4 million for next year (2026/27), moving to a projected £3.5 million by 2028/29. This results in a cumulative gap of £14.8 million over the next three years. The Council currently has £17.5 million of un-ringfenced usable reserves that have not been earmarked for spend in other areas (forecast for March 2026).

The above numbers assume an annual increase in Council Tax of 2.99% and the Adult Social Care precept of 2.00%. If the Council were to keep Council Tax and the Adult Social Care precept at the current level, this would make the budget gap next year bigger by £6.4 million, resulting in a gap of £10.8 million for 2026/27.

Transformation programmes are also ongoing in both adults and children’s social care, focused on managing demand and reducing costs. In adult social care services, these include using technology to enable people to remain at home for longer; intensive occupational therapy for people being discharged from hospital, allowing them to regain their independence more quickly; and investing in new in-house accommodation and day services for residents with learning disabilities.

Children’s Services transformation plan includes building children’s homes, reducing the need for expensive external residential accommodation; and increasing SEND places in borough to reduce expensive home to school transport costs.

In addition, a series of management actions have also been implemented internally to manage expenditure. This includes increased scrutiny on cross-council on filling posts which are not front line, all non-essential spend and agency spend.

What we spend our budget on

Our projected net budget for day-to-day services (‘revenue’ spending) for 2026/27 is £211.0 million. This figure takes into account income from ringfenced government grants and service users (in the form of fees and charges).

Every £100 we spend on day-to-day services is split as follows:

How we are funded

Our net budget for day-to-day services is funded by a combination of Council Tax, Business Rates, and non-ringfenced central government grants.

Our projected funding for 2026/27 is £206.5 million. This assumes a 2.99% increase in Council Tax and a 2.00% increase in the Adult Social Care precept. This results in a projected budget gap of £5.2 million in 2026/27.

Every £100 we receive to fund our net budget for day-to-day services is split as follows:

Key documents

Summary of the Proposed General Fund Budget 2026/27 to 2028/29

General Fund Capital Programme 2026/27 - 2030/31

Medium Term Financial Strategy 2026/27-2028/29 Update to Policy Committee