Worcestershire County Council, like many councils across the country, is experiencing serious financial pressures. Demand for statutory services, particularly Adults and Children’s Social Care, has risen sharply, driven by an ageing population, increasing complexity of need, and more children requiring support. At the same time, inflation and increases in the National Minimum Wage and provider pressures have increased costs significantly higher than the income we receive.

For 2025/26, we can only balance the budget by using reserves and applying for Exceptional Financial Support (EFS) from Government. Without this temporary support, the Council would have been required to issue a Section 114 notice, which is effectively a declaration that it cannot meet its financial obligations.

Looking ahead, our Medium-Term Financial Plan shows a funding gap of £74.3 million in 2026/27, rising to a cumulative gap of £297.1 million by 2028/29. These pressures are not unique to Worcestershire; many councils nationally are in a similar position.

The financial challenge is not the result of mismanagement. It is driven by external pressures that all upper tier councils are facing.

The biggest factor is the rising cost and demand for statutory services which are services we are legally required to provide. These include safeguarding vulnerable children, supporting adults with care needs, and providing services for people with disabilities. Demand for these services has grown significantly, and the cost of delivering them has increased due to inflation, workforce pressures, and the complexity of need.

The Council has already delivered more than £60 million of savings over the past two years, with a further £12.5 million this year. However, the scope for further savings without affecting services is now extremely limited.

We are reviewing every area of the organisation to identify where savings or efficiencies can be made. A wide range of potential options was included in Cabinet papers for consideration, which Full Council considered on 15 January. Further opportunities will continue to be considered over the coming months, and Cabinet will receive further updates on any potential cost reductions before decisions are made.  

While we will always aim to protect essential services, the scale of the financial challenge means that difficult and sometimes unpopular decisions may be unavoidable.

Our external auditors have been clear that we must reduce reliance on reserves and government support and accelerate our transformation programmes to restore long term financial sustainability. 

The budget is developed through a structured process and is constantly reviewed and updated:

• Officers prepare financial forecasts and identify pressures, risks, and potential savings in consultation with the relevant Cabinet Member with Responsibility  
• public consultation launched in October  
• draft settlement from Central Government received in December – this year we have received a 3-year settlement which demonstrates the level of central government funding for 2026/27 and the next two years
• cabinet reviews options and recommends that Council approves the draft budget for public consultation
• residents, partners, and stakeholders provide feedback through the consultation process including Scrutiny Panels  
• final Local Government Settlement and response relating to Exceptional Financial Support received mid-February  
• full Council debates and decides the final budget in late February  
• budgets, actuals, and yearly forecasts are reviewed monthly and reported to Cabinet and Scrutiny panels on a quarterly basis  

The budget consultation ran from 1 October to 1 November and received more than 2,200 responses. 

You can view the responses here: 

• 2026 01 15 Draft Budget - Appendix 7 - Budget Consultation Outcome Summary (PDF)

Key findings included: 

• 59% of respondents supported increasing council tax by 5% or more
• many respondents recognised the financial pressures facing the Council and the need to protect statutory services

The consultation results are being used to inform the development of the draft 2026/27 budget.

Worcestershire’s Council Tax is currently at the lower level of County Councils being the 3rd-lowest of all comparable County Councils without Fire Responsibilities. The Council has previously tried to keep Council Tax as low as possible, demonstrated by Worcestershire’s Council tax being lower than many of our peers. This, however, is no longer a sustainable policy given the pressures we are facing, particularly in Adults and Children’s Social Care.

In 2025/26, a Band D property in Worcestershire pays £1,615 council tax relevant to the County Council (alongside council tax for their District Council and Parish Council if they have one). This is well below the national average of £1,701. This difference equates to £18.8 million less income each year.

Even with the maximum permitted 4.99% increase, a Band D property in Worcestershire would remain the third lowest.

The council has not increased its council tax by the maximum allowable in previous years. If the Council had increased its Council Tax to the maximum in the past, the council would be generating around £14.2 million additional income by 2026/27.

Every 1% increase in council tax generates around £3.6 million, which is essential to fund statutory services, which are those which have to be delivered by the council, such as adult social care, children’s safeguarding, support for vulnerable residents and road maintenance.

Given the scale of the financial challenge, we applied to Government for additional flexibility to increase council tax by up to 5% above the maximum allowable threshold of 4.99%, as part of our Exceptional Financial Support request.

You can view the letter sent to by visiting the council’s website: 

• Letter sent to Ministry of Housing, Communities and Local Government 12 December 2025 (PDF)

The income we receive from Government as set out in the Provisional Settlement in December 2025 is increasing in 2026/27 by £6.9 million (excluding council tax increases) which is £7.1 million less than expected. £2.9 million of this increase is targeted to children’s prevention services and therefore cannot be used to fund anything else.

This increase is nowhere near in keeping pace with the demand and pressures we are currently, and continue, to face. Therefore, the draft budget proposals seek to address the continuing financial pressure we are facing from this financial year that will continue into 2026/27 as well as making projections for next year based on the best available information.

We are in active discussions with Government about further Exceptional Financial Support (EFS) for 2026/27. This has been requested in the form of a capitalisation directive as well as an increase in Council Tax. The capitalisation directive is a temporary measure that allows councils facing short term financial pressures to access additional support, such as permission to borrow or use capital resources to fund day to day services.

A capitalisation directive does not solve the underlying pressures, but it provides time to implement longer term changes and avoid issuing a Section 114 notice. Any increase in Council Tax, however, is a permanent increase in income for the year in which it is implemented which continues into future years.

We will continue to lobby government for fair funding to support the financial emergency the council is in due to the demand and cost of providing statutory services.