Council closes budget gap to put finances on even keel

‘Good news’ budget report thanks to work to generate more income and extra money from the Government

Chelmsford City Council has closed its budget gap for 2026/27, thanks to more demand for its paid services and a better-than-expected Government grant according to a report going to this month's Cabinet.

More encouraging financial outlook

The last five years have seen large budget shortfalls for all councils, caused by Covid-19 recovery, high inflation and real-terms cuts to Government support. This year, the outlook in the report is more encouraging.

More income: additional customers for services like leisure centres and the theatre, and the introduction of a garden waste subscription (already seen in most parts of Essex), have helped put the council’s finances on an even keel.

More Government grant: the city council has lobbied the Government for assistance with spiralling homelessness costs. This appears to have helped bring more money than initially expected from central Government.

This improved outlook means the council is able to invest in some of the services that matter to residents, helping to make the district cleaner and safer and supporting Chelmsford’s small businesses, as well as closing its budget gap and providing security as it prepares to hand over to a new unitary authority.

The council’s Cabinet Member for Finance, Councillor Chris Davidson, says it’s the first time in recent memory a January budget report hasn’t had to convey bad news.

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“It’s a great relief and a pleasure this year to be able to report what appears to be good news after five, very tough years. We’ve become used to budgets setting out difficult choices between cuts to services or increases in fees and charges, just to enable the city council to survive. We’ve had to deal with real-terms cuts in Government support and large rises in the costs of providing services.

“The draft Government settlement, received just days before Christmas, was much more encouraging than we were expecting. We believe this is because the Government has acknowledged the case we have put to them - that the new funding formula for councils should take account of homelessness pressures as well as deprivation, in their definition of high needs.”

Cllr Chris Davidson, Cabinet Member for Finance

New Government funding formula for councils

The Government is also now providing a three-year settlement for local authorities, helping them to better plan for the future. Initial indications are that, in 2026/27, the City Council will have extra funds ring-fenced for measures to reduce homelessness and additional general funding to improve financial resilience as the council prepares for reorganisation. To this end, payments to fund replacement equipment (put on hold after the pandemic) can now restart, reducing external borrowing and interest payments for the council.

Funding for resident priorities

With more support than expected, the council has also reviewed services under the greatest pressure and the budget report includes proposals to increase some spending in areas of concern to residents. Specific funding has been allocated to help make the district’s streets tidier and to increase the number of dog waste bins the council is able to empty.

Initiatives to reduce anti-social behaviour are also proposed to receive funding, along with grants for Chelmsford businesses and charities doing great work in the community. The council’s Leader, Councillor Stephen Robinson, says efforts to improve the council’s financial position and to lobby the Government about local pressures have paid off.

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“After several very difficult years, we can finally improve some local services, to make our area cleaner and safer. We know these things matter to our residents. The tough decisions of the recent past and making our case to the Government have put Chelmsford City Council in a much better position.

“This budget will also help put council finances on a secure footing as we get ready to merge with other councils in 2028. We can’t be complacent – the Government’s funding settlement is never confirmed until later in the year – but all initial signs are that this budget should help set the district and our services on the right track for whatever lies ahead.”

Cllr Stephen Robinson, Leader of Chelmsford City Council

LGR restrictions on spending decisions to start this year

In March, the Government is expected to announce its decision about the configuration of new unitary authority areas in Essex, that will see Chelmsford preparing to merge with other councils. As part of this process, restrictions will be placed on the council’s spending, and so this budget is probably the last to be set by Chelmsford City Council that is not constrained by local government reorganisation (LGR).

Although the precise arrangements are not yet known, during 2026/27, the council is expected to move to a form of joint governance with other councils in the new unitary for any substantial financial transactions. Despite the improved outlook, the budget report warns that maintaining financial discipline will be essential in the coming year, as the council begins this process.

Chelmsford City Council’s share of Council Tax for 2026/27

To maintain a responsible handover, the report proposes to raise the Council Tax Chelmsford City Council charges, but just below the inflation rate. The rise will be 2.97%, below December’s national inflation figure of 3.2%.

Chelmsford City Council collects all the Council Tax paid in the district but only keeps 10% of what residents pay – the lion’s share goes to Essex County Council. The city council’s proposed increase would add around 13 pence a week (£6.78 a year) to a typical Band D property in the area in 2026/27.

Separately, increases across most of the council’s fees and charges have also been kept broadly in line with inflation (around 3%), with no increases proposed on crematorium charges or shoppers’ car parking tariffs for the coming budget year.

Report will go to Cabinet and Full Council

The budget report will be considered by the city council’s Cabinet on 27 January, before going to a meeting of its Full Council in February.

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