Rising Demand for Council Services Continues to Drive Financial Pressures

The rising demand for essential services and the increasing cost of providing those services, are continuing to place significant budget pressures on the Council.

Like other local authorities, Reading is waiting to hear how much money it will receive in this year’s Local Government Finance Settlement and the results of the Government’s Fairer Funding Review. A Medium Term Financial Strategy (MTFS) Update report to tomorrow’s (Wed 17) Policy Committee outlines how the financial challenges in Reading mirror those being faced by other councils nationwide, with more vulnerable residents turning to their local council for support and the costs of operating services continuing to rise.

In Reading, the Council is currently planning to allocate additional funding to Children’s Services, primarily relating to placements for looked after children, as costs associated with the age profile of children in care and complexity of need increase.

The Council is also predicting it will need additional funding for Adult Social Care Services, as the number of vulnerable residents approaching the Council for support increases, alongside the costs of providing care packages.

Combined, Adult and Children’s Services already account for circa 70% of Reading Council’s overall budget. That percentage will rise again in the next financial year as it directs more of its funding into these statutory services.

Over the last three financial years, Reading Council has successfully delivered savings and efficiencies totalling around £17 million in order to absorb the additional costs of running services. A further £7.6 million is on track to be delivered by the end of this financial year, but with a budget gap of just over £4 million still needing to be addressed to present a balanced budget to Council in February, work to identify further savings continues at pace across directorates.

The Council’s Medium Term Financial Strategy Update will be discussed at a meeting of Policy Committee on Wednesday 17 December (https://democracy.reading.gov.uk/ieListDocuments.aspx?CId=138&MId=5711)

 “Cost and demand pressures continue for local councils, particularly in essential areas like caring for vulnerable children and adults or providing temporary accommodation for local people who cannot afford high local rental costs.

 “Helping the more vulnerable members of our society are the fundamentals of what local councils do, and we would never shy away from that. In practical terms however, the more money the Council has to direct into these statutory services, the less money is available for other universal services most of us expect.

"Many councils have yet to recover from the deep and shortsighted cuts to local government finances made under previous Governments and, combined with several years of absorbing increased demands for high- cost services, it is easy to see why there are now 29 councils receiving Exceptional Financial Support (EFS) from Government, which is up from 18 the previous year. It means one in six councils with social care responsibilities are now dependent on this additional support.

“This Council’s hard work to stabilise its finances means Reading is not in that position, but our demands mirror those seen at most other councils, with residential placements for children regularly costing £10,000 a week. It underlines the enormous challenges councils face in securing appropriate, cost-effective placements for children and young people with complex needs.

“While councils have been balancing their books through measures such as savings in discretionary service areas and drawing on their diminishing reserves, this is not financially sustainable in the long-term.

"This year the Government is providing local authorities with a multi-year settlement, which enables the Council to better plan for the next three years, rather than year-to-year as was previously the case. The Government is also in the process of simplifying more than thirty different funding streams as part of its Fairer Funding Review. Along with other councils, we will wait and see what that means for Reading before finalising our budget for the year ahead, and up to 2029.”

Following tomorrow's Policy Committee, a public consultation on Reading’s Medium Term Financial Strategy Update is set to be launched on 18 December 2025 and will run until 17 January 2026. Following this, and the announcement of the Provisional Local Government Finance Settlement, a further report will be brought to Policy Committee on 16 February 2026, recommending approval of a balanced budget to Council in order that it can approve its budget and associated Council Tax level for 2026/27 at its meeting on 24 February 2026.

Alongside consideration of the Council’s revenue budget, the MTFS Update report to Policy Committee will also consider the Council’s provisional Capital Programme of investment for future years. This is different from the money the Council uses to run services and cannot be used to balance its revenue budget.

On-going budget pressures mean that at this stage - other than fully grant funded and rolling programme schemes such as the construction of the Hexagon’s new Studio Theatre - only a small number of priority schemes funded by borrowing, developer contributions or capital receipts have been added. They include significant investment in bridges, streetlighting and traffic management measures; the purchase of vehicles to enable increased recycling; work to conserve and improve the Town Hall roof; works to increase the number of SEND school places in Reading; and structural conservation works at Cemetery Arch.