Leader calls for urgent Government action as budget pressures intensify

Next week, Melton Borough Council's Scrutiny Committee will consider the Cabinet's draft budget proposals for 2026/27. By moving funding away from rural district councils like Melton, the Government's finance settlement announced in December creates the biggest financial pressure ever faced by the Council, compounded by the requirements to implement a new food waste collection service and prepare for Local Government reform. The Leader of the Council has written to the Secretary of State expressing his deep concern and requesting that food waste collections be deferred until after local government reorganisation so as to benefit from greater economies of scale. Despite the challenge, the draft budget still seeks to protect vital public services that support the most vulnerable, and promote growth and investment, whilst concurrently making preparations should Government insist that savings need to be made.

In February, Melton Borough Council will set its budget for the coming financial year. Preparations have been underway for some time, but the next step is for the Council's Scrutiny Committee to consider the draft recommendations from the Council's Cabinet. The Scrutiny Committee meeting takes place on 22nd January 2026, with the agenda and draft budget report published on 14th January. Cabinet will then formally consider any feedback at their meeting of 4th February, before Council considers final budget proposals on 12th February. 

Local Government finances have been under considerable pressure for many years, and external government funding has reduced by over 50% since 2010. Despite this, the Council has been able to protect resources for key public services and invest in local priorities, whilst maintaining its financial stability. To increase financial resilience and reduce the impact of financial shocks, the Council has also been able to double its level of un-ringfenced reserves since 2023. This prudent approach to financial management and demonstration of value for money was recently recognised in the Interim Auditor’s Annual Report presented to the Audit and Standards Committee in November 2025.

On 17 December 2025, the Government announced its provisional finance settlement and outcome of the 'Fair Funding' review. This represented a significant redistribution of resources within the local government sector, towards areas of greater deprivation and away from more rural areas like Melton. Concurrently, and in response to extensive demand and cost pressures, funding was also moved from District and Borough Councils to County Councils to support more investment in social care, and the way business rates have been redistributed has resulted in a further financial loss, whilst other councils have seen disproportionate gains.  

Whilst transitional funding protections have been put in place for the short term, they are limited, and the impact of this triple-whammy on Melton Borough Council's finances is profound, with sectoral analysis showing Melton is one of the most adversely affected councils in the country, with the total needs assessment 7.7% less per person compared to similar authorities. 

In this context, maintaining existing services would be hard enough, but successive Governments have also mandated the introduction of new service requirements for a weekly food waste collection. Previously, and in line with long-standing policy and practice, the Government provided assurance that any new financial burdens for implementing this service would be fully funded by them. On publishing the finance settlement, the Government has confirmed that funding for food waste has been incorporated into the overall amount but has provided no transparency on exactly how much to confirm this. 

For Melton Borough Council, the cost of introducing food waste collections would be c. £800k per year, representing approximately 9% of our total general fund revenue budget. We are therefore being asked to introduce a new high-cost service, at the same time as funding preparations and transitional arrangements for local government reorganisation, whilst still maintaining delivery of other vital public services - all with a total funding package which is 5% less than what we had in 2025/26. This is not reasonable or sustainable, and the draft budget proposals have been built in this context. The Council has already had to top up a shortfall in capital funding for food waste collection vehicles due to a shortfall from Government, which has further exacerbated the strain on resources available. 

The Leader of the Council has therefore today sent a letter to the Secretary of State for Housing, Communities and Local Government expressing his deep concern about the impact of the finance settlement and requirements to implement food waste collections, at a time when we must maintain other public services and prepare for local government reorganisation from 2028. He has therefore requested that either the shortfall in Government funding be addressed or that the Council be given permission to defer implementation of food waste collections until after Local Government Reorganisation is completed, thereby enabling greater opportunities for economies of scale to be maximised. Officers have concurrently initiated discussions with senior civil servants from MHCLG. The outcome of these discussions will be shared as the Budget development process continues. 

Cllr Pip Allnatt, Leader of the Council stated:

"It is extremely frustrating that we find ourselves in this position. As a Council, we pride ourselves on delivering the best possible services for our communities, whilst maintaining a tight grip on our finances. Over recent years we have successfully achieved this; punching above our weight, progressing multi-million pounds projects like the Stockyard, and avoiding savage service cuts like many other councils have faced, whilst still boosting our reserves.”

“The position we now find ourselves in is unacceptable. Through no fault of our own, and based on quirks in the funding formula, the people of Melton are being short changed and our financial future put in jeopardy. I am confident we can manage this situation, but we need Government support to allow us to prioritise existing public services and our positive and effective transition through local government reform - rather than implementing a food waste service now that few local people want and that would consume nearly 10% of our resources.”

“We will continue talking to Government and are in no way complacent, but we must make our voices heard and speak up for our residents. Our draft budget protects those services that will maximise growth and support the most vulnerable. It ensures we are as efficient as we can be and gives us some breathing space to work up scenarios and savings plans should we be forced to implement them. I very much hope this is not the case and that Government will listen to our concerns. I also look forward to hearing the views of our Scrutiny Committee on our proposed approach, as we manage this challenging situation together."

Key headlines from the draft budget:

• The draft budget 2026/27 retains commitments to fund key priorities which will drive growth, prosperity and income; including inward investment, town centre regeneration and culture, Stockyard, and asset development. It also maintains the support we provide to the most vulnerable in our community and those struggling with the cost of living.
• It proposes an overall increase in council tax of 2.99% across all Council funds, in line with the Government’s referendum limit.
• A small number of high priority / essential growth items are proposed to support a number of critical services including homelessness, planning, and asset management. 
• An allocation has been made to support initial work towards Local Government Reorganisation.
• At this stage, whilst discussions are ongoing with Government, no provision for the introduction of food waste has been included. 
• Should all growth proposals be supported, a small deficit is projected which would be met by reserves to ensure a balanced budget. 
• Whilst the Council can maintain a stable financial position in 2026/27, should the introduction of food waste collections be required, or local government re- organisation be delayed, the Council would face an acute financial challenge and without further action, would run out of reserves in 2028/29. Accordingly, the Cabinet has already commissioned action to develop a number of scenarios, service reductions and savings plans which will then be considered further following the engagement with Government and once the outcome and timescales associated with Local Government Reorganisation are known.

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For more information please contact: communications@melton.gov.uk

Name:  Sarah-Jane O’Connor

Telephone: 01664 502460

Additional Information:

The Housing Revenue Account (HRA) budget is entirely separate from the Council’s General Fund and is not affected by the financial pressures outlined in this release. The challenges described relate solely to the General Fund, which covers the Council’s wider public services.

Read the Letter from Cllr Pip Allnatt, Leader of the Council, to Steve Reed, the Secretary of State for Housing, Communities & Local Government.