Phil Jordan, leader of Isle of Wight Council shares this latest news. Ed
The Minister of State for Local Government and Homelessness (Alison McGovern MP) has written to council leaders to announce the 2026–27 to 2028–29 multi‑year Local Government Finance Settlement and the new Local Outcomes Framework (see below).
The Key points of the letter claim:
- The government is consolidating funding streams, updating outdated data, and aligning funding more closely with need and deprivation. An additional £740 million in new grant funding nationally has been added for 2026–27, bringing total new settlement funding for 2026–29 to over £4 billion.
- Councils with historic Dedicated Schools Grant (DSG) High Needs deficits will receive grants covering 90% of deficits accrued up to 2025–26. Further support for post‑2026 deficits will be proportionate but not unlimited.
- Seven councils will be permitted council tax rises above referendum limits, but not beyond average bill levels. The Isle of Wight Council is already above the average Council Tax level.
- Technical changes will adjust business rates pooling income; a one‑off Adjustment Support Grant will protect councils whose Core Spending Power would otherwise fall in 2026–27.
- Wider reforms are planned: There will be profit caps for children’s social care placements, a financially sustainable SEND system and an independent adult social care commission
- The Local Outcomes Framework sets national priority outcomes delivered locally. It is intended to strengthen accountability, transparency, and partnership working. The Framework will operate for the Spending Review period.
Jordan: Borrowing to pay for budget shortfalls and debt is utterly unsustainable and simply won’t work
Speaking today Councillor Phil Jordan, Leader of the Isle of Wight Council said,
“I have written today to the Minister explaining that the Isle of Wight Council is materially worse off because of the Fair Funding Review (see below) and three-year settlement. Our financial predicament means setting a budget is unachievable without Government support and we have therefore applied for Exceptional Financial Support (EFS) last week.
“As part of the EFS, Government expects us to raise Council Tax by the maximum 5%, sell off any remaining assets, liquidate just about all reserves and create a transformation Plan through an Improvement Board.
“In addition, they expect us to raise service charges across the council. When that is done, using EFS, they will allow the council to borrow money to fund any financial gaps! That is absolute madness. Borrowing to pay for budget shortfalls and debt is utterly unsustainable and simply won’t work.
“Contrary to what some believe, the Council has managed its finances very prudently. We have significantly reduced any new borrowings to almost zero and substantially reduced the loan burden over the past five years. We have re-organised and re-structured. We have only spent where it was necessary or could not be avoided.
“We are an Island… and as an Island we pay more to deliver the same services as our comparative neighbouring Councils. Around £24m more a year. We have evidenced this to Government for many years. Instead of recognising this and funding us correctly the opposite has happened. Government have cut our funding since 2010 to the extent that we now have roughly £100m a year less than we had in 2010.
“Like all budgets, it cannot continue forever having less income and more expenditure because of costs, inflation and demand for services. We are at the end of the financial road and, with nowhere to turn, need Government to intervene and act without further delay.”
Here are some frequently asked questions with explanations and answers to those questions:
Why is the council talking about its finances now?
Following the Government’s final Local Government Finance Settlement for 2026–2029, the Isle of Wight Council has reviewed its position and confirmed that it faces a uniquely difficult and unsustainable financial outlook.
The Leader has written to the Minister to set this out clearly and to request urgent support and a meeting.
What has changed in the Settlement?
We welcome the Government’s move to a multi-year settlement and its ambition to align funding with need. However, the outcome of the Fair Funding Review has left the Isle of Wight materially worse off compared to councils with similar levels of need.
Crucially, the settlement does not adequately reflect the unavoidable extra costs of delivering services on an island.
Why does being an island make such a difference?
Unlike mainland councils, we cannot share services, infrastructure or workforces with neighbouring authorities. Every statutory service—from social care to highways—must be provided locally.
Transport, freight, contractor availability and specialist placements all cost more. Residents who need hospital treatment, safeguarding placements or SEND provision often require travel across the Solent, adding further expense.
These are structural pressures that do not exist in the same way elsewhere.
Has the council managed its finances responsibly?
Yes. Over recent years the Council has reduced borrowing and managed its finances prudently.
However, since 2010, overall funding has reduced significantly while demand and costs have increased. The Council now faces a structural deficit that cannot be closed through local measures alone.
What is Exceptional Financial Support (EFS)?
Exceptional Financial Support is a form of assistance from Government for councils facing severe financial pressure.
It usually allows councils to borrow or use capital resources to balance their budgets in the short term, alongside a transformation and improvement programme.
Has the council applied for EFS?
Yes. The council has submitted an application because, without some sort of Government support, it will not be possible to set a balanced budget for 2026–27.
Does this mean the Council is going bankrupt?
No. The Council continues to deliver services and is working constructively with Government to find a sustainable solution.
However, without support, there is a serious risk that the Council would have to issue a Section 114 notice, which is a formal step taken when a balanced budget cannot be set.
Why can’t the Council just make more cuts or raise council tax?
We are already considering the maximum permitted council tax increase and have used reserves where possible and prudent. Even with these measures, and further savings efficiencies, a significant gap remains.
Further service and funding cuts at this stage would risk the safety and legality of essential services, particularly (but not exclusively) in social care and children’s services.
Why not just borrow the money?
Borrowing to plug day-to-day budget shortfalls is not sustainable. It would create large annual repayment costs that the Council cannot afford, placing even more pressure on services in future years.
What is the council asking Government to do?
We are asking Government to recognise the Island’s unique and unavoidable cost pressures and to provide unique targeted financial support during the Spending Review period.
This would allow the Council to stabilise its finances, continue delivering statutory services, and avoid the disruption of a Section 114 notice.
What happens next?
Discussions with Government are ongoing. The council remains committed to working constructively and transparently with ministers and officials to reach a fair and sustainable solution for the Island.
What does this mean for residents?
Our priority is to protect essential services and ensure the council remains financially stable.
We will continue to keep residents informed as discussions with Government progress, and we remain determined to secure a fair outcome for the Isle of Wight.
