Issue - meetings

Report from the Strategic Director of Finance and Customer Services.

Recommendations:

That Cabinet:

1.    Note the current General Fund Revenue Budget forecast overspend of £2.4m.

2.    Note whilst there is a projected overspend, the Council expects to be able to manage this pressure during the year and return to a  ...  view the full agenda text for item 43

Consideration was given to the report which set out the financial position as at the end of July 2025 and forecast for the remainder of the financial year, based on actual costs and income for the first 4 months of 2025/26. As of July 2025, the Council’s financial position for  ...  view the full minutes text for item 43

Report from the Strategic Director of Finance and Customer Services.

Recommendations:

That Cabinet:

1.    Note the current General Fund Revenue Budget forecast overspend of £2.4m.

2.    Note whilst there is a projected overspend, the Council expects to be able to manage this pressure during the year and return to a balanced position following mitigating actions. Should that not be possible the Council will need to draw on its reserves to balance the 2025/26 financial position.

3.    Note the updated position of the Capital Programme.

At the Chair’s invitation Councillor Alam, Cabinet Member for Corporate Services, Finance and Community Safety introduced the item and made the following points:

·       This was the financial monitoring report for the period ending July 2025.

·       The Council’s overall financial position remained positive, despite a forecast overspend of £2.5 million.

·       The overspend was composed of a £7.5 million pressure in service directorates, with was offset by £5.3 million in central underspends.

·       The overspend was attributed to demand pressures in residential placements, particularly in social care, which reflected the position nationally.

·       Inflationary pressures were also a significant factor affecting costs.

·       The treasury management strategy was performing well, with short-term borrowing being used to minimise interest costs.

·       The capital programme had been updated, with some reprofiling of schemes into 2026-27 but the programme remained ambitious.

·       Confidence was expressed that the Council would manage the pressures and return to a balance position through mitigating actions.

·       The financial monitoring would continue closely over the coming months.

The Chair invited members of the Overview and Scrutiny Management Board (OSMB) to raise questions and queries on the item before them.

Councillor Blackham expressed scepticism about the Council’s ability to manage the overspend, especially given that two directorates were already significantly over budget just a few months into the financial year. It was suggested that the budgets for those directorates may not be realistic and called for better forecasting.

The Assistant Director, Financial Services acknowledged the concern and explained the Council expected underspends in grant-funded areas. Noting that treasury management was performing well. The Children and Young People’s Services (CYPS) directorate overspend was anticipated and offset by central contingencies. The Adult Social Care pressures were being actively managed with mitigating actions. It was confirmed that budget and medium-term financial strategy (MTFS) work was underway to realign budgets.

Councillor Yasseen observed that CYPS had been consistently overspend for a number of years, indicating a mismatch between the resources and demand. It was asked how the Council planned to redesign resources to reflect the true cost of services and want impact this had on other services that were under budget?

The Assistant Director, Financial Services explained the CYPS budget had been reduced over time, even though the overspend appeared consistent. Aspects that had contributed to this were that the number of looked-after children had decreased, but inflation and market costs had driven up placement costs. The internal residential care programme delays had impacted savings. It was clarified that other directorates had made temporary savings without major service delivery impacts.

In a follow-up question, Councillor Yasseen queried how long the Council could continue relying on its reserves and at what point would that approach become a concern?

The Assistant Director, Financial Services confirmed the Council’s reserves were robust and had increased over the past few years, with the minimum balance now three times higher than seven years ago. The planned use of reserves was strategic and not a sign of financial weakness. There was confidence that mitigations would allow the Council  ...  view the full minutes text for item 31