Agenda item

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.

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 2025/26 remained positive, although there was a forecast overspend of £2.4m. This position was made up of a Directorate overspend of £7.7m, offset by a projected Central Service underspend of £5.3m.Whilst this was an overspend, the Council expected to be able to manage this pressure during the year and return to a balanced position following mitigating actions.

The Directorate overspend of £7.7m was largely due to demand led pressures in relation to Children’s residential placements and placement types. Increased costs were also being felt across the wider Children’s Social Care market, and this was leading to market prices increasing at above inflation levels, placing further pressures on the Council’s Budget. These pressures were anticipated, and a corporate provision was maintained within Central Services as part of the Budget and Council Tax Report 2025/26.

The Local Government Pay Award had been agreed at 3.2% at all pay bands up to senior officer. The impact of this was a cost of £2.3m above the budget that was allocated when setting the Council’s Budget. The Council had no control over the level of pay award agreed. Central Services was forecasting an underspend of £5.3m, reflecting use of the £5.4m Social Care Contingency approved within the Council’s Budget and Council Tax Report 2025/26, the impact of the Local Government Pay Award and savings generated within the Council’s Treasury Management Strategy.

The Council’s Treasury Management Strategy continued to perform well, with the Council’s approach to borrowing adapted to minimise the level of borrowing and borrow short term to ultimately minimise interest costs. The position had also improved following the outturn for 2024/25 because of re-profiling of the Capital Programme delivery, which pushed back the need to borrow. It was estimated that this approach should see the Council generate savings to support Council-wide pressures. However, it was noted that the Council’s Budget and Council Tax Report 2025/26 approved a requirement for the Treasury Management Strategy to save at least £3m in 2025/26. This was on track, however, economic and market conditions were out of the Council’s control.

An update on the Council’s Capital Programme was set out in paragraph 2.16 of the report. The revised Capital Programme was £209.479m, split between the General Fund (£144.733m) and the Housing Revenue Account (£64.746m.) This was a decrease of £1.545m from the position reported to Cabinet on 7th July, 2025, the majority of which related to the reprofiling of schemes.

The report was considered by the Overview and Scrutiny Management Board (OSMB), who advised that the recommendations be supported.

Resolved:

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.