Agenda item

 

Report from the Executive Director of Corporate Services.

 

Recommendations:

 

That Cabinet:

 

1.    Note the current General Fund Revenue Budget forecast overspend of £3.4m.

 

2.    Note the projected overspend and that whilst the Council aims to manage this pressure, should that not be possible use of reserves will be required to balance the 2025/26 financial position.

 

3.    Note the updated position of the Capital Programme.

 

4.    Approve the capital budget variations as detailed in section 2.17 of the report.

 

 

At the Chair’s invitation Councillor Alam OBE, the Cabinet Member for Finance and Community Safety, introduced the report, which presented the Council’s financial position at the end of November 2025 and the forecast for the remainder of the financial year, based on actual costs and income for the first eight months.

 

As of November 2025, the forecast overspend stood at £3.4m, comprising of an £8.7m direct overspend offset by a £5.3m underspend in central services. The overspend was largely driven by placement pressures in Children’s Services, rising costs of adult social care packages, and backdated payments for Older People and Physical and Sensory Disabilities. Market price increases above inflation also contributed to budget pressures. These challenges were consistent with those faced by councils across the UK.

 

The Council continued to face significant pressures in funding social care and responding to rising demand. Traded services continued to perform well. The forecast position was being closely monitored, and it was noted that, even with mitigation, reserves might be required to achieve a balanced outturn for 2025/26. The financial impact would be reflected in future monitoring reports to Cabinet.

 

The Service Director of Financial Services, Rob Mahon explained that this time of year could be challenging due to scrutiny presentations. It was noted that this report related specifically to financial monitoring, and that issues concerning the budget and the Medium-Term Financial Strategy (MTFS) would be addressed in the next presentation.

 

The Chair invited members of OSMB to raise questions and queries.

 

A question was raised by Councillor Allen regarding CYPS placements in relation to paragraphs 2.7 and 2.9.2 of the report. Paragraph 2.7 noted a reduction of 120 placements following the review, while paragraph 2.9.2 reported a £5.7m overspend on children in care placements, mainly due to increased use of external residential children’s homes. Clarification was sought on whether the recent overspend formed part of the cumulative reduction identified in the review, or whether it occurred after the review. A further question asked whether this trend was likely to continue.

 

The Service Director of Financial Services explained that the savings delivery assessment reflected the long?standing work to review CYPS placements. The original savings were driven by reducing the number of children in care and improving the placement mix, including reducing external residential placements and increasing both in?house foster carers and kinship care options.

 

The review had resulted in a reduction of 120 placements over the period, as referenced in the report. However, the CYPS placement position remained fluid and subject to monthly fluctuation. A spike in looked?after children numbers occurred over the summer but had since reduced.

 

It was noted that ongoing challenges remained, particularly the continued reliance on external residential placements. Progress on developing in?house residential provision was expected to help reduce external placements over time. Work also continued to strengthen in?house fostering and kinship care to reduce demand for high?cost external placements.

 

It was confirmed that, based on the assessment, the CYPS savings set out in 2019/20 had been delivered, and this was also referenced in the MTFS presentation.

 

Councillor Baggaley raised a question regarding the CYPS savings position. It was noted that previous reports had shown a variance to the planned savings, and clarification was sought on whether the savings had genuinely been achieved. It was queried whether the savings arose from a real monetary reduction or simply from the fall in placement numbers over time. It was observed that the budget line itself appeared unchanged, and therefore the reduction in placements, rather than budget adjustments, seemed to be driving the reported improvement.

 

It was confirmed that the question was valid and had been discussed several times in the forum. The Service Director of Financial Services explained that while year?on?year financial monitoring reports did not always clearly show the trend, the wider budget reports demonstrated a consistent reduction in the CYPS placements budget from 2019/20 to the current financial year. The associated savings had therefore been removed from the CYPS budget over time. The original aim had been to reduce placement numbers by 120, and this had been achieved. Had those 120 placements still been required, the Council would have been spending at least £10m more per year in the current and future financial years.

 

The Service Director of Financial Services noted the inherent volatility of CYPS placements: reductions of £2-3m could be achieved through lower looked?after?children numbers, but a single new high?cost placement could cost close to £2m and dramatically alter the position. Such events had occurred in recent years. A functional assessment of the 120 reduced placements, based on typical placement costs, indicated that the intended savings had been delivered. The Service Director of Financial Services expressed confidence that it was now the appropriate time to recognise the savings as fully achieved.

 

A question was raised about the rising costs of placements, noting that where the Council relied on profit?making providers, it was unlikely those organisations would accept reduced profit margins. It was observed that as placement numbers reduced, the unit cost per placement tended to increase, which could limit the level of savings achievable.

 

Councillor Monk went on to ask whether any commissioning work was underway to prioritise not?for?profit providers, or those able to demonstrate reinvestment rather than shareholder returns, and whether any action beyond standard mitigations was being pursued to address these pressures.

 

It was noted that no specific work had been undertaken to target not?for?profit agencies within CYPS commissioning. The Service Director of Financial Services explained that a key challenge in residential placements was the increasingly complex needs of children, which often required the capacity, specialist skills and scale offered by larger providers, many of whom operated on a for?profit basis. The Service Director of Financial Services agreed to take the issue back to CYPS for further discussion and to explore whether procurement could consider approaches to increase the use of not?for?profit providers, though it was acknowledged that this may present practical challenges.

 

A question was raised by Councillor Baggaley regarding the Treasury Management savings. While the continued delivery of savings was welcomed, clarification was sought on how much of the reported position was due to delays in capital projects, resulting in later borrowing requirements being pushed into future years, versus how much was attributable to proactive treasury activity such as interest rate management. It was indicated that this distinction would be helpful for future reporting.

 

The Service Director of Financial Services explained that the majority of Treasury Management savings had been achieved through the strategic approach of minimising the need to borrow by reducing cash balances and relying on short?term borrowing to secure lower interest rates. This approach generated most of the savings reported.

 

It was confirmed that some savings were also the result of delays in delivering the capital programme, which reduced borrowing requirements in?year. However, once those capital schemes progressed, the associated borrowing would eventually be required. To mitigate this risk, provision for borrowing costs had already been built into the revenue budget and MTFS at the point the capital investment was approved, ensuring funding was in place when borrowing occurred.

 

The Service Director of Financial Services acknowledged that interest rate assumptions had to be monitored closely, as delays could expose the Council to changes in rates. This risk was managed continuously, and any significant concerns would be reflected in future MTFS proposals.

 

Councillor Brent asked about the Wath Library project. The Year Plan had stated that demolition was due to start in December; however, the current papers reported slippage and indicated the project was on hold. Clarification was sought on how these positions were consistent and what had changed since the Year Plan was agreed.

 

The Executive Director of Regeneration and Environment clarified that demolition had originally been expected to begin in December. This had slipped slightly, and the start date was now anticipated for the end of the month. The delay was due to ongoing negotiations between the contractor and the Council’s parking team regarding the positioning of site boarding around the former library building. Officers confirmed that the project was not on hold.

 

The Chair queried the increasing overspend and questioned whether any additional measures had been introduced to reduce it rather than relying on the use of reserves. The Service Director of Financial Services reported that discussions had taken place with Executive Directors, the Chief Executive and SLT regarding the current financial position and options for managing pressures in the final quarter of the year. Although the Council had not introduced formal or strict controls such as direct service cuts or enforced spending restrictions, Executive Directors had been asked to apply strengthened decision?making around recruitment, non?essential expenditure and the use of grants.

 

It was explained that several grants received during the year could be used either for new activity or to support existing work currently funded from the General Fund. Where appropriate, re?aligning these grants offered an opportunity to mitigate the forecast overspend. It was hoped that these measures would improve the position in the final quarter and reduce the potential call on reserves. It was noted that the Council’s previous financial performance supported confidence in achieving this.

 

Councillor Yasseen reflected on the long?standing demand pressures within key services and noted that overspends had increasingly arisen in areas such as Adult Social Care and Home?to?School Transport. It was observed that the current system relied heavily on responding to rising demand, and that preventative approaches across the public sector had been difficult to deliver at scale.

 

It was highlighted that prevention required sustained partnership with residents and communities. Reference was made to council plan activity on independent travel, noting that Home?to?School Transport continued to show a £9.4m overspend. Councillor Yasseen queried progress on work to support greater independence for young people where appropriate and suggested that more radical approaches to reducing future demand might be required.

 

Concerns were also raised about wider demand trends, including the number of children identified with SEND compared to regional benchmarks, and whether support models could be developed that strengthened family and community?based solutions. Councillor Yasseen noted that some families had previously expressed willingness to explore lower?cost, more flexible transport options if supported. These comments were framed as part of a broader reflection on long?term sustainability, recognising that the matter extended beyond finance and into cross?council and partnership planning.

 

The Leader noted that the issues raised linked closely to national developments in SEND policy and home?to?school transport pressures. It was emphasised that the Council did not assign SEND status to children; eligibility was determined through an independent statutory process.

 

Significant work had taken place over several years, led by Children’s Services, to address home?to?school transport pressures. Independent travel training had been expanded, supported by additional investment, and continued to benefit some young people. However, it was recognised that families often had concerns about moving away from guaranteed transport provision, particularly where children had complex needs. While family?arranged transport payments were already offered and could generate savings, the Council was open to considering further examples where this approach might work.

 

The Leader highlighted that demand pressures in SEND and home?to?school transport were being felt nationally. The challenge of balancing increased specialist provision, maintaining capacity in mainstream schools and managing the transport costs arising from these pressures was recognised. The Council’s position was noted to be similar to that of comparable authorities, with examples referenced of other councils facing significant cost increases. It was confirmed that local work continued to push the system in a more sustainable direction despite the wider pressures.

 

The Chief Executive acknowledged the comments about long?term demand pressures, particularly within Adult Social Care, and noted the challenges associated with an ageing population. It was reported that the Council was participating in the national Neighbourhood Health Pilot, led by health partners and delivered across 42 areas nationally. The local focus was on long?term conditions and complex frailty, which often drove higher care costs.

 

The pilot aimed to improve understanding of how primary care, community support and adult social care could work more effectively together to promote independence and reduce reliance on statutory services. Learning from the pilot would feed into national evaluation and support the development of more sustainable approaches to managing demand.

 

The Chief Executive emphasised that, as with SEND and independent travel training, there was no single solution. Instead, a range of interventions would be required to support residents to live independently, reduce long?term pressures and help prevent health needs from escalating into higher?cost social care later in life.

 

Councillor A Carter noted that the CYPS overspend position felt repetitive year?on?year and recalled that the previous financial monitoring report to OSMB had indicated a much smaller overspend, which was expected to be reduced to approximately £0.5m by year?end. The escalation to a £9m overspend was a significant variance, and concern was expressed that this suggested insufficient planning for the demand pressures that had been evident for several years.

 

Councillor A Carter went on to ask what measures the Council intended to take to ensure a more realistic and transparent position in the next financial year. Questions were also raised about the potential impact of the current overspend on other projects and programmes, and what may be deprioritised as a result. A further query was made regarding the impact of reduced business rates income arising from the recent steelworks closure within the borough, and how far this had contributed to the current budget pressures.

 

The Executive Director of Corporate Services did not agree that the CYPS position reflected a lack of planning. It was explained that the children’s budget had reduced year?on?year, and significant work had been undertaken to provide assurance that historic savings actions had been delivered. The data had been re?examined in detail to distinguish between the savings originally required and the separate, ongoing budget pressures caused by the complexity and cost of placements. It was noted that, without the actions taken since 2019/20, CYPS would have been spending around £10m more per year.  The Executive Director went on to emphasise that children were placed according to need, not cost, and some placements, particularly where intensive staffing was required, remained very expensive. The development of an in?house residential provision was helping to reduce costs where possible, but the service continued to face significant challenges due to the volatility and complexity of demand.

 

In relation to Adult Social Care, it was stated that the overspend did not indicate poor management but reflected unavoidable demand pressures, inflation in the care market and limited provider options. Work continued between services and finance teams to set budgets as accurately as possible while maintaining oversight and challenge.

 

The Executive Director of Corporate Services confirmed that the forthcoming MTFS report would set out the baseline adjustments and further work undertaken to establish realistic budget levels for the next financial year. It was also noted that the scale of the budgets involved, over £100m, needed to be taken into account when considering the size of variances. The Executive Director concluded that the earlier comments regarding demand pressures and inflation also addressed the point raised about the impact of business rates reductions.

 

It was confirmed by the Service Director of Financial Services that the loss of business rates from Speciality Steel had not affected the 2025/26 financial position. Under the business rates system, the Council forecasted expected income for the relevant financial year, and any surplus or deficit was adjusted through the Collection Fund in future years. The Collection Fund operated similarly to a reserve, allowing the impact of changes in business rates income to be managed over time.  They went on to note that, following the company entering liquidation in the summer, the liquidator had continued to pay the business rates for the remainder of the financial year while they remained in occupation. As a result, the Council continued to receive business rates income from the site.

 

Councillor A Carter commented that some of the financial explanations given appeared understandable from a finance perspective but did not fully reflect the operational complexities faced within frontline services. They suggested that Executive Directors and Cabinet Members responsible for significantly overspending services should be invited to a future OSMB meeting to discuss the challenges in greater detail.

 

The Chair advised that these matters would be addressed in the following month’s budget scrutiny session, when the Executive Directors and Cabinet Members would present their proposals to the Board. Members would have the opportunity at that meeting to raise questions directly with the relevant service leads.

 

The Chair noted that information as to whether any work was done by CYPS to look to commission services from not-for-profit organisations (which may help in mitigating the impact of constant price increases from private sector providers) would be provided.

 

Resolved: - That the Overview and Scrutiny Management Board supported the recommendations that Cabinet:

1. Note the current General Fund Revenue Budget forecast overspend of £3.4m;
2. Note the projected overspend and that whilst the Council aims to manage this pressure, should that not be possible, use of reserves will be required to balance the 2025/26 financial position;
3. Note the updated position of the Capital Programme; and
4. Approve the capital budget variations as detailed in section 2.17 of the report.

 

Further actions that arose from discussions were that:

• Information as to whether any work is done by CYPS to look to commission services from not-for-profit organisations (which may help in mitigating the impact of constant price increases from private sector providers) would be provided.