Agenda item

Report from the Executive Director of Corporate Services.

Recommendations:

That Cabinet:

1. Note the revenue outturn position for 2025/26.

2. Note the required transfer from HRA reserves decreased by £4.3m following the revenue and capital outturn position.

3. Note the carry forward of the combined surplus schools balance of £2.395m in accordance with the Department for Education regulations.

4. Note the reserves position set out in paragraphs 2.15 to 2.16.

5. Note the capital outturn, funding position and programme variations as set out in paragraphs 2.17 to 2.25.

Consideration was given to the report which provided a detailed outline of the final revenue and capital outturn position for 2025/26.

The Council set a balanced budget position for 2025/26 as part of the Budget and Council Tax Report 2025/26 approved at Council on 5th March, 2025. A Revenue Budget of £359.0m was set for General Fund services, this excluded schools’ budgets and the Housing Revenue Account (HRA). The Budget and Medium Term Financial Strategy (MTFS) position was based on sound financial assumptions at the time, factoring in budget contingencies for Service demand pressures, in particular within Social Care, Home to School Transport and the impact of the Local Government Pay Award.

However, demand and market pressures in relation to Children’s residential placements and placement types, and the cost and complexity of care packages in Adult Social Care had continued to increase. Market prices had increased at above inflation levels, which in turn had placed further pressures on the Council’s Budget. The Local Government Pay Award was agreed at 3.2% at all pay bands up to senior officer. The impact was £2.3m above the budget allocated when setting the Council’s Budget. The Council had no control over the level of pay award agreed.

The December Financial Monitoring Report 2025/26 submitted to Cabinet on 9th February, 2026 outlined that the Council anticipated an overspend of £3.4m. This forecast position was also outlined in the Budget and Council Tax 2026/27 report which was submitted to the same Cabinet meeting and also to Council on 4th March, 2026. The overspend was proposed to be funded from Council Reserves. However, the report noted the Council’s intention to further improve the outturn position, if possible, which would see a lower value call on reserves. The actual financial outturn position reflected an overspend of £0.3m, an improvement of £3.1m from the December Financial Monitoring reported to February Cabinet. This improvement was a result of Service areas delivering further savings ahead of year end, maximising grant allocations, improvements in income and the Council generating further savings in Treasury Management. The Council’s final overspend position of £0.3m had been funded by £0.3m of the Budget and Financial Strategy Reserve as approved within the Budget and Council Tax Report 2026/27.

Following approval of the 2026/27 Budget, the global economic position had remained volatile. Economic market sentiment had been heavily influenced by the Middle East conflict leading to steepening energy costs, and commentators anticipate a growing risk of inflation. These financial challenges were being regularly reviewed as part of the Council’s ongoing Medium Term Financial Planning.

The Housing Revenue Account had an underspend of £4.3m. As a result of this the HRA use of reserves was able to be reduced from £7.2m to £2.9m. This would help the HRA to mitigate the financial challenges presented by increased maintenance requirements over the medium term.

The Capital Programme outturn position showed slippage and an underspend of £15m against the Budget for 2025/26. Capital expenditure (programme delivery) in the year increased from the previous years to £150.6m (2024/25 outturn was £140.6m).

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

Resolved:

That Cabinet:

1.    Note the revenue outturn position for 2025/26.

2.    Note the required transfer from HRA reserves decreased by £4.3m following the revenue and capital outturn position.

3.    Note the carry forward of the combined surplus schools balance of £2.395m in accordance with the Department for Education regulations.

4.    Note the reserves position set out in paragraphs 2.15 to 2.16.

5.    Note the capital outturn, funding position and programme variations as set out in paragraphs 2.17 to 2.25.