Agenda item - 2025/26 Finance Update Q1

Report of the Corporate Director of Finance and Resources (S151 Officer). To be presented by the Cabinet Member for Finance and Corporate Services.

DECLARATIONS OF INTEREST FOR ITEM:

None

RESOLVED:

That Cabinet:

Noted the forecast total revenue outturn variance for the General Fund of £34.1m comprising £24.9m base budget pressures and £9.2m non delivery of savings delivery.
Approved the revenue budget virements and receipt of grants.
Noted the net DSG forecast of £3.0m overspend.
Noted the net Housing Revenue Account (HRA) forecast overspend is £600,000.
Noted the forecast General Fund and HRA Capital expenditure of £484.8m, which equates to 92% of the total 2025/26 quarter one revised budget position.
Approved the proposed budget adjustments and virements to the capital programme.
Noted the debt write-offs approved in Quarter 1 2025/26 which have been approved by the Corporate Director of Finance and Resources under delegated authority, or for those above £50,000, by the Cabinet Member for Finance as set out in the Constitution.
Noted the Finance Response and Recovery Plans and progress against actions as at Quarter 1.
Noted the Council’s response to the Government’s consultation on Fair Funding Review 2.0 which was submitted by the set deadline.

Reason for Decision

A strong financial management framework, including oversight by Members and senior management is an essential part of delivering the council’s priorities as set out in the Corporate Delivery Plan and to meet its statutory duties. This is made more critically important than ever because of the uncertainties surrounding the Council’s uncertain and challenging financial position, which is impacted by Government funding, high demand for services, particularly for the most vulnerable and the wider economic outlook and the ongoing reliance on Exceptional Financial Support.

Alternative Options Considered

The report of the management of the Council’s financial resources is a key part of the role of the Corporate Director of Finance and Resources (Section 151 Officer) in helping members to exercise their role and no other options have therefore been considered. The remainder of this report and the accompanying appendices sets out the position in more detail,

The Cabinet Member for Finance and Corporate Services introduced the report.

It was explained that in the financial year 2024/25 the Council faced sustained rises in the cost and need for social care and temporary accommodation and that this resulted in a projected growing overspend, driven primarily by the cost of providing temporary accommodation and adult social care. It was noted that the cost of local public services this year was now set to be £35m higher than budgeted. It was additionally explained that there was also slippage in the delivery of savings. The Cabinet Member stressed that dedicated work was being done to realise savings and that the Council was taking proactive and creative action to look across the council at wherever we can reduce discretionary spending, while maintaining standards.

Members noted that the Housing Revenue Account (HRA) was affected by the rising cost of repairs and associated works including damp and mould and disrepair cases.

It was stressed that the Council was ambitious for the borough and that the Council would work tirelessly to make the borough fairer and greener with the tools and funds that we have. It was noted that the capital programme was under constant review to reduce the revenue costs of borrowing, and a number of projects were paused.

Despite all the measures we have and are putting in place, the level of need does not match the funding we have. It was stressed that the Council would continue to lobby and to make the case for fairer funding for boroughs.

In response to comments and questions from Councillors Brabazon, Hakata, Chandwani, and Emery, the following information was shared:

It was explained that there was a dedicated team reviewing savings and assessing deliverability and review alternatives in the case of being unable to deliver. Officers explained that monitoring of savings delivery and the changes required to undertake these proposed savings were being robustly monitored. It was additionally noted that there was a tighter grip on spend and spending control.
It was noted by officers that the complexity of care in Temporary Accommodation and wage costs of staff was greater, and it was stressed that this had a significant impact on the Council’s budget. It was explained that work was being undertaken to reduce cost as much as feasible.
It was noted that additional funding had been prioritised for services under particular pressure. However, it was noted that this additional funding had not been sufficient to mitigate these pressures.
It was explained by officers that spend controls had been put in place and that the Spending Control Panel which had been implemented from April 2025 had reviewed spend over £1000 to ensure necessity. It was explained that the panel had voided over £1 million of spend as part of its work.
It was explained that the Council could not fully predict what the pressures would look like at the end of the financial year.
Officers noted that the current forecasted overspend was £34 million, which could potentially be remedied through Exceptional Financial Support, but noted that the Council was reviewing possibilities for any one-off savings to help remedy this.

RESOLVED:

That Cabinet:

Noted the forecast total revenue outturn variance for the General Fund of £34.1m comprising £24.9m base budget pressures and £9.2m non delivery of savings delivery.
Approved the revenue budget virements and receipt of grants.
Noted the net DSG forecast of £3.0m overspend.
Noted the net Housing Revenue Account (HRA) forecast overspend is £600,000.
Noted the forecast General Fund and HRA Capital expenditure of £484.8m, which equates to 92% of the total 2025/26 quarter one revised budget position.
Approved the proposed budget adjustments and virements to the capital programme.
Noted the debt write-offs approved in Quarter 1 2025/26 which have been approved by the Corporate Director of Finance and Resources under delegated authority, or for those above £50,000, by the Cabinet Member for Finance as set out in the Constitution.
Noted the Finance Response and Recovery Plans and progress against actions as at Quarter 1.
Noted the Council’s response to the Government’s consultation on Fair Funding Review 2.0 which was submitted by the set deadline.

Reason for Decision

A strong financial management framework, including oversight by Members and senior management is an essential part of delivering the council’s priorities as set out in the Corporate Delivery Plan and to meet its statutory duties. This is made more critically important than ever because of the uncertainties surrounding the Council’s uncertain and challenging financial position, which is impacted by Government funding, high demand for services, particularly for the most vulnerable and the wider economic outlook and the ongoing reliance on Exceptional Financial Support.

Alternative Options Considered

The report of the management of the Council’s financial resources is a key part of the role of the Corporate Director of Finance and Resources (Section 151 Officer) in helping members to exercise their role and no other options have therefore been considered. The remainder of this report and the accompanying appendices sets out the position in more detail,