Agenda item

Report of the Director of Finance

The Cabinet considered a report of the Director of Finance that provided members with an update, as at 31^st August 2025 (Month 5), of the Council’s 2025/26 forecast revenue budget position (detailed at Annex 1 to the report) alongside the financial position of the capital programme together with the revised capital programme 2025/26 to 2029/30 (detailed at Annex 2 to the report).

The forecast adverse position for 2025/26 at the end of Month 5 was estimated to be £23.209m (£20.822m at the end of Quarter 1 – 30^th June 2025). The details within the revenue monitoring report for Month 5 followed on from the Quarter 1 report previously presented and outlined the general direction of travel for this financial year, highlighting any significant areas of concern which may not just impact on the current year, but also when preparing future budgets.

A forecast adverse position based on the Month 5 revenue controllable budget was £23.209m which was an unfavourable movement of £2.387m from the position previously reported. The increasing need for support of the Council’s services from residents and businesses, the complexity of the support needed, and inflationary costs continue to put pressure on service budgets and is demonstrated by the Month 5 forecast outturn position. These pressures, in the main were driven by escalating costs in essential statutory services supporting the most vulnerable residents, reflecting the broader challenges the Council and numerous Councils across the country are facing. This is particularly acute in statutory and heavily inspected services where there is little flexibility to mitigate rising costs, for example increasing pressures on social care budgets due to the support needs of vulnerable children and complexity in the needs of adult requiring support.

There was also an increasing need to support children with Special Educational Needs (SEND) and whilst significant work has been done in the last 12 months, homelessness presentations and use of temporary accommodation is still of concern given the numbers accessing this service.

Since the last report was presented to the Cabinet, the Executive Team had implemented enhanced controls on expenditure with future revenue monitoring reports expected to show the positive impacts of these management actions. Details on these controls were included in Annex 1 to the submitted report. Given, the in-year financial position of the Council, the level of reserves available and the budgetary gaps already within the MTFS, the outcome of the Local Government Finance Settlement for 2026/27 and future years will have a significant influence on the financial sustainability of the Council and the Council’s ability to set a balanced budget over the short term. The budget pressures the Council has faced in recent years cannot continue to be mitigated without significant action both to reduce projected spend in year and to reduce costs over years to come. Further details of mitigations underway were included at Annex 1 to the submitted report.

The Director of Finance’s report outlined the most up to date capital spending position for 2025/26 to 2029/30 for approved schemes. The revised Capital Programme budget for 2025/26 is £122.222m at the close of Month 5. Actual expenditure to 31^st August 2025 was £20.042m (16.4% of the forecast outturn).

Options/alternatives considered:

Options/Alternatives 1 was to agree the recommendations detailed in the submitted report.

Option 2 to not agree the recommendations and to propose alternative forecasts.

Option 1 was the preferred Option.

Resolved:

1.    That the Cabinet notes the contents of the report.

2.    That the Cabinet notes the forecast revenue position at the end of Month 5 at £23.209m with mitigations in place to reduce expenditure as detailed at Annex 1, to the submitted report.

3.    That the Cabinet approves the revised Capital Programme for 2025/26 including the proposed virements and notes the forecast for the financial years to 2029/30 as at the end of Month 5 as outlined in Annex 2, to the submitted report.