Agenda item

An update on the Council’s 2025/26 forecast revenue budget position, the financial forecast of the Dedicated Schools Grant and the Housing Revenue Account, alongside the financial position of the capital programme.

The Cabinet considered a report of the Director of Finance which provided Members with an update, as at 30^th September 2025 (Quarter 2 – July-September) of the Council’s 2025/26 forecast revenue budget position, the financial forecast of the Dedicated Schools Grant and the Housing Revenue Account (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 Quarter 2 was estimated to be £21.094m (£23.209m at the end of Month 5). The details within the revenue monitoring report for Quarter 2 followed on from the Month 5 report previously presented to the Cabinet and highlighted 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 Quarter 2 revenue controllable budget was £21.094m which represented a favourable movement of £2.115m 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 continues to put pressure on service budgets and was demonstrated by the forecast outturn position reported at the end of Quarter 2. These pressures, in the main driven by escalating costs in essential statutory services supporting the most vulnerable residents, reflected 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 this meeting, the implementation of the agreed enhanced controls had started to have an impact on the forecast position resulting in the favourable movement between periods. As these controls are further embedded it was expected that the position would continue to improve.

It was important that the organisation continues its work on mitigating and reducing the forecast revenue variance by the end of the financial year, limiting any unbudgeted use of reserves and protecting its financial resilience. Given, the in-year financial position of the Council, the level of reserves available and the budgetary gaps already within the MTFS, the upcoming Policy Statement and the outcome of the Local Government Finance Settlement for 2026/27 onwards 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 the years to come. Further details of mitigations underway were included at Annex 1, to the submitted report.

Information on the forecast year end position of the Dedicated Schools Grant (DSG), and Housing Revenue Account (HRA) were also outlined in the report.

The report outlines 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 was £122.248m at the close of Quarter 2 (30^th September 2025). Actual expenditure to 30^th September 2025 was £25.973m (21.2% of the forecast outturn).

Options/Alternatives considered:

Option 1 – to agree the recommendations in the report.

Option 2 – to not agree the recommendations in the report.

Option 1 was the preferred Option.

Resolved:

1.    That the Cabinet notes the report.

2.    That the Cabinet notes the forecast revenue position at the end of Quarter 2 (2025/26), at £21.094m, with mitigations in place to reduce expenditure as detailed at Annex 1, to the submitted report.

3.    That the Cabinet notes the forecast positions for the Dedicated Schools Grant and Housing Revenue Account.

4.    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 Quarter 2 as outlined in Annex 2, to the submitted report.