To report the forecast position for 2025/26 at Quarter 3 (December 2025), including explanation and analysis of the drivers for the material budget variances, and to outline current and planned recovery activity to reduce the forecast overspend.

Councillor Stoddart cabinet member for finance and corporate services introduced the report

The cabinet member set out the Quarter 3 (December 2025) forecast revenue outturn for the 2025/26 financial year.

It was noted that the forecast outturn position showed an overall overspend of £6.3m (2.7% of the net revenue budget), which was expected to reduce to £4.4m because of planned management and recovery actions.

It was noted that the Council’s approved net revenue budget for 2025/26 was £231.5m, inclusive of £3.9m of planned savings, and that detailed explanations of variances by Directorate and Service area were set out in Appendix A to the report.

It was noted that continuing in?year cost pressures were being experienced, particularly in relation to social care, temporary accommodation, and Special Educational Needs (SEN) home?to?school transport.

It was reported that the Quarter 3 revenue position for 2025/26, prior to management action, showed a forecast variance of £6.3m.  This comprised of £4.7m of in?year net cost pressures and £1.6m of savings targets brought forward and assessed as at risk at Quarter 3.

It was noted that the 2025/26 approved budget included a £1.4m contribution from reserves to the Children & Young People Directorate to support the delivery of Year 2 savings within the extended Three?Year Financial Plan, with repayment originally planned for 2026/27 and 2027/28. The forecast Quarter 3 position showed an underspend of £2m within the Directorate, reflecting robust expenditure management and full delivery of planned savings.  As a result, it was reported that it was proposed to repay the £1.4m reserve contribution in the year ending 31 March 2026, one year earlier than planned.

It was noted that the combined effect of £3.3m management and recovery actions, together with the early repayment of £1.4m reserve contribution, resulted in a revised forecast overspend of £4.4m as detailed in Table 2 of the report. It was further noted that any overspend remaining at 31 March 2026 would be required to be funded from the Council’s available reserves.

It was noted that the forecast outturn position by Directorate, prior to recovery action, was summarised in Table 1 of the report.

It was reported that recovery actions expected to further reduce the forecast overspend during Quarter 4 included:

• the proposed £2.8m allocation from the Budget Resilience Reserve;
• continued review of the Council’s contract arrangements and shareholding in Hoople Ltd; and
• ongoing challenge of forecast and planned expenditure through Directorate expenditure control panels.

It was confirmed that expenditure controls were introduced in 2023/24, remained in place and would continue for the remainder of the financial year to support financial recovery and maintain robust control over spending.

It was noted that the Budget Resilience Reserve, established in 2024/25 to manage in?year cost pressures, had been reduced from £11m to £7m following a £4m allocation in 2024/25. The proposed £2.8m use in 2025/26 would reduce the balance to £4.2m at 31 March 2026.

It was further noted that, in accordance with the 2026/27 Revenue Budget and Medium  ...  view the full minutes text for item 78