To report the provisional financial outturn position for 2025/26 for revenue and capital budgets, subject to external audit.  The results for 2025/26 report a balanced revenue outturn position after the use of reserves and implementation of recovery plan actions.

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

It was noted that Herefordshire Council achieved a balanced revenue outturn for 2025/26 despite a challenging financial environment and initial forecast overspends. This was attributed to strong financial management, effective expenditure controls, prudent use of reserves, and delivery of recovery plan actions.

It was highlighted that previous years’ forecast overspends had also been successfully managed, demonstrating consistent financial discipline. Key achievements included reduced reliance on the Budget Resilience Reserve, early repayment of reserve contributions from the Children & Young People Directorate, and strengthened reserves to manage future risks, including inflation and rising costs.

It was noted ongoing financial pressures arising from demographic and service demand factors, including adult social care, temporary accommodation, and SEND and home-to-school transport costs. Plans to address these pressures included continued demand management, cost control measures, and service transformation within the Community Wellbeing Directorate.

The central budget outturn reported a net underspend, primarily due to higher treasury management income, additional business rate income, and investment returns. It was recommended that a portion of this would be allocated to bad debt provision and reserves, with the remainder offsetting directorate overspends.

It was noted that savings delivery was strong, with £13.2m achieved (84% of target), although some savings would be carried forward. The Dedicated Schools Grant deficit increased but remained subject to a management plan, with anticipated government support expected to significantly reduce the Council’s long-term liability.

The capital programme recorded its highest ever annual expenditure, with £86m delivered. Variances were largely due to project reprofiling and timing differences, with robust monitoring arrangements in place to manage risks including inflation, delivery delays, and grant compliance.

It was further noted that draft accounts would be published ahead of the statutory deadline, with external audit planned for early summer.

Overall, it was highlighted that the outturn demonstrated strong financial stewardship, supporting service delivery and maintaining the Council’s financial resilience.

Comments from cabinet members:

Congratulations and thanks were extended to Cllr Stoddart and the team. 

Thanks, were also extended to Tina Russell for their work in Children’s Services. The positive outcome of the Ofsted inspection was noted, with Children’s Services rated good with outstanding leadership.

It was emphasised that, alongside financial performance, feedback from families through surveys and follow-up activity provided an important measure of service quality and demonstrated clear improvement. It was highlighted that the Council had achieved financial stability while continuing to improve service delivery, which was considered a significant achievement. Appreciation was extended to all officers involved.

The Council’s financial position in the context of neighbouring authorities was noted. It was highlighted that nearby councils, including Worcestershire, were facing significant overspends of approximately £50m, and that this comparison emphasised the strength of Herefordshire’s financial management.

Group Leaders were invited to offer their views:

The representative for Independents for Herefordshire outlined the views of their group and argued that:

It was raised that delivering a balanced budget was a statutory requirement and, while not an achievement in itself,  ...  view the full minutes text for item 95