To report the forecast position for 2025/26 at Quarter 1 (June 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.

The member for finance and corporate services introduced the report. 

It was highlighted that the council was the first council to submit its audit accounts for second year running. 

The forecast 2025/26 outturn was £4.3m overspend before management action at Quarter 1. This was expected to reduce to £1m with planned management activity.  The approved net revenue budget for 2025/26 was £231.5m which included planned savings of £3.9m

Recovery actions to reduce the forecast overspend by Quarter 4 included allocation of the budget resilience reserve to mitigate the impact of cost pressures and volatility in demand led budgets, continued review of the council’s contract arrangements and shareholding in Hoople Limited and action to challenge the forecast expenditure over the remainder of the financial year. 

Regarding savings it was noted that a review of the delivery of the 2025/26 approved savings had been completed, which had been informed by planned activity in year to date to determine the savings targets at risk of in year delivery.  The review confirmed that £1.6m of the total approved savings target for the year had been delivered at Quarter 1.  A further £2.3m was assessed as on target for the year.  No savings were assessed at risk. 

It was noted that the revised savings plan had been developed and totalled £11.9m with £5.9m being delivered and £4.6m were forecast to be delivered in year.  £1.4m remained at risk with focused activity to resolve or mitigate in year.  It was emphasised that delivery of savings in full and on time was critical to ensure the 2025/26 outturn position was balanced. 

The Dedicated Schools Grant (DSG) remains as an unusable reserve on the council’s Balance Sheet as permitted by statutory instrument which remains in place until 31 March 2028.  As of 1 April 2025, the cumulative deficit was £20m and the cumulative deficit will total £40.2m by 31 March 2026. 

The 2025/26 approved capital budget of £155.3m had been revised to £175.4m. The revised capital budget included £11.7m of unspent project budgets brought forward from 2024/25, removal of a project £6m and £14.5m additional grants. The forecast spend position, at Quarter 1 was £117.9m which represented a variance of £57.5m against the capital programme budget of £175.4m.  Forecast delivery of the council’s capital programme for 2025/26 assumed a requirement to undertake external borrowing and provision was made in the approved 2025/26 revenue budget to support this borrowing.

The capital projects expected to deliver positive impact on revenue budgets were highlighted and included the Home to School / SEN Transport cost pressures (council school transport fleet £0.4m and High Needs Grant £2.1m), social care demand and cost pressures (children’s residential homes £0.4m), Temporary accommodation demand and cost pressure (acquisition fund for housing provision £5m, empty property investment and development £0.6m) and repair and maintenance budgets (estates building improvement programme and works, highways and public realm investment works). 

The key risks to the capital programme were set out. 

It was highlighted that the forecast variance of £4.3m at Quarter  ...  view the full minutes text for item 27