To report the forecast position for 2025/26 at Quarter 2 (September 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 noted Quarter 2 was being presented in a different external environment compared to three months ago.  Following preparatory steps for the 26/27 budget setting the council’s initial assessment of the Government’s fair funding review indicated there was a potential gap between the council’s income and expenditure of £27.3m.

The Quarter 2 revenue outturn position showed a net overspend of £7m, with planned management action this would reduce to £3.7m. The forecast outturn position for 25/26 by directorate was set out at Table 1 of the report.    The report highlighted the continuing budget pressures to support increase in demand across social care budgets, temporary accommodation and Special Educational Needs and Disabilities (SEND) transport services.  

Recovery actions expected to reduce the forecast overspend in Quarter 4 included; £2.8 million allocation of the Budget Resilience Reserve to mitigate the impact of cost pressures and volatility in demand in Directorate Budgets; continued review of the council’s contract arrangements and shareholding in Hoople Ltd; additional cost pressures in the Community Wellbeing Directorate emerging in Quarter 2 will be subject to further review and challenge in Quarter 3 before additional allocation from the budget resilience reserve is approved; and challenge of forecast expenditure over the remainder of the financial year through Directorate expenditure control panels.

In the financial year ended 2024/25, £4m of the Budget Resilience Reserve was applied to cost pressures in the Community Wellbeing Budget which reduced the balance carried forward to the current financial year to £7m. 

It was noted that Expenditure controls remained in place to support recovery activity and robust control over expenditure in 2025/26. Directorate panels would continue to review expenditure on goods and services as well as changes in staffing arrangements to maintain the increased level of rigour and challenge over expenditure for the remainder of the financial year.

Table 2 sets out the updated financial position for 25/26 and the projected overspend of £3.7m. 

Council approved £3.9 million of savings for 2025/26 Children & Young People Directorate.  A review of the delivery and status of the approved savings had been undertaken and confirmed that £1.6m (40%) of the total approved savings target for the year had been delivered at Quarter 2. A further £2.3m (60%) had been assessed as ‘on target/in progress’ for the year. No savings were currently assessed as ‘at risk’.

It was noted that in June 2025 a focused review of the original proposals and planned activity was undertaken during Quarter 1 and revised savings plans were developed. The revised savings of £11.9m were in Table 4.  As at 30 September 2025 (Quarter 2), £6.4m (54%) of the £11.9m brought forward savings had been delivered with a further £4.1m (34%) forecast to be delivered in year; £1.4m (12%) remained at risk, with focused activity underway to resolve or mitigate in year.

It was confirmed that the Dedicated Schools Grant (DSG) was accounted for as an unusable reserve on the council’s Balance Sheet, permitted by  ...  view the full minutes text for item 8