Agenda item

The report presents the revenue and capital budget outturn, reserves position, dedicated schools grant outturn, housing revenue account, and results of council company and partner organisations for the financial year 2025/26.

The 2025/26 general fund revenue outturn of £4.6m is in line with the quarter three forecast and confirms that demand-led social care services remain the council’s most significant financial challenge. This is particularly within children’s services which overall has overspent by (£9.1m), being 9% of the service’s budget. Planned investment and mitigation for 2026/27 will be critical to improving resilience and bringing these pressures under control.

Pressures across the main service areas were partly offset by underspends in Resources and corporate budgets.

Included in the budget were itemised savings of £9.6m with 91% achieved through service transformation, third party spend reduction, staff savings and raising additional income.

The transformation programmes over the last six years have been crucial in reducing annual ongoing expenditure with cumulative revenue savings of £56m over this period from one off investments of £45m to date.

The accumulated deficit of £180m for the dedicated schools grant at 31 March 2026 remains a significant threat to the council’s financial stability. Expenditure will continue to outstrip funding by an estimated further £200m over the next two financial years. The required SEND reform plan has been developed and if approved, central government could provide an estimated 90% contribution toward this deficit. This would still leave the council with a residual debt to fund of £38m.

Delivery of the £100m general fund capital programme was 60% spent by the year end, largely funded by government grant, with the balance carried forward into future years.

The Portfolio Holder for Finance presented two reports, The Financial Outturn and the Medium-Term financial plan, copies of which had been circulated to each Member and copies of which appear as Appendices ‘B’ and 'C' to these Minutes in the Minute Book. The Financial Outturn Report presented the revenue and capital budget outturn, reserves position, dedicated schools grant outturn, housing revenue account, and results of council company and partner organisations for the financial year 2025/26.

The 2025/26 general fund revenue outturn of £4.6m was in line with the quarter three forecast and confirms that demand-led social care services remain the council’s most significant financial challenge. This is particularly within children’s services which overall has overspent by (£9.1m), being 9% of the service’s budget. Planned investment and mitigation for 2026/27 will be critical to improving resilience and bringing these pressures under control. Pressures across the main service areas were partly offset by underspends in Resources and corporate budgets. Included in the budget were itemised savings of £9.6m with 91% achieved through service transformation, third party spend reduction, staff savings and raising additional income.

The transformation programmes over the last six years have been crucial in reducing annual ongoing expenditure with cumulative revenue savings of £56m over this period from one off investments of £45m to date.

The accumulated deficit of £180m for the dedicated schools grant at 31 March 2026 remains a significant threat to the council’s financial stability. Expenditure will continue to outstrip funding by an estimated further £200m over the next two financial years. The required SEND reform plan has been developed and if approved, central government could provide an estimated 90% contribution toward this deficit. This would still leave the council with a residual debt to fund of £38m.

Delivery of the £100m general fund capital programme was 60% spent by the year end, largely funded by government grant, with the balance carried forward into future years. A number of issues were discussed in the discussion of these reports including:

·       Children’s Services - A substantial increase in children entering care was reported. Costs were driven primarily by numbers rather than increasing costs. It was reported that external review work had been commissioned to identify improvement opportunities.

·       Adult Social Care - An overspend had occurred for the first time. This was due to demand increases including care home placements and domiciliary care provision. It was noted that cost control mechanisms were effective and that pressures were largely demand-driven and systemic

·       Budget Management and Monitoring - It was explained that financial performance was monitored on a monthly basis. Overspends were managed through, departmental accountability, corporate oversight and exception reporting.

·       Financial Oversight and Scrutiny - It was emphasised that strengthened financial discipline and robust scrutiny arrangements would be essential. Councillors highlighted the need for close monitoring of budget performance and early identification of variances. The importance of clear and transparent financial reporting to support effective oversight was also noted.

·       Reliance on Asset Disposals Concerns were raised regarding the reliance on asset disposals to address financial pressures, particularly in relation to the Dedicated Schools Grant deficit. It was noted that uncertainty remained around the availability of suitable assets and the potential long-term impact on the Council’s asset base. Further clarity on the strategy and associated risks was requested.

·       Long-Term Financial Sustainability - The long-term financial sustainability of the Council was identified as a key concern. It was observed that increasing demand for statutory services, combined with inflationary pressures and funding uncertainty, presented a challenging outlook. It was suggested that more fundamental changes to the Council’s operating model may be required.

·       Delivery of Transformation and Savings - Attention was drawn to the delivery of transformation and savings programmes. While progress had been made, it was noted that delivery had been slower than anticipated. Members stressed the importance of ensuring that savings were realistic, closely monitored, and delivered in full, given the limited financial resilience available.

·       Demand-Led Service Pressures - Ongoing pressures within demand-led services, particularly Children’s Services and Adult Social Care, were highlighted. It was acknowledged that these pressures were being experienced nationally. However, it was emphasised that local mitigation measures, including early intervention and service transformation, would need to be strengthened to manage demand effectively.

·       National and Systemic Pressures - It was recognised that many of the financial challenges faced were systemic and national in nature. However, Councillors emphasised that the Council must continue to take proactive steps to manage its financial position, including strengthening governance, improving forecasting, and prioritising available resources effectively.

- Exclusion of the Press and Public -

In order to discuss a figure outlined in the Financial Outturn Report the Board agreed the following resolution:

That under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in Paragraphs 5 in Part I of Schedule 12A of the Act and that the public interest in withholding the information outweighs such interest in disclosing the information.

The Board discussed and sought clarification on the information. The Board was also advised that this information was still pertinent to a live legal case and therefore the Council were not able to discuss the matter in a public meeting.

Following the discussion in exempt session the Board moved back into public session for the remainder of the meeting