Agenda item

To set out the current financial position for the Council at the end of the second quarter of 2025/26 (report of the Director of Finance (Section 151 Officer) enclosed).

The Leader introduced the report which gave the Quarter Two Finance Update for 2025/26. 

He advised all present that throughout the year quarterly monitoring reports were completed forecasting the expected year end outturn compared to the approved budget. This report provided information on the forecast full year financial performance as at 30 September 2025.

General Fund Revenue Forecast

The revenue outturn forecasted an overspend position of £281,000 at the year-end.

The Leader pulled out some key areas for Cabinet’s attention as follows:

• The General Fund 2025/26 net budget for investment income was £0.771m.  The forecasted full year outturn for investment income as at Q2 was £1.283m, which would be an overachievement of £512,000.
• As members would be aware the 2025/26 budget included a savings efficiency target of £1.203m, savings were being tracked and could be found in Table 1b. He advised that that 54% of the target had been identified as at 30^th September and the forecast assumed the remaining target would be met with work ongoing to support this.

General Fund Capital

The Leader detailed that for General Fund Capital, Table 1a of Appendix B provided details of all capital schemes. The capital budget as at Q2 for the General Fund was £14.681m. General Fund forecasted capital spend at the end of Quarter 2 was £14.520m, expected to underspend by £161k. Changes to the capital programme were also being tracked with £199k identified and detailed in Table 1c of Appendix B. Slippage continued to be carefully monitored and considered and budgets refined as we progressed through the financial year.

General Fund Reserves
The Leader advised that Table 2 of Appendix A provided details of the balances held in reserves at 30 September 2025 being £7.761m.  The overall movement in reserve balances during Q2 2025/26 was a decrease of £38,000 taking account of adjustments budgeted or previously approved by way of Proforma B that sought approval from either the S151 Officer or Cabinet.

HRA Revenue

The Leader advised that Section 2.4 detailed the HRA revenue outturn, which showed a surplus of £687,000. He noted that this was due mainly to a reduction in interest payable (£244,000) and an increase in investment income (£297,000).

HRA Capital

The Leader advised that for the HRA Capital, Table 4 provided details of all capital schemes with the programme totalling £20.356m for 2025/26. HRA forecasted capital spend at the end of Quarter 2 was £16.500m.

Treasury

The Leader advised that Section 2.6 of Appendix A detailed the Council’s treasury investments. The Councils cash continued to perform well with £810,000 forecast to be achieved in excess of budget.

Concerns were raised regarding utility costs at Priory Road, which appeared not to have been included in the budget to meet last year’s spend, resulting in an overspend of approximately £35,000.  Officers explained that the variance column showed differences between budget and actuals, not an omission.

It was noted that General Fund Assets agency costs were £67,000, which seemed high and suggested significant use of agency staff.  Regarding agency costs, it was confirmed that the waste service employed a significant number of agency workers, which accounted for the high figure.

It was acknowledged that the budgeted amount for utilities did not match previous year’s spend, and this would be reviewed to ensure future budgets captured such changes.  The increase in utility costs had not been fully reflected in the budget, possibly due to timing of budget setting and price changes

Salary efficiency targets were highlighted as not being met, prompting questions about their origin and achievability.  Officers noted that while the full target had not been met, vacancy savings of approximately £400,000 had been achieved, making a significant contribution. Further work would continue over the next six months..

The importance of monitoring small variances was stressed, as these could accumulate into significant overspends.

Officers reassured members that despite pressures, the overall forecast deficit of £281,000 was not considered a bad position compared to other councils.

It was acknowledged that improvements were needed, but the Council remained in a stronger financial position than many others nationally, reflecting positively on the finance team and auditors.

DECISION:

1)   That Cabinet notes the forecast revenue position of a £281,000 overspend for 2025/26 as detailed in Table 1 and the need for continued focus on the savings and efficiency programme.

2)   That Cabinet notes the forecast revenue position of the HRA for 2025/26 (surplus of £688k) as detailed in Table 3. 

3)   That Cabinet notes the HRA Capital Programme position as detailed in Table 4 of Appendix A and the changes set out in this report.

4)   That Cabinet approves the amendments to the Capital Programme at Appendix B – Table 1c that require Cabinet approval to take into account the changes set out in this report.

(Other Options Considered)

·         To not approve the financial movements outlined.

Reasons for Decisions

·         To ensure the Council’s forecast financial position for 2025/26 is considered and related decisions approved.  It is important that the Cabinet are aware of the financial position of the General Fund and Housing Revenue Account to ensure that they can make informed decisions that are affordable and financially sustainable for the Council.