Agenda item

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

Consideration was given to the report of the S151 Officer which set out the current financial position for the Council at the end of the third quarter of 2025/26.

The Portfolio Holder for Finance introduced the report and advised members that throughout the year quarterly budget monitoring reports are completed forecasting the expected year end outturn compared to the approved budget. This report provided information on the forecast year-end financial performance as at 31 December 2025.

The actual 2025/26 year-end position was currently being worked on and would to be presented to Cabinet when completed.  The Portfolio Holder for Finance updated as follows:

General Fund

The revenue forecast on the General Fund was projecting an underspend position of £187,000. Table 1 to the report provided an analysis of the forecast position.  

Members were aware when the 2025/26 budget had been agreed it had included an efficiency target of around £1.2 million. Therefore, based on the forecast underspend of £187,000, Cllr Redgate was confident in saying that the overall efficiency target was forecast to be exceeded.

General Fund Capital

Appendix B, Table 1a gave an overview of all the General Fund capital schemes. As things stood at Quarter 3, the total capital budget was £14.6 million. The authority was currently forecasting spend of £13 million by the end of the year, a variance of £1.6 million some of which would be slippage and some underspend. This would be decided once the year end closure process had been completed.

Reserves
Table 2 of Appendix A set out the forecast balances for specific and general reserves. General fund reserves were forecast at around £8.2 million, and the HRA reserves at around £8.6 million.

HRA Revenue

Section 2.4 of the report outlined that the Housing Revenue Account, was projected to have a surplus of £890,000 at year end. This was mainly due to a reduction in interest payable (£244,000) and an increase in investment income (£307,000).

HRA Capital

For HRA Capital, Table 4 provided details of all capital schemes with the programme totalling £20.4 million for 2025/26. HRA forecasted capital spend at the end of Quarter 3 was around £15.2 million, a variance of £5.2 million, some which would be slippage and some underspend. This would be decided once the year end closure processes had been completed.

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Treasury

Section 2.6 of Appendix A detailed the Council’s treasury investments.

The Council’s cash flow management continued to perform well with £833,000 forecasted to be achieved in excess of the budget.

The Portfolio Holder for Finance advised that members should also note that in March 2026 the Council restructured its HRA debt by repaying its £67.5 million of Public Works Loan Board (PWLB) HRA borrowing. In doing so the Council received a discount of around £18.4 million. The debt had been replaced with £50 million of PWLB HRA borrowing, leading to the annual interest payments reducing by around £83,000. In addition to the savings on the interest to be paid, the Council would be able to credit the revenue account with one tenth of the discount (£1.8 million) each year for the next ten years commencing in 2025/26.

There was a request for a paper to be produced setting out the full financial implications of the repayment of existing debt and the new loan that had been taken. It was explained that, as a non?specialist, it was difficult to understand how repaying a PWLB loan at a lower interest rate and borrowing at a higher rate resulted in a saving. It was requested that an explanatory note be prepared for all Members, not just Cabinet or Committee Members, to aid understanding and scrutiny.

Members queried the reported underspend variance of £2.984m and asked whether the associated works were expected to be completed within the current year or would be carried forward.

It was explained that works within the capital programme were ongoing and were monitored through regular capital programme clinics. Some of the variance related to a deliberate underspend following stock condition surveys, which had identified that certain components did not yet require replacement. The Green Homes programme was continuing, with works planned over the next five years. It was confirmed that the variance reflected the profiling of expenditure rather than delays, and that funding would be rolled forward into the 2026/27 budget and beyond. Members were advised that there were no current supply chain issues, programmes were on track, a recent phase covering 470 properties had been completed, and the next phase would involve approximately 1,000 properties. It was also noted that the Council was considering bidding for additional available government grant funding.

It was queried what preparations were being undertaken considering emerging legal and wider economic risks, including the potential longer?term implications for fuel and utility costs, and what contingency planning was being considered under a worst?case scenario.

Officers advised that initial work was focused on understanding and assessing potential impacts, with information being gathered on immediate pressures such as fuel prices, material costs, and potential contractual implications. It was noted that there were also likely to be longer?term effects, including impacts on service delivery, collection rates, council tax, and business rates as cost?of?living pressures fed through to residents and businesses. Members were advised that mechanisms were being developed to track these impacts accurately. It was further highlighted that, from an operational perspective, the Council was mindful of the need to maintain critical services, including waste collection, and to consider contingencies such as fuel availability to mitigate service disruption should costs rise significantly.

DECISION:

That Cabinet notes:

1) The forecast revenue position of a projected £187,000 underspend for 2025/26 as detailed in Table 1 and the need for continued focus on the savings and efficiency programme.

2) The forecast revenue position of the HRA for 2025/26 (projected surplus of £890,000) as detailed in Table 3.

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

4) Note that the Council carried out debt restructuring on the HRA borrowing in March 2026 as outlined in Appendix A, Section 2.6

5) The amendments to the Capital Programme at Appendix B – Table 1c.

(Other options considered:

·         To not approve the financial movements outlined.

Reasons for decision:

·         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)