Agenda item

To submit the report of the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 Officer which set out the financial performance of the Council’s services at the end of Quarter 2 to 30 September 2025 was presented for the Executive’s consideration.

Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance, Corporate Business and Customer Experience presented the report which forecasted an end of year underspend on the revenue budget of £1,707k (0.88%). He noted that while the six months  to the end of Quarter 2 provide greater certainty regarding emerging patterns and trends, the forthcoming winter period may present challenges, including rising demand for a range of services that could lead to increased costs for the Council.

The Director of Function (Resources)/Section 151 Officer reported that analysis of the forecasted budget position by services as set out in Table 4 of the report indicates an overall overspend of £404k. The main area of concern remains Children’s Services which, based on Q2 figures, are forecasted to overspend by £1.462m at year end due to the rising costs of out of county placements. This is despite the service budget for 2025/26 having been increased by £2m plus inflation. Recruitment issues in certain services are also contributing to higher expenditure on agency staff. The Section 151 Officer further highlighted the £3,032k over expenditure arising from changing demand for services (Table 5 refers) noting that this reflects the ongoing financial pressures on the Council. While factors such as . vacant posts, income generation and additional grants are helping to mitigate the overspend in 2025/26, these may not be repeated in future years. This will need to be considered when setting the budget for 2026/27.

Corporate budgets are performing on target with lower borrowing costs and higher investment returns resulting in an underspend. The Council Tax budget is also performing better than profiled due largely to the change in eligibility rules for business rates on self-catering accommodation. This has led to a number of properties being transferred back from business rates to Council Tax and becoming liable for the Council Tax premium. However, appeals against this reclassification are anticipated and if successful, would require those properties to be removed from the Council Tax register, reducing income and necessitating reimbursement of Council Tax already paid. Funding has been set aside to address this risk. The Section 151 Officer concluded by confirming that the main risk at this stage is the winter period which may result in increased costs for the Council.

The Executive acknowledged that Quarter 3 represents a critical period for budget management, given the pressures that the winter months can bring, particularly in relation to increased demand for services such as homelessness support and social care which have the potential to alter the financial outlook. The Executive also noted that the Council is currently well positioned as it enters the winter period.

It was resolved –

• To note the position set out in Appendices A, B and C of the report in respect of the Authority’s financial performance to date and expected outturn for 2025/26.
• To note the summary of contingency budgets for 2025/26, detailed in Appendix CH.
• To note the monitoring of agency and consultancy costs for 2025/26 set out in Appendices D and DD.