Agenda item

The Committee was presented with the ‘Medium-Term Financial Plan (MTFP) – Outturn March 2025’ report which was considered by the Stockton-on-Tees Borough Council (SBC) Cabinet last week (17 July 2025) and outlined the Council’s draft financial performance and position as at 31 March 2025.  Summarised by the SBC Assistant Director – Finance, key elements highlighted included:

·         Summary: The overall financial position was similar to that projected at the end of December 2024 (as outlined in the budget report in February 2025), with a variance of £69,000 from the previously reported position.  Actions taken to manage the overspend of £7m were agreed as part of the budget report, and the position had continued to be carefully monitored.

There had also been a notable movement in the Dedicated Schools Grant deficit, increasing to £6.7m as a result of growing numbers of children with Education, Health & Care Plans (EHCPs).  The Capital Programme had been updated to incorporate new schemes and reflect those schemes completed as at the financial year-end.

·         General Fund: The included table showed an updated £7.447m total overspend (compared to the previously projected £7.378m in quarter 3), with the reasons for any significant variances from those previously reported subsequently summarised for each SBC directorate.

·         Dedicated Schools Grant – High Needs Block: The growth in demand for services for pupils with Special Educational Needs (SEN) had increased sharply during 2024-2025 (as experienced by many Councils across the country), creating significant financial pressure on the High Needs Block within the Dedicated Schools Grant (a ringfenced amount that was not part of the General Fund).  During the year, there was a 17% increase in children with an EHCP.  The opening deficit at 1 April 2024 was £3.8m – this had increased by £2.9m during 2024-2025, leaving a closing deficit at 31 March 2025 of £6.7m.

·         Collection Fund: A ringfenced account which included the actual amount collected for both Council Tax and business rates, the opening position as at 1 April 2024 was a deficit of £591,000.  Performance during the financial year in 2024-2025 had been positive, creating a surplus which had cleared the opening deficit, and leaving a balanced closing position at the end of the year.  The positive performance due to additional Council Tax growth was reflected in the MTFP projections as part of the ‘MTFP Update and Strategy’ report to Council in February 2025.

·         General Fund Balances and Addressing the Overspend in 2024/25: The total General Fund Balances at 31 March 2025 were £8m, in line with the agreed level and as outlined in the report to Cabinet in February 2025.  In order to fund the overspend in 2024-2025 (as agreed in the budget report in February 2025), reserves had been used to fund the overspend position of £7.447m.  The earmarked reserves position had reduced in-year from an adjusted opening position of £46.5m to £30.2m.  The General Fund Balances remained at £8m.

In response, Committee comments / questions were recorded as follows:

·         General Fund (paragraph 3): Regarding uncollected debt within the Adults, Health and Wellbeing directorate, Members asked for confirmation of the increase in the level of bad debt that resulted in an increase of £296,000 to the bad debt provision.

·         General Fund (paragraph 5): Further to the reported overspend of £150,000, Members requested clarity on the original budget amount in relation to the Community Safety (Adults, Health and Wellbeing) purchase of equipment to support the digital switchover and also queried if such equipment could be repurposed for further use in the future.

·         General Fund (paragraph 9): In terms of Children’s Services, Members sought further detail on the ‘technical accounting’ reference used in relation to the profit SBC received from the joint venture arrangement with Spark of Genius.  It was explained that the matching principle was used to prepare accounts in order to align income and expenditure to the time periods within the financial years that were being reported on.  In this case, following advice from the Council’s external auditors, the estimated income relating to this joint venture arrangement was amended which meant the Council had to account for 18 months of profit share (a one-off adjustment for the 2024-2025 year).

·         General Fund (paragraph 11): For the entry under the Finance, Transformation and Performance directorate, Members questioned whether the stated dividend was for the 2024-2025 year (given the 2023-2024 dividend was already shown in the Hampton by Hilton hotel’s accounts).  The Committee was informed that the dividend referred to in the MTFP report was paid to the Council during 2024-25 and related to financial year 2023/24. The audit of the Hotel Company’s accounts was underway for the financial year 2024/25. Following the completion of this audit, the Hotel Company’s board would meet to decide on the dividend relating to 2024/25. Members asked why this paragraph was included in the outturn statement for the 2024-2025 period (a report which reflected the Council’s financial position, not the hotel’s). The Committee was informed that this was due to the Council receiving the funds from the Hotel during the financial year 2024/25. Members requested confirmation of the actual total dividend paid to SBC (inclusive of the additional £150,000 quoted).

·         General Fund (paragraph 13): Highlighting the further £110,000 overspend on the shopping centre relating to additional voids and tenants leaving (Regeneration and Inclusive Growth), Members pointed out that this was on top of an already reported overspend and requested the total overspend for the year.  Referencing previous statements from the then Cabinet Member for Regeneration and Housing that decisions to change the retail infrastructure within key areas of the Borough would enable the Council to make more money, Members asked what the impact would be on the budget should the situation regarding void lettings continue, and what action was being taken to address this issue.  The SBC Director of Regeneration and Inclusive Growth would be approached to provide a response following this meeting.

·         Collection Fund (paragraph 21): Responding to a Committee request for further detail, Members heard that the improved performance around Council Tax growth had turned a deficit of £591,000 at 1 April 2024 to a minor surplus at year-end (31 March 2025) – this was therefore reported as a balanced closing position.

·         Addressing the Budget Gap (paragraph 25): Clarity was sought around the stated savings figures associated with the SBC Powering Our Future programme as the report appeared to indicate that the combined updated savings targets for 2025-2026 (£1.35m) and 2026-2027 (£2.256m) was now £2.2m less than the £5.8m previously identified.  The Committee was informed that the updated targets reflected what was left to identify in each of these years rather than a change in the amount of overall savings required. A breakdown was included in the Budget setting report to Council in February 2025.  Further updates on the Powering Our Futures Programme would be brought to future meetings of Cabinet. Allocations of investment relating to Central Stockton and North Thornaby could be provided following this meeting (including any envisaged impact upon the Central Stockton and North Thornaby blueprint).

AGREED that:

1.    the ‘Medium-Term Financial Plan – Outturn March 2025’ report be noted;

2.    responses be provided in relation to the queries set out above.