Agenda item

1.

Title of Item/Report

Financial Update and Medium Term Financial Plan (MTFP)

2.

Record of the Decision

Consideration was given to a report on the Financial Update and Medium Term Financial Plan (MTFP).

Like many councils across the country, the Council was seeing greater demand and cost pressures across council services which was leading to a predicted larger overspend against budget by the end of 2025/26 financial year.

The areas that were experiencing the greatest budgetary challenges were Adults Social Care, Children’s Social Care and Home to School Transport. Mitigating actions had been identified since Quarter 1 to positively reduce the forecast overspend to £4.127m. Work was continuing to identify further actions to mitigate the overspend, however if the current forecast position materialises this would need to be met from earmarked reserves, which was not a sustainable approach.

Over the summer the Government launched the Fair Funding Review 2.0 consultation, which was a fundamental change to how local authorities were funded. The Fair Funding Review 2.0 aimed to produce a fairer, evidence-based system that targeted funding towards areas with high deprivation and need. The Government had published their response to the consultation alongside a Local Government Policy Statement which gave an indication of how the changes would impact Stockton-on-Tees Borough Council. The report included the latest estimate of the planned changes; however, the actual impact would not be known until the Provisional Local Government Finance Settlement expected week commencing 15 December.

The report also provided an indicative update to the MTFP. The emerging position reflected rising costs and demand pressures which exceed the expected increase in Government funding. As a result, the projected budget gap across the MTFP had widened; £11.5m in 2026/27, £18.4m in 2027/28 and £18.7m in 2028/29.

The scale of this gap meant that a strengthened programme of service reviews, efficiencies and cost reductions would be required, alongside a measured and time-limited use of reserves with a clear replenishment strategy. Work was underway with Directors to identify a deliverable set of proposals for the February budget, with early emphasis on accelerating existing activity within Powering Our Future and expanding its scope where necessary.

Powering Our Future continued to provide the Council’s overall framework for service transformation and improvement. It had already delivered several tangible benefits. However, given the heightened financial context, the programme needed to operate at a greater pace and scale. Over the coming weeks, Directors would be required to identify specific, evidenced savings proposals that could be progressed through POF and the design principles for inclusion in the 2026/27 budget, supported by clear delivery milestones.

Further detail on potential service changes, efficiency options and reserves strategy would be brought forward in the February budget report. The Council would also shortly begin consultation on the 2026/27 budget to support transparent decision-making and ensure stakeholders can understand and comment on the choices ahead.

The report also contained rationale for the virement of monies between projects within the Thornaby Town Deal programme, to support works in the Regeneration of Thornaby Town Centre workstream.

RESOLVED that:-

1. The updated financial position for 2025/26 be noted.

2. The revised Capital Programme at Appendix A of the report be noted.

3. The virement be approved of £500,000 from the Connecting Thornaby – Cycleways workstream allocation alongside £235,000 from the North Thornaby workstream into the Regenerating Thornaby Town Centre workstream.

4. The emerging issues for the MTFP be noted.

3.

Reasons for the Decision

To update Members on financial performance in 2025/26 and to outline proposals for the 2026/27 Budget and MTFP based on latest available information.

4.

Alternative Options Considered and Rejected

None

5.

Declared (Cabinet Member) Conflicts of Interest

None

6.

Details of any Dispensations

None

7.

Date and Time by which Call In must be executed

Midnight, 19 December 2025