Agenda item

The Committee considered a report which provided a financial update and an indicative position for the Medium-term financial plan (MTFP). The report identified rising cost and demand pressures that exceeded expected increases in government funding, which resulted in a widening projected budget gap £11.5m in 2026/27, and £18.4m in 2027/28.

·       Summary: The areas that experienced 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.

·       General Fund: The included table showed a projected budget outturn position for each Directorate in 2025/26, based on information to 30 September 2025. A projected overspend of £4.1m was reported at quarter 2, compared to £1.7m at quarter 1, with the reasons for any significant variances from those previously reported subsequently summarised for each SBC directorate.

It was reported that growing demand for council services and increased cost of delivery had placed pressure on several budgets. Following the projected overspend at Quarter 1, senior officers had undertaken an urgent exercise to identify mitigating actions to improve the in-year financial position. This exercise had identified £2.543m of savings, resulting in a revised forecast overspend of £4.127m.

·       Dedicated Schools Grant: The grant deficit was held in a separate ring-fenced account, which stood at £6.72m on 31 March 2025 and was forecast to increase to £11.37m by 31 March 2026. The main reasons for the estimated growth in the number of children with SEND and increase in complexity of need. There is specific accounting treatment for this deficit which must be held in a separate ring-fenced account within the Council’s overall financial statements.

·       Powering our Futures – Progress Towards Closing the Budget Gap: The programme, particularly the transformation mission, had identified savings of £5.8m by 2026/27, which were included within the budget report in February 2025. Further savings have subsequently been identified including the review of the fostering offer.

·       Medium-term financial plan 2025-2028: Due to ongoing growth in demand and costs for Adults and Children’s Services the Council is projecting a significant budget gap across the medium term of £11.5m in 2026/27, £18.4m in 2027/28 and £18.7m in 2028/29. This is an estimate of the projected position and will be confirmed in the budget report to Council in February following the Provisional Local Government Finance Settlement.

The report also presented an update on the Capital Programme.

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

·       Members queried why the Adults Social Care budget in the report (£107m) differed from the figure included in the budget consultation (£84m) and the figure referenced in the CQC report (£6.6m). Officers advised that the report included the full directorate, while the budget consultation related to Adults Social Care only, and that a reconciliation would be provided.

·       The additional grant from the DfE including grants to fund additional national insurance costs had been received later in the year.

·       Members referred to the predicted savings of £5.8m from the Powering our Futures Programme and asked what actions would need to be taken if these savings did not materialise. Officers advised that achievement of planned savings is closely monitored through its financial management processes and any variation would be addressed within future budgets. There was an expectation that these savings would be met if not exceeded.

·       Members asked what mitigations had been in place in relation to SEND if overspending continued. Officers highlighted the work that was taking place as part of the Delivering Better Programme (DBV) and the savings that had been reported in the Cabinet report as a result of the Additionally Resourced SEND provision. The Committee was advised that an update will be circulated following the meeting.

·       Members asked whether the resurfacing works at Wellington Square Car Park had been completed and if not, where the funding was, given that the Council had borrowed £1m for the scheme. Officers advised that an update on the resurfacing would be provided.

·       Members highlighted the shortfall in car parking income and the additional costs of delivering the service, which had resulted in a forecast pressure of £250,000 and a budget shortfall.

·       Questions were asked if the virement of monies to the Golden Eagle had a detrimental effect on the works with North Thornaby. The chair clarified that because of the success of the project, performing over and above targets, no detrimental effect was evidenced, and copies of the full report would be circulated after the meeting.

AGREED

1.    That Executive Scrutiny Committee note:

a.    The updated financial position for 2025/26.

b.    The revised Capital Programme at Appendix A to the report.

c.     The virement 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.

d.    The emerging issues for the MTFP.

2.    That further responses be provided in relation to the above queries.