Agenda item

To receive a report from the Deputy Chief Executive (S151) Officer on the 2025/26 Quarter 1 Budget Monitoring.

The Cabinet had before it and NOTED a report * from the Deputy Chief Executive (S151) Officer and the Head of Finance, Property and Climate Resilience on the 2025/2026 Quarter 1 Budget Monitoring.

The Cabinet Member for Governance, Finance and Risk outlined the contents of the report with particular reference to the following: 

• The report presented the first Budget Monitoring for the year 2025/26 covering the period April – June 2025. This gave a forecast of the potential year end position.
• Based on Quarter 1 data the projected outturn position for the General Fund was a £232k over-spend. This was in-line with the previous year’s trend where initial forecasts indicated an over-spend.  However the position had improved during the remainder of the previous year and it was expected that this would be the case again this year. The main cause for the over-spend was the need for specialist agency staff which had exceeded the vacancy saving.
• It was worth highlighting that the current assumption was to earmark the significant increase in the Extended Producer Responsibility (EPR) grant recently announced (£450k), which if recognised would mean the Council had a small financial surplus. However, it was more prudent to earmark it at this point in the year and to continually assess this action throughout the remainder of the financial year as greater clarity on the likely year-end position became known.
• The Housing Revenue Accounts (HRA) forecast was for a £118k under-spend, which although a little lower, was again similar to the previous year’s initial forecasts. Salary underspends were the main driver of this under-spend. The Capital Programme forecast a variance of £16.7m against the 2025/26 Deliverable Budget. This was largely due to the slippage of £15.2m, of which £4m related to the Cullompton Town centre Relief Road although the project was now well underway. There were other notable slippage variances in relation to 4 specific HRA development projects. There were a few forecasted over-spends where projects had broadened, for example with leisure and waste. This was more than offset by under-spends, particularly the Waste Depot Remodelling Project which was recently approved by the Cabinet. Finally, there was a small amount of expenditure no longer required as it had been encompassed into the larger Waste Depot Project.
• Also included within the report were sections that provided updates on the latest Treasury Management position, Collection Fund forecast and Procurement.
• The fundamental changes in funding mechanisms had been mooted for a while and were seeing hints of what this might mean for the Council. Specifically as this Council appeared to belong to a small group of less than 50 councils who were targeted for larger funding reductions. While most of the 300+ Councils were likely to have a cash freeze, it was indicated that the Council would receive a cut of between -5% to -7%.
• However, the real concern was the impact of resetting the business rates, with the loss of all of the growth generated since the scheme was implemented in 2013/14. If there was no transitional relief, this would have a significant impact on the Councils finances (£2m+).
• This Council would continue to challenge the rationale for being treated differently and lobby for effective transitional support and early notification of the final position.

Discussion took place with regards to:

• For the Business Rates was this just affecting this Council, Districts or other Local authorities? It was explained that it affects all Council’s.
• The shortage with regards to the Housing Revenue Accounts (HRA) that was a significant amount, what were the reasons for this? There were a number of factors that contributed to the shortage.
• Who or what was (DMO) and did they borrow money for three days? It was explained that it was the Debt Management Office who we lent money to at an interest rate on a short term let.  

RESOLVED that:

1. The financial monitoring information for the income and expenditure for the 3 months to 30 June 2025 and the projected outturn position be NOTED;
2. The use of Waivers and Direct Awards for the procurement of goods and services as included in Section 8 be NOTED;
3. The update on future funding given in paragraphs 9.2 and 9.3 be NOTED.
   
   

(Proposed by Cllr J Downes and seconded by Cllr J Lock)

Reason for Decision:

Good financial management and administration underpin the entire document. A surplus or deficit on the Revenue Budget would impact on the Council’s General Fund balances. The Council’s financial position was constantly reviewed to ensure its continued financial health.

Note: * report previously circulated.