Subject:
Targeted Budget Management (TBM)
2025/26 Month 2 (May)
Date of meeting:
Thursday, 17 July 2025
Report
of:
Cabinet Member for Finance & City
Regeneration
Contact Officer: Name: Haley
Woollard, Deputy Chief Financial Officer
Email: haley.woollard@brighton-hove.gov.uk
Ward(s) affected: (All Wards)
Key Decision:
Yes
Reason(s) Key:
Expenditure which is, or the making of savings which are,
significant having regard to the expenditure of the City
Council’s budget, namely above £1,000,000 and is
significant in terms of its effects on communities living or
working in an area comprising two or more electoral divisions
(wards).
For general release
1.1
The Targeted Budget Monitoring
(TBM) report is a key component of the council’s overall
performance monitoring and control framework. This report sets out
an early indication of forecast risks as at Month 2 on the
council’s revenue and capital budgets for the financial year
2025/26. Effective financial management is a core component of
providing a well-run council, a key priority within the Council
Plan that demonstrates that the council manages within its finite
resources and optimises the use of those resources.
1.2
The forecast outturn
‘risk’ for 2025/26 at this early stage is a
£15.486m overspend on the General Fund revenue budget.
Forecasts at this stage of the year are based on early trends and
are more difficult to predict with high accuracy, particularly in
relation to those areas subject to seasonal variation.
1.3
The forecast outturn includes a significant level of savings to be
at risk; the report indicates that £4.166m (26%) of the
substantial savings package in 2025/26 of £15.789m is
potentially at risk.
1.4
It is important to note that early projections in each financial
year are likely to indicate higher forecast risks as there are
significant underlying demand pressures to be managed down, pay
awards currently tending to be above budget assumptions, and there
are large annual savings targets required to balance the budget.
Implementing and addressing these risks is often complex and can
have varying lead-in times. There is also limited trend data
available at this stage and very limited time to react to emerging
information in order to develop recovery measures. While a high
forecast risk may give cause for concern, it conveys important
information to decision-makers, enhances accountability for
managing risk, and ensures that the council is transparent and open
about the level of potential risk it will need to manage down to
enable:
·
Councillors and
residents to be aware of the financial challenge and that managing
this can have impacts on some services as they develop recovery
plans and actions;
·
Councillors and
officers to be given advance warning that consideration to more
serious council-wide measures such as vacancy freezes or spending
restrictions may need to be given if succeeding months do not show
improvement;
·
Councillors and
officers to consider whether or not in-year budgetary reductions,
i.e. further permanent savings measures, may be necessary if
succeeding months do not show steady improvement, potentially
requiring full Council approval subject to the scale and impact on
the budget and policy framework.
1.5
The ‘forecast risk’ at Month 2 is significant and will
require exploration of a wide range of options to manage this
forecast risk. It is accepted that Budget Managers across the
authority will tend toward prudence in forecasting until the data
and trends provide more certainty which is a natural (and safer)
tendency. However, making broad assumptions about any
‘over-prudence’ is not sensible or practicable. It is
also the case that the council’s annual budget is set in an
increasingly volatile and uncertain environment, particularly
concerning inflation, demands, economic conditions and funding
certainty. However, without being transparent about the potential
risk, based on current spending and activity levels, the council
could give the impression that all budgets and savings plans are on
track. This is not currently the case for a wide range of reasons
and factors set out in the detail of the report and there is a lot
of work to be done to address the forecast risk. It’s
important to note that the council has maintained significant
spending and recruitment controls since November 2024 which remain
in place into 2025/26, and will need to continue in order to
mitigate the overspend forecast. Further measures that will be
implemented to mitigate forecast risks will include:
·
Creation of a
Savings Delivery Board which will oversee and monitor the delivery
of the 2025/26 savings package as well as develop further savings
proposals to alleviate the overspend and future year budget
shortfalls;
·
Further
tightening of normal financial management actions across all areas
under pressure including vacancy controls and spending
prioritisation;
·
Urgent
development of recovery and transformation plans to address demand
and costs, particularly in key areas with the most significant
demand pressures, including Temporary Accommodation, and Children
and Adult social care.
·
Consideration of
(and potential consultation on) alternative options where an agreed
saving is found to be undeliverable (in whole or in part) or is
delayed for unavoidable reasons;
·
Exploration of
alternative funding sources or bids, or alternative use of
ring-fenced funds where this is possible;
·
Use
of any available ‘risk provisions’ or unexpected
one-off resources to mitigate the position in the short term. The
latter cannot normally be estimated and is only known when and if
it arises;
·
Halting or
slowing revenue and/or capital spend to alleviate in-year pressures
in the short term (but will normally result in building up future
pressures unless projects/services are ultimately stopped or
reduced);
·
As
noted earlier, implementation of considerably more severe
recruitment and spending controls including freezes.
While this report
sets out an early indication of budget pressures, and may give a
‘worst case scenario’ of the financial position, it is
important to note that budget pressures are significant, higher
than noted at this point than in previous years, and unsustainable
given the Council’s low level of reserves. It is therefore
important that leaders and managers across the Council pay close
attention to this situation, and focus the necessary time,
resources and efforts towards mitigating actions. Alongside the
development of service level recovery plans, a Savings Delivery
Board has been established with Directors and key support service
staff to focus on developing plans to reduce budget pressures in
areas of demand led pressure, for example temporary accommodation,
adults and children’s social care placement costs, and home
to school transport.
2
Recommendations
2.1
Cabinet notes the forecast risk position for the General Fund,
which indicates a potential forecast overspend risk of
£15.486m.
2.2
Cabinet notes the forecast overspend risk for the separate Housing
Revenue Account (HRA), which is an overspend of £0.450m.
2.3
Cabinet notes the forecast overspend risk for the ring-fenced
Dedicated Schools Grant, which is an overspend of
£4.437m.
2.4
Cabinet notes the forecast position on the Capital Programme which
is an underspend variance of £0.417m.
2.6
Cabinet approves the new capital schemes requested in Appendix
6.
3
Context and background
information
Targeted Budget
Management (TBM) Reporting Framework
3.1
That The TBM framework focuses on
identifying and managing financial risks on a regular basis
throughout the year. This is applied at all levels of the
organisation from Budget Managers through to Cabinet. Services
monitor their TBM position on a monthly or quarterly basis
depending on the size, complexity or risks apparent within a budget
area. TBM therefore operates on a risk-based approach, paying
particular attention to mitigation of growing cost pressures,
demands or overspending through effective financial recovery
planning together with more regular monitoring of high risk
demand-led areas as detailed below.
i)
General Fund Revenue Budget Performance
ii)
Housing Revenue Account (HRA) Performance
iii)
Dedicated Schools Grant (DSG) Performance
iv)
S75 Partnership Performance
v)
Capital Investment Programme Performance
vi)
Capital Programme Changes
vii)
Implications for the Medium Term Financial Strategy
(MTFS)
viii)
Comments of the Chief Finance Officer (statutory S151
officer)
3.3
The report may also include a Treasury Management update from time
to time. This is required to comply with the updated Treasury
Management Code which requires a minimum of quarterly reporting.
Cabinet already receives mid-year and end-of-year reviews and
therefore two additional interim reports will be provided via an
appropriate TBM report to ensure compliance with reporting
requirements. No report is due at this time.
4
General Fund Revenue Budget Performance (Appendix 3)
4.1
The table below shows the
forecast outturn for council-controlled revenue budgets within the
General Fund. These are budgets under the direct control and
management of the Corporate Leadership Team. More detailed
explanation of the variances can be found in Appendix
3.
|
2024/25
|
|
2025/26
|
Forecast
|
Forecast
|
Forecast
|
|
Outturn
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
Variance
|
|
Month
2
|
Month
2
|
Month
2
|
Month
2
|
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
%
|
|
(1,062)
|
Families,
Children & Wellbeing
|
80,300
|
83,678
|
3,378
|
4.2%
|
|
2,431
|
Homes & Adult
Social Care
|
121,641
|
130,999
|
9,358
|
7.7%
|
|
(3,797)
|
City
Operations
|
50,368
|
49,494
|
(874)
|
-1.7%
|
|
(43)
|
Central
Hub
|
33,147
|
35,345
|
2,198
|
6.6%
|
|
(2,471)
|
Sub
Total
|
285,456
|
229,516
|
14,060
|
4.9%
|
|
1,380
|
Centrally-held
Budgets
|
(10,854)
|
(9,428)
|
1,426
|
13.1%
|
|
(1,091)
|
Total General
Fund
|
274,602
|
290,088
|
15,486
|
5.6%
|
4.2
The
General Fund includes general council services, corporate budgets
and central support services. Corporate Budgets
include centrally held provisions and budgets (e.g. insurance) as
well as some cross-cutting value for money savings targets. Note
that General Fund services are accounted for separately to the
Housing Revenue Account (Council Housing). Note also that although
part of the General Fund, financial information for the Dedicated
Schools Grant is shown separately as this is ring-fenced to
education provision (i.e. Schools).
4.3
The chart below shows the monthly forecast variances for 2025/26
and the previous three years for comparative purposes. This
indicates that forecast risk early in the year has been higher in
recent years. This is partly due to:
·
Pay
awards coming in higher than the budget assumptions due to
persistent inflation;
·
The
requirement to deliver successive, large savings programmes which
becomes increasingly challenging over time;
·
Continuing
economic conditions which are impacting external provider costs,
many income sources (demand), and recruitment costs and which is
difficult to predict with accuracy.
2023/24, was also
exceptional in terms of the availability of one-off resources of
over £10m across the year, which significantly aided in
addressing forecast risks.
Demand-led Budgets
|
2024/25
|
|
2025/26
|
Forecast
|
Forecast
|
Forecast
|
|
Outturn
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
Variance
|
|
Month
2
|
Month
2
|
Month
2
|
Month
2
|
|
£'000
|
Demand-led
Budget
|
£'000
|
£'000
|
£'000
|
%
|
|
(1,661)
|
Child Agency
& In House Placements
|
28,716
|
30,719
|
2,003
|
7.0%
|
|
49
|
Community
Care
|
80,729
|
84,864
|
4,135
|
5.1%
|
|
2,652
|
Temporary
Accommodation
|
3,157
|
9,621
|
6,464
|
204.8%
|
|
1,040
|
Total
Demand-led Budget
|
112,602
|
125,204
|
12,602
|
11.2%
|
The chart below shows the monthly forecast variances on the
demand-led budgets for 2025/26.
TBM Focus Areas
4.5
There are clearly
ongoing pressures across most areas of the council, particularly
front-line, demand-led areas which is a clear indicator of the
inflationary and demand pressures driven by current economic
conditions. Key areas of pressures are outlined below:
4.6
Children’s Services: The projected outturn position
showed significant cost pressures: £0.492m on Home to School
transport, In House Children’s Disability Residential
Provision £0.228m, PFI £0.265m and £2.003m on
Children’s Placements. This together with other overspends of
£0.740m and a recovery plan of (£0.350m) result in a
Month 2 overspend of £3.378m. Key drivers of the position are
as follows:
·
Home to School
Transport:There are several
factors contributing to the overspend in Home to School Transport.
These include increased demand on the service (both at 5-16 ages,
and 16 up until 19th birthday), increased numbers of children
requiring single occupancy journeys, lack of local SEND school
sufficiency, and increased numbers of routes required to
accommodate individual post 16 learners’ timetables.
Market forces
within SEND transport are also contributing to the overspend in
Home to School Transport. The service is also increasingly impacted
by local driver, vehicle passenger assistant, vehicle shortages and
increased running costs. There is also a lack of competition in the
transport market, particularly minibus providers, which is
increasing contract prices still further. There is also
increasingly less capacity in the local system to meet demand, not
just in the numbers of children requiring transport but the nature
of the transport requirements. There was also an increase in solo
routes being created to educational provisions where they were the
only children attending and using HTST.
·
Children’s
Placements: The Children's
Placements budget is facing significant challenges, driven by
various factors affecting the cost and availability of suitable
placements for children in care. In recent years, there has been a
noticeable rise in the number of children entering care with
increasingly complex needs. This includes a small number of
children with significant safeguarding risks requiring placements
that offer specialised care and support at a very high cost. In
addition, the prevailing market conditions have made the current
framework contracts unattractive to providers and have resulted in
the necessity to make more placements outside of the framework
contract at higher rates. Ongoing
difficulties in recruiting foster carers have continued to cause
sufficiency issues. The shortage of foster carers makes it
problematic to place children in family settings, whether in-house
or with external providers. This shortfall in available foster
placements forces the service to opt for more expensive care
options. The number of
children in Care remains relatively stable and the demand pressures
are being managed through high quality social work intervention and
the recently established Early Help service. However, the issues
with very vulnerable children with complex needs coming into care,
the local care provider market and fostering recruitment has led to
substantial cost pressures on the placement budge
·
Schools
PFI: The
Schools’ PFI (Private Finance Initiative) was set up in 2003
to improve the facilities at four schools within the city - Dorothy
Stringer, COMART (now closed), Patcham High and Varndean –
using private finance to fund the capital improvements. The scheme
runs for 25 years and a Special Purpose Vehicle (a legal entity
created to fulfil specific or temporary objectives) “Brighton
& Hove City Schools Ltd” was set up as part of it. This
is currently owned by SEMPERIAN. The scheme is funded partly by a
DfE grant with schools paying an annual charge back to the council
and partly via an annual drawdown of earmarked reserves. The annual
charge is updated each March for the RPIX (RPI All Items Excluding
Mortgage Interest) for the 12 months to February. Once the 25-year
period is complete (~ 31st March 2028) the contract with SEMPERIAN
ends and the assets will be transferred back to the
council.
It is
forecasted that by the end of the 2025/26 financial year the
Schools’ PFI contract will be overbudget by £0.265m.
Despite receiving pressure funding to compensate for the reserve
depletion in 23/24, it is not predicted to be sufficient to cover
the higher-than-expected PFI contractor costs plus inflation. For
prudency the forecasted inflation for 25/26 and beyond has been
assumed in the model at 3%, despite the Office for Budget
Responsibility forecasting that it will average out at 2% between
2024 and 2028.
The
PFI contract finishes on the 31st March and it is expected the
council will make savings as will no longer be paying out to the
PFI contractor. There will be both risks and benefits involved in
the completion of this contract. Ultimately it gives the Council
ownership of the asset and all its associated costs but also the
control of its budget. However, for this to be successful it will
require the correct support from Property and the Procurement and
Commissioning Teams.
Schools
Budgets
At the end of the
2024/25 financial year there was a net deficit school balances
position of £2.623m. This represents a worsening of the
financial position of £2.904m when compared to the net
surplus position of £0.281m at the end of 2023/24. Final
school budget plans for 2025/26 are submitted during summer term
2025 and these will incorporate final balances from 2024/25. It is
likely that due to the worsening financial position in schools, the
level of required licensed deficits will increase for 2025/26.
Meetings will be held with the Corporate Director - Families,
Children & Wellbeing and Section 151 Officer before the end of
summer term to review and agree school licensed deficit
requests.
The current
forecast for the 2025/26 central Dedicated Schools Grant is an
in-year deficit of £1.437m. At the end of the 2024/25 there
was an overspend on central DSG of £0.680m, meaning the
cumulative overall deficit position at the end of 2025/26 is
estimated to be £2.117m. The DSG position is described in
more detail in section 5 below.
4.7
Homes & Adults Social
Care: The
service faces significant challenges in 2025/26 in mitigating the
risks arising from increasing demands in homelessness and adult
social care, managing the unit costs in temporary accommodation and
the care market, and delivering all of the saving plans for
2025/26. It is to be noted that this is after applying service
pressure funding of £8.391m in 2025/26 which has been used to
fund budget pressures resulting from the increased unit costs and
complexity.
The 2025/26 savings plan for the
directorate totals £9.256m, in addition to this, pressure
mitigations of £5.025m were also applied to 2025/26 service
pressure funding allocated corporately. There are continued actions
focussing on attempting to manage demand for, and costs of
services/accommodation across Homes and Adult Social Care and
making the most efficient use of available funds.
Adult
services
The total financial recovery plan for Adult Social
Care totals £8.860m, with £6.552m achieved to date and
£1.533m reported at risk. The Adult social care and
commissioning departments continue to implement a strengths-based
approach across key work streams in adult social care, ensuring
robust pathways are in place, developing a community reablement
offer and re-designing the front door service. Currently the Health
& Social Care system is under considerable pressure, and this
is generating additional costs for the council due to:
·
Pressures on the system due to short-term grant monies
and an unresolved
national, long-term funding solution;
·
Significant pressures on the acute hospital resulting in
increased costs to support timely discharge into residential,
nursing and home care;
·
Increased complexity particularly in relation to working
age adults and the associated costs of service delivery.
·
Continued workforce capacity challenges across adult social
care services.
The funding of all care packages is
scrutinised for Value for Money, ensuring that eligible needs are
met in the most cost-effective manner which will not always meet
people’s aspirations. Established safeguards are in place to
provide assurance within this process.
In respect of
financial recovery and the ongoing management of Community Care
Budget pressures, a monthly savings and efficiencies meeting
provides rigorous monitoring and oversight of the Adult Social Care
& Health savings progress. Additionally, each month the top ten
spends on placements and packages of care are reviewed to ensure
immediate remedial action is undertaken to look at options and,
wherever possible, reduce the cost of care whilst meeting assessed
need. Negotiations are also underway with Sussex partnership NHS
Foundation Trust regarding addressing the current high spending
commitment within the Mental Health s75 arrangements. These
negotiations will be supported by a deep dive discussion at the
Finance and Performance Board.
Housing Services and Temporary Accommodation
(TA): The total financial recovery plan target for
Temporary Accommodation is £5.421m, with £1.556m
achieved to date and £2.813m being reported at risk. The
current overspend is due to increased demand for temporary
accommodation along with a rise in rental costs. A Temporary
Accommodation (TA) Reduction Plan has been developed, setting out a
range of activities to either reduce the number of households
entering TA; assist households to move on from TA, or reduce the
cost of the TA we are using. As a broad overview, these actions can
be categorised as Prevention, Move-On’s to sustainable
accommodation, cost reduction measures, and increasing income
through improved collection and reducing void turnaround times. The
overspend relates to the following elements:
·
Nightly
accommodation (spot purchased) was budgeted for an average of 193
households per night for the year. However, the forecast assumes
that the average units per night will be 477. The service aims to
reduce the average nightly cost wherever possible, but greater
demand, increased costs, and the continuous decline of Temporary
Accommodation leased properties pose significant challenges.
Consequently, this budget has been overspent by £5.316m. The
service is implementing additional measures to reduce the number of
households accommodated as part of the financial recovery plan and
future budget strategy.
·
Block
Booked - The service is facing significant pressures on the overall
costs of Block Booked accommodation. The budget is set at 303 units
per night during 2025/26, but due to increased demand, the forecast
assumes 414 units. Additionally, the council is experiencing
substantial increases in contract prices, resulting in an overspend
of £0.619m.
·
Private Sector
Leased TA is underspent by £0.288m. This is due mainly to HB
subsidy costs being £0.132m over budget. Despite lower
numbers of leased properties being used for TA as landlords
withdraw their properties from the rental market, the new leases
are also commanding a higher rate and shorter terms. This is part
of the reason for the increased numbers of Block Booked
accommodation.
·
There
are unbudgeted Support Accommodation costs amounting to
£0.173m to secure 25 units for the next three
years.
The directorate has
substantial income budgets for parking, planning and venues.
All of which are dependent on visitor numbers, commercial activity
and the general economy. There are challenging savings targets
in-year of which most relate to efficiency savings by providing
services in a different way as well as generating additional
income. Of the £1.782m savings planned for the 2025/26
financial year, £1.388m is achieved or anticipated to be
achieved, with the remaining £0.394m at risk. The most
significant areas at risk primarily relate to income opportunities
within Parking Services and City Parks, service redesigns across
other service areas and efficiency savings including review of the
Multi-Functional Devices across the council.
The overall position for City
Operations is a net £0.874m forecast underspend at Month
2. There are pressures within the forecast which have been
identified in year including the pressure of £0.485m relating
to the NJC arrangements with the Royal Pavilion Museums Trust,
increased costs of fleet management totalling £2.140m
identified in Environmental Services, a significant pressure
relating to Building Control income of £0.647m, a
£0.300m cost pressure for the management of tree diseases
across the city and an income pressure of £0.566m within
bereavement services. Offsetting these pressures is a significant
underspend in the forecast for City Infrastructure of
£2.327m, surplus income of £0.510m from the Brighton
Centre, commercial and green waste and underspends on staff costs
across the service.
Data on income trends must continue to
be carefully analysed with many income forecasts needing to be
seasonally adjusted to reflect historic patterns and traditionally
higher incomes over summer months (e.g. parking). Data for the
early months of each financial year needs to be treated with
particular caution and a key issue is that complete monthly data is
often only available two to three weeks after each month end.
Current trends are positive but this could quickly change and
therefore financial recovery actions will be explored to
potentially mitigate income pressures should they arise. This will
include a combination of measures to try and boost income alongside
measures to reduce the cost of services.
4.8
Central Hub:
There is a forecast overspend
of £2.198m for Central Hub services. The most significant
element of this is a pressure of £1.994m on the Estate
Management service. Within this there is a pressure of
£1.230m resulting from a combination of lost rental incomes
from the decanting of New England House, void costs including NNDR
and fire safety waking watch. There are also pressures of
£0.241m on the agricultural estate and £0.200m on
Bartholomew house where rental incomes are not meeting income
targets yet, however leasing of 3rd and 4th floors has achieved
savings where operating costs are with tenants. There is a
£0.270m pressure on Commercial Portfolio and £0.195m on
Phoenix House from voids and rent free periods.
4.9
Centrally-held
Budgets: There is a forecast overspend of £1.426m.
Of this £0.805m relates to the estimated additional cost of
the 2025/26 pay award in excess of the amount provided in the
budget.
There is a forecast
pressure of £0.600m on Housing benefit Subsidy. There is
insufficient data to make a detailed forecast so this high level
estimate is based on the 2024/25 outturn and the pressure funding
provided in 2025/26.
The corporate
Functional Alignment saving from 2024/25 is also held in this area.
At present £0.804m of this is at risk. These pressures are
offset by a £0.500m underspend in Financing Costs due to a
delay in borrowing resulting from reprofiling and slippage from the
2024/25 Capital Programme.
Monitoring Savings
4.10
The savings package
approved by full Council to support the revenue budget position in
2025/26 was £15.789m following directly on from a
£23.627m savings package in 2024/25 and makes 15 years
of substantial savings packages totalling over £248m since
government grant reductions commenced in 2010, and which have been
necessary to enable cost and demand increases to be funded
alongside managing the reductions in central government grant
funding.
4.11
Appendix 3 provides a
summary of savings in each directorate and indicates in total what
has been achieved, what has been offset by in year pressures and
the net position of unachieved savings. Appendix 4 summarises the
position across all directorates and presents the entire savings
programme. The graph below provides a summary of the position as at
Month 2 and shows that gross savings of £11.723m have been
achieved but that inflationary pressures (exceptional price
increases) have reduced this by £0.100m. Including other
unachievable savings of £4.066m, this means that a total of
£4.166m (26%) is forecast to be unachieved in 2025/26.
Housing Revenue Account Performance
(Appendix 3)
4.12 The Housing Revenue Account (HRA)
is a separate ring-fenced account which covers income and
expenditure related to the management and operation of the
council’s housing stock – and the majority of funding
is from the rent and service charges paid by tenants and
leaseholders. The forecast outturn is an overspend of
£0.450m, this position includes variances within specific
service areas, details of which are provided in Appendix 3.
Any overspend in the HRA will result in a contribution from general
reserves at year end (as at Month 2 the general reserves balance is
£7.700m – equivalent to approximately 10% of income
from rent and service charges).
HRA Risks
4.13 The HRA
continues to face significant uncertainty regarding the financial
position. There are major risks that need to be addressed and
monitored to ensure that the position remains stable. These risks
include but are not limited to:
·
Health &
Safety compliance
·
Building Safety
compliance
·
Disrepair
claims
·
Rent
arrears and collection rate
4.14 The HRA
will continue to review spend to try to improve the current
financial position. Any
variations will be reported to future Cabinet meetings. Officers
have recently joined the London Directors of Housing Group and will
endeavour to work with peers in as well as the Housing leads in the
LGA to explore how central government can support social landlords
in investing in safety and quality improvements whilst also seeking
to increase supply.
5
Dedicated Schools Grant
Performance (Appendix 3)
5.1
The Dedicated Schools
Grant (DSG) is a ring-fenced grant within the General Fund which
can only be used to fund expenditure on the Schools’ Budget.
The Schools Budget includes elements for a range of services
provided on an authority-wide basis including Early Years education
provided by the Private, Voluntary and Independent (PVI) sector,
and the Individual Schools Budget (ISB) which is divided into a
budget share for each maintained school. The forecast outturn
is currently an overspend of £1.437m and more details are
provided in Appendix 3. Under the Schools Finance Regulations any
underspend or overspend must be carried forward within the
Schools’ Budget in future years.
6
S75 Partnership Performance
(Appendix 3)
6.1
The Section 75 Services represent those services delivered by local
NHS Trusts and the Council under Section 75 Integrated Agreements.
Services are managed by Sussex Partnership NHS Foundation Trust
(SPFT) and the Council and include health and social care services
for people whose primary support reason (PSR) is Adult Mental
Health and Memory and Cognitive Support Services. The spend
reflects the totality of people with a PSR of Mental Health and
Memory and Cognitive Support, most of which is within the S75
arrangement, but some of which is within other assessment teams,
such as the Hospital Discharge Team and Locality Teams for older
adults. The forecast outturn is an overspend of £0.954m and
more details are provided in Appendix 3.
7
Capital Programme Performance
and Changes
7.1
The table below provides a
summary of capital programme performance by Directorate and shows
that there is an overall underspend of £0.417m which is
detailed in Appendix 5.
|
Forecast
Variance Month 0
|
|
Reported
Budget Month 2
|
Provisional
Outturn Month 2
|
Provisional
Variance Month 2
|
Provisional
Variance Month 2
|
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
%
|
|
0
|
Families, Children & Wellbeing
|
18,275
|
18,233
|
(42)
|
-0.2%
|
|
0
|
Homes & Adult Social Care
|
11,075
|
11,075
|
0
|
0.0%
|
|
0
|
City Operations
|
88,976
|
88,976
|
0
|
0.0%
|
|
0
|
Central Hub
|
22,629
|
22,629
|
0
|
0.0%
|
|
0
|
Homes & Adult Social Care - HRA
|
96,008
|
95,633
|
(375)
|
-0.4%
|
|
0
|
Total Capital
|
236,963
|
236,546
|
(417)
|
-0.2%
|
(Note: Summary may include minor rounding differences to Appendix
5)
7.2
Appendix 5 shows the changes to
the 2025/26 capital budget. Cabinet’s approval for these
changes is required under the council’s Financial
Regulations. The following table shows the movement in the capital
budget since approval at Budget Council.
|
Summary
of Capital Budget Movement
|
Reported
Budget Month 2
|
|
|
£'000
|
|
Original 2025/26 budget approved plus outturn
reprofiles/slippage and separate reports approved at
Cabinet
|
228,717
|
|
Changes reported at other committees and already
approved, to be included for Month 2
|
20,676
|
|
New schemes to be approved in this report (see
Appendix 6)
|
1,167
|
|
Variations to budget (to be approved)
|
3,681
|
|
Reprofiling of budget (to be approved)
|
(17,278)
|
|
Slippage (to be approved)
|
0
|
|
Total Capital
|
236,963
|
7.3
Appendix 5 also details
any slippage into next year. However, as normal, project managers
have forecast that none of the capital budget will slip into the
next financial year at this early stage.
8.1
The council’s MTFS sets
out resource assumptions and projections over a longer term. It is
periodically updated including a major annual update which is
included in the annual revenue budget report to full Council. This
section highlights any potential implications for the current MTFS
arising from the 2025/26 financial year and details any changes to
financial risks together with any impact on associated risk
provisions, reserves and contingencies. Details of Capital Receipts
and Collection Fund performance are also given below because of
their potential impact on future resources.
Capital Receipts Performance
8.2
Capital receipts are used to support the capital programme. Any
changes to the level of receipts during the year will impact on
future years’ capital programmes and may impact on the level
of future investment for corporate funds and projects such as the
Strategic Investment Fund, Innovations fund, Asset Management Fund
and the Information, Technology and Digital Investment Fund. The
planned profile of capital receipts for 2025/26, as at Month 2, is
£17.808m which includes receipts expected for a major
industrial lease extension at Moulsecoomb and Patcham Court Farm.
There are also a number of residential and commercial properties
identified for disposal as reported within the Residential Property
Strategy report and Commercial Investment Property Strategy report
to committee in December 2023 as well as the disposals approved by
Cabinet on 27 June 2024 and within the Capital Asset Strategy
approved at cabinet in April 2025. To date there have been receipts
of £0.415m in relation to the sale of properties at Grand
Parade Mews and New Dorset St and some minor lease extensions and
loan repayments. The capital receipts performance will be monitored
over the remainder of the year against capital commitments.
8.3
The forecast for the ‘right to buy sales’ in 2025/26 is
that an estimated 20 homes will be sold for an estimated
£2.500m. The net retained receipt is used to fund investment
in the HRA capital programme, specifically the new supply of
affordable housing. To date 6 homes have been sold for a total
receipt of £1.006m.
Collection Fund Performance
8.4
The Collection Fund is a
separate account for transactions in relation to council tax and
business rates. Any deficit or surplus forecast on the collection
fund relating to council tax is distributed between the council,
Sussex Police & Crime Commissioner and East Sussex Fire
Authority, whereas any forecast deficit or surplus relating to
business rates is shared between the council, East Sussex Fire
Authority and the government.
8.5
The collection fund for council tax is forecast to be in deficit by
£1.149m at year end. The primary driver is a forecast 0.5%
reduction in council tax income collection (+£1.184m). Other
areas with variances include increased council tax reduction (CTR)
claimant numbers (+£0.228m), brought forward surplus
(-£0.131m) and empty property premiums
(-£0.127m). The council tax service is experiencing a
high level of backlog due to system issues which is adding further
complexity in forecasting the underlying position. The
council’s share of the deficit is £0.972m and is
included as a one-off shortfall to be funded as part of the 2026/27
budget.
8.6
The collection fund for
business rates is forecasting an overall deficit position of
£2.730m (£1.910m brought forward and £0.820m
in-year). The cost of successful appeals against the 2017 rating
list is the main reason for the overall deficit as they have been
higher than forecast. At the end of May there are 26 appeals
remaining against the 2017 rating list. The impact of appeals
against the 2023 rating list is forecast to be within the levels
set aside although it remains complex to predict the eventual
outcome as further appeals will continue to be received. One large
appeal against the 2023 rating list, settled in April, had a 43%
rateable value reduction backdated reducing business rates income
by c£1.500m. The council’s share of the deficit
position, after allowing for section 31 compensation grants and
contributions from the collection fund section 31 adjustment
reserve, is £0.987m and is included as a one-off shortfall to
be funded as part of the 2026/27 budget.
Reserves, Budget Transfers and
Commitments
8.7
The creation or re-designation
of reserves, the approval of budget transfers (virements) of over
£1.000m, and agreement to new financial commitments of
corporate financial significance require Cabinet approval in
accordance with the council’s Financial Regulations and
Standard Financial Procedures. There are no items requiring
approval at this stage.
8.8
The level of reserves held is
kept under review and the table below shows the usable General Fund
Reserves as at 31st March 2024 and 2025. It’s
imperative that the current overspend forecast is addressed by the
actions outlined paragraph 1.5. Failure to sufficiently do so will
risk having to draw down the whole General Fund working balance as
well and a significant proportion of other usable
reserves.
|
|
Balance
as at 31st March 2024 £'000
|
Balance
as at 31st March 2025 £'000
|
|
General
Fund Working Balance
|
5,624
|
7,840
|
|
Held
in Working balance for specific future commitments
|
2,579
|
411
|
|
PFI
Reserves
|
8,601
|
9,671
|
|
Grants
Carried forward
|
6,152
|
2,574
|
|
Schools
LMS Reserves
|
282
|
-2,623
|
|
Other
Usable Reserves
|
7,926
|
10,163
|
|
Total
General Fund Usable Reserves
|
31,164
|
28,036
|
9
Analysis and consideration of
alternative options
10
Community engagement and
consultation
10.1
No specific consultation has
been undertaken in relation to this report.
11
Financial
implications
11.1
The financial implications are
covered in the main body of the report. Financial performance is
kept under review on a monthly basis by the Corporate Leadership
Team and Cabinet and the management and treatment of strategic
financial risks is considered by the Audit, Standards & General
Purposes Committee.
Finance Officer consulted: Jeff
Coates
Date: 19/06/2025
12.1
Decisions taken in relation to
the budget must enable the council to observe its legal duty to
achieve best value by securing continuous improvement in the way in
which its functions are exercised, having regard to a combination
of economy, efficiency and effectiveness. The council must also
comply with its general fiduciary duties to its Council Tax payers
by acting with financial prudence, and bear in mind the reserve
powers of the Secretary of State under the Local Government Act
1999 to limit Council Tax & precepts.
Lawyer consulted: Elizabeth
Culbert
Date: 19/06/2025
13.1
There are no direct equalities
implications arising from this report.
15
Health and Wellbeing
Implications:
15.1
The council’s budget
includes many statutory and preventative services aimed at
supporting vulnerable children and adults. The budget prioritises
support to these core and critical services including management of
any emerging in-year pressures to minimise impacts on statutory
provision.
16.1 The forecast
overspend risk of £15.486m at Month 2 represents 5.6% of the
net General Fund budget. This early forecast indicates a number of
demand and cost pressures across homelessness, a pressure on the
Section 75 Mental Health partnership and a number of significant
income pressures across City Services. There is evidence of the
continuing impacts of higher inflation and interest rates on social
care and temporary accommodation costs (prices) which are coming in
above budget assumptions. There are also continuing impacts on
incomes such as commercial rents and planning fees due to a
suppressed economy. These are also impacting the achievement of
some savings programmes. The projected overspend set out in this
report is unsustainable for the Council given the low level of
reserves. Corrective action will have to be successful over the
coming months if the Council is going to be able to balance its
in-year budget and set a balanced budget for 2026/27.
16.2 As set out
earlier in the report, understanding the level of forecast risk is
important to inform decision-making and recovery actions.
Given the scale of the projected overspend, urgent work is
being undertaken by all Directorate Leadership Teams to develop
recovery plans, alongside a cross Council Savings Delivery Board,
which will focus on the most significant areas of financial
pressure across the organisation.
16.3 In the meantime,
vacancy management and spending control processes remain in place
across the council to contribute to in-year financial management
and the option remains to tighten these further if interim monthly
TBM reports do not indicate a downward trajectory of the forecast
risk.
Supporting Documentation
Appendices
1.
Financial Dashboard Summary
2.
Revenue Budget Performance RAG Rating
3.
Revenue Budget Performance
4.
Summary of 2025/26 Savings Progress
5.
Capital Programme Performance
6.
New Capital Schemes
