Subject:
Targeted Budget Management (TBM) Provisional Outturn 2025/26
Date of meeting:
Thursday, 25 June 2026
Report
of:
Cabinet Member for Finance & City
Regeneration
Contact Officer: Name:
Elizabeth Griffiths, Director Property & Finance
Haley Woollard, Deputy Chief Finance Officer
Email: elizabeth.griffiths@brighton-hove.gov.uk
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).
Note: Reasons for urgency
The special circumstances for non-compliance with Council
Procedure Rule 3, Access to Information Procedure Rule 5 and
Section 100B(4) of the Local Government Act 1972 (as amended),
items not considered unless the agenda is open to inspection at
least five days in advance of the meeting) were that some of the
data and information key to producing the report was only available
after the statutory publication deadline and failure to include
this information would have materially affected the position being
reported.
For general release
1.1
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.
1.3
The final outturn
position is subject to the annual external audit review of the
council’s accounts. The final position will be shown in the
council’s unaudited financial statements which are due for
publication by 30 June 2026 and must be signed by the Chief Finance
Officer (CFO) and will ultimately be reflected in the audited set
approved by the Audit & Standards Committee, due to be
published by 31 January 2027.
2
Recommendations
2.1
Cabinet notes that the provisional General Fund outturn position is
a break-even position which is the same as the projected and
planned resource position at Month 9 and taken into account when
setting the 2026/27 budget.
2.2
Cabinet approves General Fund carry forward requests totalling
£2.744m as detailed in Appendix 5 and assumed within the
provisional outturn.
2.3
Cabinet notes the provisional outturn for the separate Housing
Revenue Account (HRA), which is an overspend of £0.378m.
2.4
Cabinet notes the provisional outturn position for the ring-fenced
Dedicated Schools Grant, which is an overspend of
£1.762m.
2.5
Cabinet notes the provisional outturn position on the Capital
Programme which is an underspend variance of £5.003m.
2.7
Cabinet approves new capital schemes requested in Appendix 8.
2.8
Cabinet notes the Treasury Management end of year review 2025/26 as
set out in Appendix 10.
2.9
Cabinet approves the transfer to ear marked reserves of £3.91m
which
is
assumed within the provisional outturn and discussed at 4.9
3
Context
and background information
Overview of the
position
3.1
The provisional outturn is a
break-even position on the General Fund revenue budget. This
is an improvement of £4.861m from Month 9 which was a forecast
of £4.861m overspend. The report also indicates that
£5.523m (35%) of the substantial savings package in 2025/26 of
£15.789m was not achieved.
3.2
When setting the 2026/27 budget, it was assumed the 2025/26
position would improve to a breakeven outturn (that is,
£0.000m) due to a combination to spending controls and the
application of central decisions to manage the position. Therefore,
the position is in line with the assumptions within the 2026/27
budget report. It is worth noting however that a large element of
the in year overspend was mitigated by releasing centrally held
funds, meaning that the council is carrying an underlying overspend
of circa £7-8m which could not be mitigated by service
activity and will carry forward into 2026/27.
3.3
The chart shown in 4.2 demonstrates that the TBM forecasts for
2025/26 have consistently tracked higher than other years (aside
from 2022/23 where a £3.302m overspend was incurred), which is
the result of a combination of pressures in cost and demand in
demand-led services, as well as non-delivery of savings. A number
of measures were implemented and one-off funding applied during
2025/26 which has helped address the outturn position:
·
Tightening of
spending and recruitment controls across the organisation in
November 2025, including the delay of recruitment decisions to 1
April 2026;
·
A
review of earmarked reserves at TBM Month 9, resulted in the
allocation and subsequent release of £1.109m of previously
earmarked reserves;
·
Release of the
one-off £1.747m risk provision into the forecast at TBM Month
8;
·
Deferral of the
contribution to reserves of £1.125m at TBM Month 9.
·
A
further review of earmarked reserves resulting in the release of a
further £0.564m at TBM Month 12;
·
Review of the use
of capital receipts for funding transformation and capital activity
resulting in the funding £1.551m of transformation activity
from capital receipts;
·
Creation of a new
officer-led Savings & Innovation Delivery Board which oversees
and monitors the delivery of the 2025/26 transformation savings and
recovery plans;
·
Development of
service level financial recovery plans to mitigate and address
overspends;
·
Development of
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;
·
Exploration and
implementation of additional financial recovery measures in
Temporary Accommodation, monitored by a Strategic Coordination
Group chaired by the Chief Executive;
3.4
A number of the actions outlined in 3.3 were corporately taken
decisions. Therefore, (see 3.2 above) there is an underlying
structural overspend of an estimated £7-8 million in service
areas (particularly demand-led areas) which carries risk into the
2026/27 budget.
3.5
Appendix 9 shows the council’s reserves and balances as at 31
March 2026. It is worth noting that the approved 2026/27 budget
includes topping up the working balance by £4.106m as well as
contributing £3.899m to the general risk reserve.
4
General Fund Revenue Budget Performance
(Appendix 4)
4.1
The table below shows the
provisional 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
4.
|
Forecast
|
|
TBM
|
Provisional
|
Provisional
|
Provisional
|
|
Variance
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
Month
9
|
|
Month
12
|
Month
12
|
Month
12
|
Month
12
|
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
%
|
|
179
|
Families,
Children & Wellbeing
|
74,709
|
73,864
|
(845)
|
-1.1%
|
|
8,593
|
Homes & Adult
Social Care
|
118,806
|
129,616
|
10,810
|
9.1%
|
|
(3,036)
|
City
Operations
|
42,558
|
31,553
|
(11,005)
|
-25.9%
|
|
(154)
|
Central
Hub
|
35,440
|
34,103
|
(1,337)
|
-3.8%
|
|
5,582
|
Sub
Total
|
271,513
|
269,136
|
(2,377)
|
-0.9%
|
|
(721)
|
Centrally-held
Budgets
|
(15,136)
|
(12,759)
|
2,377
|
15.7%
|
|
4,861
|
Total General
Fund
|
256,377
|
256,377
|
0
|
0.0%
|
4.2
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.
·
Rising costs in
demand led services driven by numbers, unit costs and increasing
complexity of need.
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
|
Forecast
|
|
TBM
|
Provisional
|
Provisional
|
Provisional
|
|
Variance
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
Month
9
|
|
Month
12
|
Month
12
|
Month
12
|
Month
12
|
|
£'000
|
Demand-led
Budget
|
£'000
|
£'000
|
£'000
|
%
|
|
1,030
|
Child Agency
& In House Placements
|
28,718
|
30,074
|
1,356
|
4.7%
|
|
4,820
|
Community
Care
|
80,795
|
87,933
|
7,138
|
8.8%
|
|
5,961
|
Temporary
Accommodation
|
5,431
|
12,327
|
6,896
|
127.0%
|
|
11,811
|
Total Demand-led
Budget
|
114,944
|
130,334
|
15,390
|
13.4%
|
The chart below shows the monthly forecast variances on the
demand-led budgets for 2025/26. The details are included in the
sections below. The increase on the community Care budget between Month 11
and outturn is because of spend against the home care contract
where actual spend in the year was significantly higher than
expected and additional bad debt provision contribution required
due to increasing levels of aged debt.
TBM Focus Areas
4.4
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:
4.5
Children’s Services: The final outturn position showed
significant cost pressures: £0.131m on Home to School
transport, In House Children's Disability Residential Provision
£0.126m, and £1.355m on Children’s Placements. This
together with Public Health contributions of (£0.426m), Early
Help (£0.305m), Section 17(Prevention) (£0.279m), PFI
(£0.540m), Council Nurseries (£0.238m), BHISS
(£0.324m) and other underspends of (£0.345m) resulted in
a year-end underspend of (£0.845m). Key drivers of the
position were as follows:
·
Home to School
Transport: There were
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 contributed 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 was also a lack of competition in
the transport market, particularly minibus providers, which
resulted in increased contract prices. There was 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 faced 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 select 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 budget.
·
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.
As a
result of late information received, anticipated PFI contractor
costs were overestimated during the year. This was further
compounded by late application of external contributions, resulting
in a £540k underspend against budget and a £640k change
from TBM 9. Measures have now been put in place to prevent a
recurrence of these issues in 2026/27.
For
prudence, inflation within the model for 2027/28 and future years
has been assumed at 3%. This is more cautious than the Office for
Budget Responsibility’s forecast, which indicates that
inflation will average 2% from 2027 onwards. The PFI contract
finishes on 31 March 2028 and we will be holding back 10% of the
PFI contractor costs for the final two years to ensure the assets
are handed over in good condition. 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
2025/26 financial year there was a net deficit school balances
position of £2.281m. This represents an improvement of the
financial position of £0.342m when compared to the net deficit
position of £2.623m at the end of 2024/25.
There are 22
schools (out of a total of 53 maintained schools) that have
overspends at the end of the 2025/26 financial year. This
represents 42% of all schools.
The 2025/26
central Dedicated Schools Grant is an in-year deficit of
£1.082m. 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 £1.762m. The
DSG position is described in more detail in Appendix 4.
4.6
Homes & Adults Social
Care: The
directorate faced 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 was used to fund
budget pressures resulting from the increased unit costs and
complexity. Despite the hard work of colleagues to fully
achieve the planned savings, the increase in demand and complexity
exceeded the projection used for the budget setting.
The 2025/26 Homes
and ASC budget faced a structural deficit, driven by sustained
growth in demand for statutory services, rising complexity of need,
and pressures in the provider market, that exceeded the
Council’s funding base.
The 2025/26 savings
plan for the directorate totalled £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 Social Care
The total financial recovery plan for Adult Social
Care totaled £8.860m, with £6.413m achieved and
£2.447m reported as not achieved in 2025/26. 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.
·
Increasing demand due to
changes in funding arrangements including clients no longer being
eligible for Continuing Healthcare.
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.
Temporary Accommodation (TA):
The target for the
Temporary Accommodation financial recovery plan was £5.421m.
Of this, £3.081m was realised, leaving £2.340m unmet. The
overspend is attributed to heightened demand for temporary
accommodation and increased rental charges. A Temporary
Accommodation Reduction Plan has been implemented, outlining
actions to either limit the number of households entering TA,
support households moving on from TA, or reduce associated costs.
Broadly, these actions fall under prevention, facilitating move-ons
to sustainable housing, cost reduction strategies, and boosting
income through improved collection and quicker void turnaround
times.
·
Nightly
accommodation (spot purchased): Demand for TA remains elevated,
with efforts ongoing to reduce expenditure. Recently, 112 spot
units were renegotiated as block booked contracts at improved
rates. In 2025/26, an average of 468 households were housed in
nightly spot accommodation, resulting in an overspend of
£4.545m.
·
Block
Booked - Units increased from the budgeted 303 to an average of 498
per night, resulting in an overspend of £1.804m.
·
Private Sector
Leased (PSL) overspent by £0.860m, mainly due to renegotiated
leases at higher rates. Nevertheless, PSL remains more
cost-effective and stable than alternatives such as
hotels.
·
Other
service areas reported underspends totalling £0.313m,
predominantly due to staff vacancies and recruitment
difficulties.
A robust management framework is in place,
ensuring strict financial and operational oversight. Despite
ongoing financial pressures, there are clear signs of stabilisation
because of enhanced controls:
·
112
spot-purchased units have been converted to block-booked
arrangements, lowering average nightly costs and increasing cost
certainty.
·
Move-on activity
has increased, with 538 preventions achieved in 2025/26,
£0.902m above target, helping to reduce future
demand.
·
Net
inflow into nightly-paid accommodation has slowed, reflecting early
positive impacts from prevention and move-on
initiatives.
·
Void
turnaround times are improving, increasing supply and lessening
reliance on expensive nightly-paid options.
·
Income collection
within TA is rising, improving the net financial
position.
Whilst not all actions resulted in a full-year
reduction in overspend, the recovery plan is delivering impact and
shifting the long-term cost trajectory.
The directorate manages substantial income budgets
for parking, planning, and venues each sensitive to fluctuations in
visitor numbers, commercial activity, and the wider economy. For
2025/26, City Operations faced challenging in-year savings targets,
primarily focused on service redesigns and income generation. Of
the £1.782m planned savings, £1.463m was achieved,
leaving £0.319m unachieved. Key risks relate to income
generation in Parking Services and City Parks, service redesigns,
and efficiency measures such as the review of Multi-Functional
Devices across the council.
The
overall position for City Operations is a net £11.005m
underspend showing an improvement of £7.969m compared to Month
9. This movement is a combination of an improvement in the
forecast position of £3.5m between the month 9 forecast and
year end, reflecting the continued actioning of financial recovery
plans and measures, and a release of £4.4m of bad debt
provision following a review of the level of provision required for
parking charge notices. £3.9m of this release of
provision has been moved to a corporate risk reserve. See 4.9
below.
There
are pressures within the outturn which have been identified in year
including the pressure of £0.584m relating to the NJC
arrangements with the Royal Pavilion Museums Trust, ongoing costs
ensuring Hollingdean Depot remains operational, refuse fleet
related costs, architects fees, costs of maintaining trees across
the city and increased costs for essential highway maintenance and
backlog clearance. Offsetting these pressures is a significant
underspend in the outturn for City Infrastructure, budget surpluses
from leisure management fees, expenditure controls and underspends
on staff costs across the service
The
£3.544m improvement relates mainly to improvements in further
staffing underspends as a result of the vacancy controls in place,
improved incomes in sports & leisure, building control, and
planning fees. Spend controls in year also resulted in improvements
in outturn including reviews of vehicle fleet related costs in the
council whilst ensuring services could be delivered, as well as
reviewing use of available one off grants and funding in City
Operations against eligible spend to support the councils overall
financial position in year. A review of Direct Revenue Funding
(DRF) as part of the spending controls and outturn has released
£0.157m additional revenue resources. This has resulted in
£0.013m of additional borrowing prepayments per annum for 15
years.
4.8
Central Hub:The directorate has delivered an overall underspend for 2025/26, with
significant underspends across most areas offsetting a small number
of material service pressures. This has been achieved in part
through one-off funding being applied or through the capitalisation
of transformation activity costs. These one-off measures will mean
that there will be pressures carried into the 2026/27 financial
year.
Across the
Cabinet Office and Corporate Leadership Office, services have
generally reported favourable positions, with underspends in
Economic Development (£0.208m), Policy (£0.224m), and
Tourism & Marketing (£0.033m) driven by staffing savings
and income performance. These have helped offset a £0.120m
overspend in Leadership Support, which reflects pressures arising
from service redesign, recruitment activity and professional
fees.
The
Finance & Property directorate shows a mixed but managed
position. Several services delivered strong underspends, most
notably Building Surveying (£0.743m) and Financial Services
(£0.400m), driven by reprofiling of works to capital, income
overachievement, grant funding, and the flexible use of capital
receipts. These favourable variances have helped mitigate
significant pressures within Estates Management, which reported an
overspend of £1.681m, and Welfare, Revenues & Business
Support, which closed the year with an overspend of £0.671m
arising from system re procurement, staffing capacity pressures,
and income shortfalls as detailed below.
Within
Governance & Law, services have performed strongly overall,
delivering a net underspend across the directorate. This reflects
consistent staffing savings, income generation, and operational
efficiencies across most services, including Legal Services
(£0.184m underspend) and Registrations (£0.214m
underspend). These mitigations have absorbed isolated pressures,
including a small overspend within Mortuary Services
(£0.059m).
The
People & Innovation directorate delivered a particularly strong
overall position, with combined underspends of over £2.1m
across its services. This outcome has been largely driven by the
flexible use of capital receipts to fund transformation related
staffing costs, alongside vacancy management, income generation,
and the pausing of non-statutory activity. These actions have
enabled the directorate to absorb pressures such as increased
utility costs while maintaining a significant net underspend.
(£1.593m).
Finally, the
Contribution to Orbis partnership reflects a modest £0.024m
underspend, driven by better than anticipated performance across
partnership services.
4.9
Centrally-held
Budgets: There is an overall overspend of £2.377m,
largely driven by moving £3.9m to a centrally held risk
reserve which will allow an in depth review of aged debt in
2026/27. Without this, centrally held budgets would have had a net
underspend in the year. This reserve was funded by amending a
bad debt provision for PCNs which was being held at a level
inconsistent with our approach to other debts and didn’t
accurately reflect the level of likely recovery. The release
of this money and the creation of the provision will facilitate a
further review of all aged debt without risking further impact on
reserves.
Another contributing factor to the final position was an
overspend of £0.803m which relates to the additional cost of
the 2025/26 pay award above the amount provided in the
budget.
The issue was
identified in 2025/26 but the problem started in 2024/25 meaning
that the impact of both years had to be recognised in
2025/26. The impact of those years is £1.645m and
£3.409m respectively.
A recovery plan is
in place to minimise the ongoing housing benefit subsidy
losses.
The corporate
saving in relation to functional alignment activities from 2024/25
is also held in this area. At the year-end £0.974m of this was
unachieved and is included in the forecast.
These pressures are
offset by a £3.977m underspend in Financing Costs, primarily
due to previous year slippage and reprofile of the capital
programme the capital programme review, which has reduced the
in-year borrowing need resulting in an underspend in the current
financial year. In addition, the council continues to maximise the
use of internal reserves to meet its capital financing requirement.
Whilst this limits investment returns, it will delay the need to
externally borrow during a time of elevated borrowing rates and
therefore reduce in year borrowing costs as the rate of return on
outward treasury investment is below the current cost of
capital.
The 2025/26 budget
contained a risk provision of £1.747m. This has now been
released to support the in-year position.
Cabinet approved
the deferral the planned repayment to Working Balance of
£1.125m in 2025/26 in order to support the in-year position in
the TBM Month 9 report to February 2026. Additionally, the Budget
Update report to December Cabinet identified £1.109m of
previously earmarked reserves and provisions that could be released
to support the 2026/27 budget position. Due to the difficult
in-year position this was released to support the 2025/26. At the
year-end a further £0.564m of unrequired reserves has been
released to support the 2025/26 position which are detailed in
section 8.10.
Carry Forward Requests (Appendix 5)
4.10
Under the
council’s Financial Regulations, the S151 Chief Finance
Officer may agree the carry forward of budget of up to £0.050m
per member of the Corporate Leadership Team (up to a maximum of
£1m in total) if it is considered that this incentivises good
financial management. However, due to the challenging financial
situation, all requests are being presented to Cabinet for
consideration. Similarly, carry forwards have only been proposed
where there is clear evidence of either ring fenced or external
funding where we have made a commitment to the funding body about
the specifics of the planned expenditure, or where we are in an
agreement with multiple parties and the balance carried forward
represents a shared funding arrangement governed by an agreement
that carries the expectation that the funds will not be
withdrawn. In smaller exceptions, the carry forward request
relates to funding agreed for committed spend, which due to timing
has not yet been undertaken. This will normally be supported by a
contractual or purchase order commitment.
4.11
Carry forward requests include grant funded and non-grant funded
carry forwards totalling £2.744m which have been assumed in
the outturn figures above. An analysis of these is provided in
Appendix 5 split into two categories as follows:
·
The
non-grant funded element of carry forwards totals
£0.786m. These items have been proposed where funding is in
place for contractual commitments, existing projects or partnership
working that cross over financial years and it is therefore due to
a timing issue that this money has not been spent in full before
the year-end.
·
The
grant funded element of carry forwards totals £1.958m.
Under current financial reporting standards, grants received by the
council that are un-ringfenced or do not have any conditions
attached are now recognised as income in the financial year in
which they are received rather than in the year in which they are
used to support services. Carry forward is therefore required to
ensure the grants are available to fund the commitments against
them next year. Carry forwards must meet the criteria above or they
are released against current year expenditure.
Monitoring Savings
4.12
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.
4.13
Appendix 4 provides a
summary of savings in each directorate and indicates in total what
has been achieved and the net position of unachieved savings.
Appendix 5 summarises the position across all directorates and
presents the entire savings programme. Work will be undertaken to
review the non-achievement of savings to ensure there is robust
monitoring of savings delivery moving into 2026/27.
4.14
The graph below provides a summary of the position as at outturn
and shows that savings of £10.266m have been achieved and that
savings of £5.523m (35%) were unachieved in 2025/26.
5
Housing Revenue Account
Performance (Appendix 4)
5.1
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 provisional outturn is an overspend of
£0.378m, this position includes variances within specific
service areas, details of which are provided in the Revenue Budget
Performance Appendix. Any overspend in the HRA will result in
a contribution from HRA reserves at year end (as at Month 12 the
general reserves balance was £7.7m – equivalent to
approximately 10% of income from rent and service charges).
HRA
Risks
5.2
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:
·
Volume of Health
& Safety compliance
·
Delays related to
Building Safety compliance
·
Disrepair
claims
·
Rent
arrears and collection rate
5.3
The
HRA will continue to review spend to try to improve the current
financial position. Any variations will be reported to future Cabinet
meetings during 2026/27. Officers are part of the London Directors
of Housing Group and will endeavour to work with peers, as well as
working with 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.
6
Dedicated Schools Grant Performance
(Appendix 4)
6.1
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 2025/26 central
Dedicated Schools Grant is an in-year deficit of £1.082m. 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 £1.762m. The DSG position is described
in more detail in Appendix 4. Under the Schools Finance Regulations
any under or overspend must be carried forward within the
Schools’ Budget in future years.
6.2
Currently, the government is
providing legislation known as the Statutory Override facility that
means any deficit associated with the Central DSG is excluded from
the council’s general fund financial position at the end of a
financial year. The regulations require the negative balance
(central DSG deficit) be held in an unusable reserve. The override
facility has recently been extended for a further 2 years and now
runs to the end of the 2027/28 financial year. At the end of the
2025/26 financial year a negative unusable reserve of £1.762m
has been established. This is simply an accounting term that
means that the overspend is held on the balance sheet but is not
required to be offset against our revenue expenditure or general
reserves.
6.3
In February 2026, the
Government announced that, as part of the wider SEND system reform,
they will introduce a High Needs Stability Grant in 2026/27. This
grant, subject to compliance with certain conditions, is expected
to mean that 90% of the council’s cumulative deficit
(£1.762m) as at 31/03/2026 will be funded by government.
Allocations of the High Needs Stability Grant will only be paid
once a local authority has developed and submitted a detailed Local
SEND Reform Plan to the Department for Education which is then
approved as meeting the required criteria.
7
Capital Programme Performance
and Change
7.1
The table below provides a
summary of capital programme performance by Directorate and shows
the changes to budget since TBM9. Full details of the budget
changes and the performance against the budget are included within
Appendix 7.
|
|
Reported
Budget Month 9
|
Reported
at Other Committees/ IFRS Changes
|
New
Schemes since TBM9
|
Variations
(changes to budget)
|
Reprofiles
& Slippage
|
Reported
Budget Month 12
|
|
Directorate
|
£'000
|
£'000
|
£'000
|
£'000
|
£’000
|
£'000
|
|
Families, Children
& Wellbeing
|
21,995
|
109
|
0
|
49
|
(14,128)
|
8,025
|
|
Homes & Adult
Social Care
|
10,530
|
0
|
0
|
447
|
(1,575)
|
9,402
|
|
City
Operations
|
84,101
|
0
|
0
|
3,249
|
(33,561)
|
53,789
|
|
Central Hub
|
21,481
|
0
|
0
|
252
|
(16,365)
|
5,368
|
|
Housing Revenue
Account
|
103,597
|
(1,177)
|
0
|
2,942
|
(7,716)
|
97,646
|
|
Total
Capital
|
241,704
|
(1,068)
|
0
|
6,939
|
(73,345)
|
174,230
|
(Note: Summary
may include minor rounding differences to Appendix 7)
7.2
Cabinet’s approval is
required for the changes listed in Appendix 7 under the
council’s Financial Regulations. The following table shows
the overall movement in the capital budget since approval of the
Month 9 report.
|
Summary of Capital
Budget Movement
|
Reported
Budget Month 12
|
|
|
£'000
|
|
Budget approved as at
TBM month 9
|
241,704
|
|
Reported at Other
Committees/IFRS Changes
|
(1,068)
|
|
New schemes since
TBM9 2025/26 (for approval – Appendix 8)
|
0
|
|
Variations to budget
(for approval – Appendix 7)
|
6,939
|
|
Reprofiling of budget
to later years (for approval – Appendix 7)
|
(65,213)
|
|
Slippage (for noting
only)
|
(8,132)
|
|
Total
Capital
|
174,230
|
7.3
Appendix 7 also details
any slippage into next year. At this stage project managers have
forecast that £8.132m of the capital budget will slip into the
next financial year and this equates to approximately 3.36% of the
capital budget at TBM9.
7.4
The table below shows a summary of the Variations to budget and
their sources of funding. Further details can be found in Appendix
7. The cost of any new borrowing will be reflected in the 2026/27
revenue forecast as appropriate. The overall cost of additional
borrowing for General Fund scheme variations (including the cost of
short term borrowing for the Housing joint venture) is estimated to
be £0.189m in 2026/27. This is likely to offset against
reductions in borrowing costs
|
Service
Area
|
£'000
|
Project
|
Narrative
|
Funding
source
|
|
|
City
Infrastructure
|
43
|
Controlled
Parking Schemes
|
Variation
to budget of less than £0.100m
|
Additional
borrowing
|
|
|
Environment
and Culture
|
131
|
Various
schemes
|
See
Appendix 7
|
Additional
borrowing
|
|
|
Homes
& Investment
|
19
|
Warm
Safe Homes
|
Variation
to budget of less than £0.100m
|
Additional
borrowing
|
|
|
Housing
Revenue Account
|
237
|
Feasibility
& Design - Housing Investment
|
Increase
in budget required to reflect the feasibility costs of new supply
schemes.
|
Additional
borrowing
|
|
|
Housing
Revenue Account
|
137
|
Hereford
Court
|
Increase
in budget required to reflect the actual spend incurred to
date.
|
Additional
borrowing
|
|
|
Housing
Revenue Account
|
216
|
Various
schemes
|
See
Appendix 7 (HRA – Housing Regeneration)
|
Additional
borrowing
|
|
|
Housing
Revenue Account
|
25
|
Various
schemes
|
See
Appendix 7 (HRA – Homes & Investment)
|
Additional
borrowing
|
|
|
Place
|
193
|
Black
Rock Enabling Works
|
Overspend
relates to additional costs associated with project final
account.
|
Additional
borrowing
|
|
|
Place
|
1,547
|
Contribution
to Housing JV
|
Equity
loan to Housing JV. Change to cash-flow and loan repayment time
scales. Loans to the JV will be repaid once the build programme is
finished and the accommodation is sold. This is therefore
short-term borrowing.
|
Additional
borrowing
|
|
|
|
2,548
|
Total
additional borrowing
|
|
|
Adult
Social Care
|
109
|
Various
schemes
|
See
Appendix 7
|
Budget
reallocation
|
|
|
City
Infrastructure
|
(221)
|
Integrated
Transport Schemes (LTP)
|
Project
managers being moved around various projects.
|
Budget
reallocation
|
|
|
City
Infrastructure
|
(119)
|
Traffic
Signal Obsolescence Grant
|
Some
budget was used to fund other eligible projects.
|
Budget
reallocation
|
|
|
City
Infrastructure
|
340
|
Bridge
Strengthening and Assessment
|
Overspend
in respect of Dukes Mound arches work being redrawn.
|
Budget
reallocation
|
|
|
City
Infrastructure
|
37
|
Various
schemes
|
See
Appendix 7
|
Budget
reallocation
|
|
|
Digital
Innovation
|
(421)
|
Customer
Digital
|
Budget
amendment to reflect use of Modernisations funds.
|
Budget
reallocation
|
|
|
Education
and Learning
|
(15)
|
High
Needs Provision Capital
|
Variation
to budget of less than £0.100m
|
Budget
reallocation
|
|
|
Environment
and Culture
|
(35)
|
Various
schemes
|
See
Appendix 7
|
Budget
reallocation
|
|
|
Family
Help and Protection
|
64
|
Residential
Project Ireland Lodge
|
Variation
to budget of less than £0.100m
|
Budget
reallocation
|
|
|
Finance
and Property
|
(163)
|
Solar
Panels Corporate Buildings
|
Some
installations originally planned for install in 2024/25 were
omitted from the original contract due to planning
issues.
|
Budget
reallocation
|
|
|
Finance
and Property
|
2
|
Various
schemes
|
See
Appendix 7
|
Budget
reallocation
|
|
|
Homes
& Investment
|
(80)
|
Disabled
Facilities Grant
|
Variation
to budget of less than £0.100m
|
Budget
reallocation
|
|
|
Place
|
7
|
Black
Rock Enabling Works
|
Overspend
relates to additional costs associated with project final
account.
|
Budget
reallocation
|
|
|
Place
|
133
|
Various
schemes
|
See
Appendix 7
|
Budget
reallocation
|
|
|
|
(362)
|
Total
budget reallocation
|
|
|
City
Infrastructure
|
674
|
A259
Kings Road Arches
|
Will
be in receipt of non-Local Transport Plan (LTP) related
funding.
|
Third
Party Funds
|
|
|
City
Infrastructure
|
250
|
A270
Wild Park Rainscape
|
Final
grant claim processed late in the year (after TBM9).
|
Third
Party Funds
|
|
|
City
Infrastructure
|
14
|
Brighton
Bikeshare Replacement Programme
|
Variation
to budget of less than £0.100m
|
Third
Party Funds
|
|
|
Environment
and Culture
|
354
|
Playground
Refurbishment programme 2021-2025
|
More
S106 receipts identified to support Playground Refurbishment
Programme
|
Third
Party Funds
|
|
|
Place
|
227
|
Madeira
Terraces Regeneration - Project Support
|
Additional
grant funding utilised
|
Third
Party Funds
|
|
|
|
1,519
|
Total
third party funds
|
|
|
Finance
and Property
|
380
|
Commercial
Property Portfolio Repairs
|
Forward
funded costs in relation to dilapidations on the capital
portfolio.
|
Timing
of funds
|
|
|
|
380
|
Total
timing of funds
|
|
|
|
|
Digital
Innovation
|
42
|
Laptop
Refresh 2023-25
|
Variation
to budget of less than £0.100m
|
Use
of receipts or reserves
|
|
|
Environment
and Culture
|
53
|
King
Alfred Main Pool Reinforcement
|
Variation
to budget of less than £0.100m
|
Use
of receipts or reserves
|
|
|
Finance
and Property
|
33
|
Dome
Planned Maintenance PMB
|
Variation
to budget of less than £0.100m
|
Use
of receipts or reserves
|
|
|
Housing
People Services
|
399
|
LDV
On-Going Costs - Community Homes (B&HSCH)
|
Overspend
is due to additional work in 25/26.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
477
|
Minor
Capital Works
|
Exceeded
its budget primarily due to gaps within the planned works
programmes.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
355
|
Condensation
& Damp Works
|
Spend
reflects increased demand and the need to undertake more extensive
remedial works.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
348
|
Gutter
Clearance
|
More
properties completed this financial year than originally planned,
ahead of schedule.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
255
|
Disrepair
Capital Works
|
Spend
reflects an increased number of cases completed this financial
year.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
247
|
Water
Tanks
|
Spend
exceeded the budget for 2025/26, coinciding with a period of
accelerated water compliance activity.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
236
|
Roofing
|
Unplanned
additional roof replacement carried out.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
212
|
Kitchens
|
Higher
than budgeted spend, primarily reflects a decision to reallocate
the cost of associated electrical upgrades to the Kitchens capital
budget.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
108
|
Bathrooms
|
Spend
reflects an increase in ad hoc referrals arising from Responsive
Repairs and Empty Homes.
|
Use
of receipts or reserves
|
|
|
Housing
Revenue Account
|
89
|
Various
schemes
|
See
Appendix 7
|
Use
of receipts or reserves
|
|
|
|
2,854
|
Total
receipts or reserves
|
|
|
|
|
|
|
|
|
|
8
Implications for the
Medium-Term Financial Strategy (MTFS)
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.
8.2
Section 3.3 outlines that
significant one-off resources have been used to address the TBM
outturn position in 2025/26, resulting in a structural overspend in
demand led services and non-delivered savings which will carry risk
into 2026/27 and future years. The extent of these risks for
2026/27 will be reviewed and reported as part of 2026/27 TBM Month
2 (reported to Cabinet in July 2026) and reviewed to ascertain
their impact on future years of the MTFS.
8.3
Details of Capital Receipts and
Collection Fund performance are also given below due to their
potential impact on future resources.
Capital Receipts Performance
8.4
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. There
are 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, 24 April 2025 and 16 October 2025.
8.5
The total general fund capital receipts and appropriations in
2025/26 was £13.522m from 16 disposals which included
properties at Freshfield Industrial Estate, Patcham Court Farm
Grand Parade Mews, New Dorset St, East Brighton Park, Oxford St,
Stanmer village and Pickers Hill.
8.6
The forecast for the ‘right to buy sales’ in 2025/26
was £12.000m. This step increase in sales compared to previous
years is because the discount provided for Right to Buy (RTB)
reduced in November 2024 and there was an increased level of
applications leading up to that deadline. Receipts from RTB sales
are expected to reduce significantly in future years. The net
retained receipt is used to fund investment in the HRA capital
programme, specifically the new supply of affordable housing. As at
the end of March, 72 homes were sold for a total receipt of
£12.225m.
Collection Fund Performance
8.7
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.
8.8
The Collection Fund for council tax closed with an overall deficit
position of £2.439m. The main drivers for this deficit are
losses in collection of £1.852m, lower than anticipated
properties £0.950m, increased council tax reduction (CTR)
claimant numbers £0.482m, increased Severely Mentally Impaired
(SMI) exemption cost £0.313m, increased single person discount
£0.238m and other exemptions and discounts £0.422m. This
has been partially offset by increased second home premium
£0.981m, reduced student exemptions £0.706m and brought
forward surplus £0.131m. The council’s share of the
deficit is £2.062m and represents an increased deficit of
£0.991m from the position previously reported mainly related
to losses in collection and this will be incorporated into the
surplus / deficit position for the 2027/28 budget.
8.9
The Collection Fund for
business rates closed with an overall deficit position of
£5.089m (£1.910m brought forward and £3.179m
in-year). The cost of successful appeals was the main reason for
the brought forward deficit. The in-year £3.179m deficit is
largely driven by increased appeals costs of £8.673m. There
was also increased empty property relief £1.314m, retail,
hospitality and retail relief £1.197m, higher than forecast
collection losses £1.221m and other reliefs £0.390m. This
has been partially offset by growth in the gross liability
£7.493 (2025/26 £3.985m and previous years £3.509m)
and reduced Small Business Rates Relief award £2.123m. The
council’s share of the deficit position is £2.494m. This
represents an increased deficit of £1.797m from the position
previously reported mainly due to increased cost of appeals and
this will be incorporated into the surplus / deficit position for
the 2027/28 budget.
8.10
The creation or re-designation
of reserves, the approval of budget transfers (virements) of over
£1 million, 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. Cabinet is asked to approve the
creation of a £3.9m risk reserve to mitigate impact from the
increased focus on aged debt being undertaken in
2026/27..
8.11
The council’s reserves and provisions have been assessed as
part of the annual closure of accounts process and a schedule of
the reserves is shown at Appendix 9. This reflects the position
after the release of a further £0.564 of reserves to support
the 2025/26 in year position and these are detailed in the table
below.
|
Reserve
|
Amount Released
£’000
|
|
IT Investment
Reserve
|
329
|
|
Unrequired
Working Balance
|
120
|
|
Travelers Site Capital Reserve
|
79
|
|
IT Helpdesk Reserve
|
33
|
|
Other residual
balances
|
3
|
|
Total
|
564
|
8.12
The working balance was drawn down in 2022/23 by £3.376m to
fund the general fund revenue overspend, and a strategy is in place
to replenish over a 3 year period to 2026/27. The
recommendations within this report will bring the working balance
to £7.740m as at 31 March 2026. Part of the EFS request agreed
by MHCLG was to improve the general fund position in recognition of
the fact that it remains too low.
9
Treasury Management End of Year
Review 2025/26
9.1
The 2025/26 Treasury Management
Strategy, including the Annual Investment Strategy, was approved by
full Council on 27 February 2025.
9.2
The CIPFA Treasury Management
Code requires the performance of the treasury management activity
against the strategy and key prudential and treasury indicators to
be reported at least twice a year, to be presented to Cabinet as
part of the TBM process.
·
Investment
balances have continued to remain low as the council maintains a
strategy to maximise internal reserves and balances to temporarily
finance the borrowing need in the capital programme.
·
The
highest risk indicator on investments during the period was 0.003%
which is well below the maximum benchmark of 0.050%.
·
The
return on investments has exceeded the benchmark rates for the
period.
·
The
council entered into six tranches of new HRA PWLB borrowing
totalling £135m throughout 2025/26 to fund the HRA capital
financing requirement in response to maturing debt and reducing
cash balances.
·
The
two borrowing limits approved by full Council have not been
exceeded.
·
The
Annual Investment Strategy parameters have been met throughout the
6-month period.
10
Analysis and consideration of
alternative options
10.2
The working balance will be
increased by £4.160m in 2026/27 through the use of Exceptional
Financial Support (EFS).
11
Community engagement and
consultation
11.1
No specific consultation has
been undertaken in relation to this report.
12
Financial implications
12.1
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 members and the management and treatment of strategic
financial risks is considered by the Audit, Standards & General
Purposes Committee.
Finance Officer consulted: Jeff
Coates Date:
23/06/2026
13.1
Decisions taken in relation to
the budget must enable the council to meet 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.
13.2
The Treasury Management actions
reported in the review document at Appendix 10 are carried out in
accordance with the powers conferred by Part 1 of the Local
Government Act 2003, which permit local authorities to invest for
the purposes of the prudent management of their financial affairs.
Regard must be had to statutory guidance in the form of the
Prudential Code for Capital Finance in Local Authorities issued by
the Chartered Institute of Public Finance and Accountancy. The
Council’s approach is considered to be consistent with that
Code and the requirements of the Act.
Lawyer consulted: Victoria
Simpson
Date: 17/06/2026
14.1
There are no direct equalities
implications arising from this report.
16
Health
and Wellbeing Implications:
16.1
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.
17.1
The council has achieved a break-even position in spite of
exceptional pressures in the cost, demand and complexity of
provision within demand led budgets. These pressures have also had
a significant impact on the delivery of savings programmes. Whilst
the position has improved since TBM Month 9 by £4.861m, much
of the improvement was a result of the application of one-off
resources, resulting in a considerable underlying overspend which
will impact on 2026/27.
17.2
The council’s ongoing financial sustainability remains a
critical concern. The council has requested Exceptional Financial
Support from the government in 2026/27 and has used some of this to
create contingency in the revenue budget and increase the
council’s General Fund working balance and general risk
reserve, but this increase is still less than the underlying
overspend that is being carried forward, meaning that additional
savings and ways to offset the funding shortfall will need to be
found..
Supporting Documentation
Appendices
1.
Financial Dashboard Summary
2.
Revenue Budget Movement Since Month 9
3.
Revenue Budget Performance RAG Rating
4.
Revenue Budget Performance
5.
Carry Forward Requests
6.
Summary of 2025/26 Savings Progress
7.
Capital Programme Performance
8.
New Capital Schemes
9.
Schedule of Reserves
10.
Treasury Management End of Year Review
