Subject:
Targeted Budget Management (TBM) 2026/27
Month 5 (August)
Date of meeting:
Thursday, 15 October 2026
Report
of:
Cabinet Member for Finance & City
Regeneration
Contact Officer: Elizabeth
Griffiths, Director of Finance & Property
Haley Woollard, Deputy Chief Financial 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).
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 indication of forecast risks as at Month 5 on the
council’s revenue and capital budgets for the financial year
2026/27. 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.
2
Recommendations
2.1
Cabinet notes the forecast risk position for the General Fund,
which indicates a potential forecast overspend risk of
£23.835m
2.2
Cabinet notes the additional risks of £18.862m included in
the table at Appendix 2 which are not included in the forecast
figure above.
2.3
Cabinet notes the forecast overspend risk for the separate Housing
Revenue Account (HRA), which is an overspend of £1.145m.
2.5
Cabinet notes the progress of transformation programmes shown in
Appendix 6 and the delivery of savings as detailed at 3.8 and 3.9
of the report.
2.6
Cabinet notes the Treasury Management update at Appendix 3.
2.7
Cabinet approves the addition of new projects to the capital
programme totalling £0.357m as set out in Appendix 4.
2.9
Cabinet notes the forecast position on the Capital Programme at
Appendix 5.
2.10 Cabinet notes
the aged debt position shown at Appendix 7.
3
Overview
3.1
The forecast outturn
position at month 5 for the current financial year 2026/27 is an
overspend of £23.835m with an additional table of risks
(Appendix 2) totalling £18.862m.
3.2
The forecast has deteriorated by £2.983m between month 4 and
5.
3.3
Centrally-held budgets have seen the largest change. This is
primarily driven by the delay of savings in Organisational
Transformation (£1.125m). Workshops have been held and data
analysed but no significant opportunities have been realised that
were not already in services’ existing plans and savings
targets. A delivery partner has been commissioned to do a
more extensive analysis to facilitate these savings in the future
but this delay in realisation impacts the 2026/27 forecast
position. Council-wide organisational diagnostic work will provide
insight and identify clear workstreams for the Organisational
Transformation programme going into 2027/28. In addition,
£0.550m of one-off costs to be met for schools reorganisation
have now been quantified. These costs are expected to support a
more financially sustainable schools provision in future
years.
3.4
In City Operations, parking income remains above the equivalent
period in 2025/26 but is currently below the 2026/27 budget target.
The budget assumed growth of 8% compared with the previous year,
whereas income to date is 6% higher than the same period last year,
resulting in a forecast pressure against the target. Growth has
been driven primarily by on-street parking income, while car park
income has been lower than the previous year as a result of reduced
occupancy levels. With the peak summer period now largely complete,
there is limited scope for seasonal demand alone to bridge the
remaining gap and performance will continue to be monitored closely
throughout the remainder of the year.
3.5
In Families, Children and Wellbeing, the growth in the number of
Education, Health and Care Plans (EHCPs) continues to place
significant pressure on both home to school transport and the DSG
High Needs Block. As more children and young people require
specialist provision, often outside their local area, transport
demand has increased alongside a rise in overall unit costs. This
is adding to existing budgetary pressures within local authority
services, transport expenditure and the sustainability of the High
Needs Block. While the Council continues to review transport
arrangements and promote efficient use of resources, the underlying
growth in EHCPs remains a key driver of demand-led cost pressure
and represents a material financial risk.
3.6
In Homes and Adult Social Care,
the figures highlight a worsening forecast and a worsening risk
position with Adult Social Care continuing to account for the most
significant financial pressures. Demand for community care,
nursing and residential support remains above budgeted assumptions,
while increases in the complexity and cost of care packages
continue to drive expenditure growth. ASC remains on track to
deliver over 80% of its planned savings and mitigations, and
building on the learning from last year’s management of
provider fee uplift pressures, have undertaken an earlier
assessment of the most likely impact of these and as a result, are
recognising these risks more transparently at this stage of the
financial year. Options for a more corporate response to
support fully delivery of savings are being considered.
3.7
The below graph shows the trajectory of the forecast compared to
previous years. Not only has this year’s forecast position
started higher than previous years, but has continued to rise
through the first part of the year, which is inverse to the
trajectory of previous years.
Savings &
Transformation Delivery
3.8
All services continue to report good progress on their
transformation programmes which are having a positive effect on
their position but are currently unable to keep pace with the rise
in numbers and costs. The transformation programmes are overseen by
the Innovation and Savings Delivery Board which reports into CLT.
An update on the current position of the projects is shown at
Appendix 6.
3.9
Workstreams have two RAG ratings; one for project delivery and one
for savings delivery. This is because it is entirely possible to
have a well managed project which is delivering according to plan
(and therefore RAG’d green) but because demand or other
factors are overtaking the outcomes, the anticipated savings are
not being realised. It should be noted that even when the
anticipated savings are reduced, a successful project provides
significant cost mitigation against a position which would have
been worse. The performance below shows the RAG rating for savings
delivery – paragraph 3.10 outlines what each RAG colour
represents.
3.10 Savings in
service budgets, not linked to transformation projects are also
delivering well with 71% either already delivered or strongly
expected to be.
3.11 Savings are
RAG’d as follows:
·
Grey
– the actions required have not yet been planned.
·
Red
– the actions are understood but unlikely to happen or have
an effect.
·
Amber
– the actions are underway but the outcome is still
uncertain.
·
Green
– there is a strong expectation of a successful
outcome.
·
Blue
– the saving has already been delivered.
3.12 Detailed reports
on all areas are included in Appendix 1 which shows forecasts,
explanations for notable variances, current and planned
mitigations, savings delivery and supporting data for each service
area.
3.13 Appendix 1 also
shows the expected variances on the Housing Revenue Account (HRA)
and the Dedicated Schools Grant (DSG) which, while outside the
reported revenue position of the Council are still the
responsibility of the Council to manage. These are showing
overspends of £1.145m and £9.130m respectively with the
large overspend in the DSG being driven by increased demand in the
High Needs Block. The Department for Education continues to
scrutinise closely the past expenditure on the DSG, as it is doing
with all Councils currently in preparation for the partial write
off of overspends. This is seen as a low risk as previous
BHCC expenditure has been compliant and the overspends relatively
low compared to other councils, but since the overall value of DSG
expenditure is so high, this is acknowledged as a potential
threat.
3.14 It’s
important to note that alongside the key factors this month, the
overspend is caused by a number of underlying and ongoing
pressures. We are a council that is committed to paying the
living wage. Not only to our staff but in the organisations
we contract with, and that has an impact on what we pay for our
social care but as a values-led council, we stand by that
commitment. Over the last few years we have budgeted for
inflationary increases but global economic changes have caused
costs to rise by more than expected inflation. In the same
way that our residents are experiencing rapidly rising costs, so is
the authority. This has impacted our borrowing costs as well
and, as discussed in the Treasury update below and detailed in
Appendix 3, we are highlighting a risk that when current debt is
refinanced, and the projection of the timescales around that is
shown clearly in Appendix 3, it may very well be at a higher cost
than the debt which has expired, putting further pressure on our
budget.
3.15 In 2025/26, very
similar cost pressures existed in our budget but were offset by
underspends in other areas or by the use of centrally held
funds. Those underspends were reset in the 2026/27 budget
with increased income targets which helped to balance the overall
position. Those targets are largely being met but their
inclusion in the budget means they are no longer available as
unbudgeted surplus to offset the other overspends. In short,
the council has been managing its finances closely and continues to
do so but like so many councils, the underlying increases in demand
and the increasing levels of complexity and therefore cost are
overwhelming the savings being made, while at the same time,
elements outside of our control such as rising fuel costs and
inflation have materially increased the cost of service
delivery. The Council continues to pursue its transformation
agenda as the means of delivering true and long lasting financial
sustainability for the future.
Treasury, Debt
and Capital
3.16 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 at least
two additional interim reports will be provided via an appropriate
TBM report to ensure compliance with reporting requirements. A
Treasury Management update is included at Appendix 3 and reports
that all activities have been within approved parameters but notes
a concern that if interest rates continue to rise, due mainly to
macroeconomic factors, there is a risk that our capital financing
cost could exceed budget substantially. The treasury team
estimate that for every 1% increase in interest rates, the
council’s borrowing costs would increase by £780k per
annum. This takes account of loans that are fixed for the current
year but over time the impact would be increased as those loans
become due for repayment and new expenditure increases.
3.17 New project
capital funding requested for Cabinet approval totals £0.357m
over two projects. Further details are provided in Appendix 4.
3.18 Appendix 6
reports in detail on the performance of the capital programme and
budget variances to existing projects. These are summarised
below:
|
Summary of
Capital Budget Movement
|
Reported
Budget Month 5
|
|
|
£'000
|
|
Budget approved at
TBM02
|
272,809
|
|
Changes reported at
other committees and already approved, to be included for
TBM5
|
9,082
|
|
New schemes to be
approved in this report (see Appendix 6)
|
123
|
|
Variations to budget
(to be approved)
|
717
|
|
Reprofiling of budget
(to be approved)
|
(20,094)
|
|
Slippage (to be
approved)
|
0
|
|
Total
Capital
|
262,637
|
3.19 The notable
variations not previously agreed, where budget is increasing, are
£1.400m additional borrowing for the Madeira Terraces
Regeneration project, and £0.524m for the Asbestos programme.
There is in addition a reduction in budget and borrowing of
£1.000m for the Valley Gardens Phase 3 project.
3.20 It is worth
noting that the MTFS from 2027/28 onwards expects a saving in the
revenue cost of the capital programme of £1.5m per
annum. The graph at the bottom of the Treasury Management
update shows the anticipated increase in these revenue costs over
the life of the MTFS (an increase of £10m per annum) based on
the current capital programme planned expenditure. Work is
underway to identify capital expenditure that could be deferred or
eliminated in order to achieve this reduction of £1.5m per
annum from the current projection.
4
Analysis and consideration of
alternative options
4.1
The forecast outturn
on General Fund budgets is an overspend of £23.835m m with
additional risks of £18.862m. This exceeds the
Council’s available reserves and likely ability to mitigate
and therefore will require additional EFS.
5
Community engagement and
consultation
5.1
No specific consultation has
been undertaken in relation to this report.
6
Financial
implications
6.1
The financial implications are
covered in the main body of the report and appendices. 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.
6.2
The financial position of the
council remains challenging and while mitigations and further
savings are constantly being developed and implemented, as
evidenced by the tables above, external demand continues to
overwhelm them. Going forward, the council is taking a
transformational approach to the closure of the budget gap but the
change required is and will continue to be, significant. The
authority’s reserves are insufficient to offset the overspend
and further EFS will be required, while we acknowledge that this in
itself is a short term solution and the repayment of it brings
additional cost in the coming years. It provides single year
mitigation for ongoing budget pressures, meaning that unless
additional funding and savings are found that exceed the current
overspend, the budget gap will not close.
Finance Officer consulted: Elizabeth
Griffiths Date:
02/10/2026
7.1
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.
7.2
The Council has a legal
obligation to set a balanced budget on an annual basis as
prescribed in the Local Government and Finance Act 1992 and
associated Regulations. The recommendations contained in this
report will assist in the discharge of that
obligation. Cabinet will note the s151 officer’s view
that Exceptional Financial Support is required in ordered to
achieve a balanced budget.
Lawyer consulted: Elizabeth
Culbert
Date: 05/10/26
8.1
The risk in the forecast
figures has been outlined in Appendix 2 which contains estimates of
further risk from all services that have not yet been included in
the forecast figures because of their level of
uncertainty.
8.2
The more significant risk is
that if our request for further EFS is not approved, the
Council’s Chief Financial Officer would be forced to issue a
S114 report on the grounds that expected expenditure in the current
financial year cannot be met by expected income.
9
Equalities
implications
9.1
There are no direct equalities
implications arising from this report.
11
Health and Wellbeing
Implications:
11.1
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.
12.1 The position at
TBM5 is a significant projected overspend driven by underlying
pressures in service spending carried forward from 2025/26 and
continuing into 2026/27. Savings have been evaluated based on
current expectations of delivery, which has increased the forecast
overspend but gives a more realistic and accurate expectation of
the authority’s year end position.
12.2 The reported
financial position has required the Council to approach MHCLG to
request more Exceptional Financial Support for 2026/27. This is
expected to be a sum of up to £30m. It should be noted
that this is additional borrowing, not additional funding.
12.3 The financial position of the council
remains challenging and while mitigations and further savings are
constantly being developed and implemented, as evidenced by the
tables above, external demand continues to overwhelm them. Going
forward, the council is taking a transformational approach to the
closure of the budget gap but the change required is and will
continue to be, significant. The authority’s reserves
are insufficient to offset the overspend and further EFS will be
required, while we acknowledge that this in itself is a short term
solution and the repayment of it brings additional cost in the
coming years. It provides single year mitigation for ongoing
budget pressures, meaning that unless additional funding and
savings are found that exceed the current overspend, the budget gap
will not close.
Supporting Documentation
Appendices
1.
Forecast Dashboards by Service
2.
Additional risks not included in the forecast
3.
Treasury Management update
4.
New capital schemes
5.
Capital programme performance
6.
Update on the progress of Transformation programmes and key
risks
7.
Aged Debt
