Agenda item

The Assistant Director Finance and Customer Services presented the Quarter Three 2025/26 Finance and Performance Monitoring Report (including Financial Savings) for the consideration of Cabinet, which covered the period April to December 2025.

The report provided an update on the Council’s forecast revenue and capital outturn, savings delivery, reserves, treasury management, and key performance information.

At Quarter Three, the Council was forecasting a £314,000 revenue overspend for the full year. This represented a broadly stable position compared with previous forecasts and reflected ongoing financial management actions taken during the year.

The overall position included the impact of both service-level pressures and favourable movements within corporate financing.

The key message was that the position remained manageable, but there were material service pressures that continued to require close monitoring into Quarter Four and beyond.

In terms of revenue pressures and underspends the most significant overspend was within Environmental Services, currently forecast at £884,000. This was mainly driven by waste management pressures linked to the ageing vehicle fleet, higher maintenance and hire costs, and the use of agency staff to cover vacancies and sickness. These pressures were expected to reduce once the new fleet was fully introduced.

Finance and Customer Services was forecasting a £674,000 overspend. This primarily related to agency staffing costs to cover vacancies, specialist VAT support and insurance property valuation work required for the Statement of Accounts, alongside a housing benefit subsidy budget realignment. A review of resourcing arrangements was ongoing.

The overspends were largely offset by significant underspends elsewhere. Corporate Services was forecasting an £864,000 underspend due mainly to vacancy management, corporate efficiencies, and lower-than-expected inflation and utility costs. Corporate Financing was also showing a £970k underspend, driven by higher investment interest income, savings on interest payable, and the recognition of revenue grants received in advance in the previous financial year.

The Council had a savings target of £1.213m for 2025/26. As of Quarter Three, savings of £1.457m had been delivered, exceeding the target by approximately £244,000. The majority of savings had been achieved through vacancy management and corporate efficiencies. Further work was underway to review vacant posts and ensure that these savings were sustainable into future years.

Capital expenditure to date totalled £13.593m against a revised capital budget of £21.876m, which included additional grants received and carry-forwards from previous years.

Key schemes included Nailers’ Yard, where construction was progressing with a revised completion date of 6^th May 2026, and the Windsor Street site, where remediation works were continuing to prepare the site for redevelopment.

Public Realm works had been completed and were reporting a notable underspend.

While delivery continued, there might be short-term cashflow implications pending the receipt of some external grant funding.

At the end of Quarter Three, earmarked reserves stood at £11.266m and were forecast to rise to £12.245m by 31^st March 2026. This remained consistent with the approved Medium-Term Financial Plan and provided a reasonable level of resilience to manage known risks and future pressures.

The Council continued to operate without external borrowing. At the end of December 2025, £6m was held in short-term investments. Treasury activity remained fully compliant with approved prudential indicators, and returns had benefited from the higher interest rate environment.

Council Tax and Business Rates collection performance remained strong and was close to or above national averages. Benefits processing times had improved during the year, despite increased complexity in cases retained by the Council. Overall, corporate performance indicators were broadly on track at Quarter Three.

Following the presentation of the report, there were several areas discussed in detail. These included the consideration of this report at a Finance and Budget Working Group meeting held on 20^th April. There had been several actions as a result of this pre-scrutiny including:

·       Further information in respect of the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP) funding which was due to be received by the Council.

·       Information on the costs of temporary accommodation. There had been a request made that the Assistant Director for Communities and Housing Services be invited to a meeting of the FBWG in the new municipal year.

·       Funding for potholes at the Aston Road roundabout. This was an unadopted roundabout, maintained by the Council, which needed to be repaired if it was to be adopted in the future.

·       Further information on the £64,000 pressure from North Worcestershire Water Management (NWWM). Cabinet queried whether the pressure would be shared between the partner Authorities. It was confirmed that this was the case.

·       Clarification on the £27,000 additional rent on St John’s car park. Members noted that this was referred to as ‘Waitrose’ car park.

In respect of all these actions, Cabinet requested that they also receive a copy of the information provided to FBWG Members.

Members also requested clarification on the £46,000 savings in terms from UK Shared Prosperity Fund within Economic Development. This was particularly pertinent given the approval of the funding for the 0.5 FTE approved as part of the Community Infrastructure Fund considered earlier at this meeting.

Vacancies and agency costs had also been discussed at the FBWG meeting earlier that day. Clarification on whether vacancies should be considered as underspends or savings was queried. Information was provided on when a vacancy would be considered an underspend and instances when it would be a saving. It was also clarified why a ‘central pot’ was used to hold funds when there were vacancies and that it was returned to the Service area when it was filled. It was noted that some roles were particularly difficult to recruit to and therefore the monies might stay in the ‘central pot’ for long periods of time. However, once the role was recruited to the proportionate (depending on when in the financial year the role was recruited to) amount was returned to the specific service area. Concerns had been raised in respect of agency costs, and it was noted these were carefully monitored. However, it was noted that Environmental Services used agency staff regularly as there was often long-term sickness due to the physical nature of the roles within that Service area.

The Cabinet Member for Finance stated that the Quarters Three and Four reports would be presented to Council at its meeting in July 2026. The reporting schedule would be looked at closely to provide timely reporting to Members and the most up to date information as possible.

The Performance & Improvement Manager presented the Quarter Three Performance Monitoring report for Members consideration. The data had remained largely stable since the previous report at Quarter Two. A request was made that for future reports, any data that had not be received for a specific performance measured, be reported in a different way. This was to ensure that when assessing the data it showed that reporting was still taking place in this area.

RESOLVED that the following be noted:

1)    The current Revenue position of £314k adverse variance;

2)    The current Capital spending of £13.593m against a revised budget of £21.876m;

3)    The current savings delivery is £1.457m against an annual target of £1.213m for 2025/26.  This is included in the above Revenue position;

4)    The Earmarked Reserves balances of £11.266m;

5)    The Ward Budget allocation position to date is 22 approved allocations at £23,433.59, leaving a balance of £38,556.41 to be allocated before year end;

6)    There is an updated procurements position, with any new items over £200,000 to be included on the forward plan;

7)    The position on Council Tax and Business Rates be noted;

8)    The position on benefits processing be noted;

9)    The Q3 position on Corporate Performance Indicators be noted;

10) The Council’s Treasury performance for Q3 of the financial year 25/26;

11) The position in relation to the Council’s Prudential indicators;

RECOMMENDED that

12)That the Balance Sheet Monitoring Position for Q3 is noted – which is the Treasury Monitoring Report and required to be reported to Council; and

13)That £120k capital funding be approved for work on fixing potholes on the Aston Road roundabout and the road leading to the depot.