Council finances remain stable despite £1m forecast overspend

A cabinet meeting this week received an update on the council’s revenue budget position at the end of the second quarter of 2025/26.

The revenue budget, which covers the council’s day-to-day costs including staffing, services, maintenance and utilities, is currently forecasting an overspend of £1.035m. This is slightly higher than the first-quarter position, which showed a £0.7m overspend.

Without drawing on money set aside for emergencies, the budget gap would have reached £7.4m. The biggest pressure continues to come from the rising need for temporary accommodation, adding more than £4m in extra costs.

Children’s services are also facing increased demand, with higher transport costs, greater use of agency staff and growing support needs for vulnerable young people.

These pressures are being partially offset by income from investments, along with savings in adult social care and other areas.

The council’s main financial safety net, its general reserves, is expected to be £21.98m by the end of the year, well above the required minimum of £10m.

Chris Ward, the council’s director of finance and resources, told the cabinet that despite the overspend the council is in a much stronger position than this time last year, when the forecast gap was around £5m.

However, he warned that if additional pressures continue, further savings will be needed, placing strain on the council’s future financial position.

Treasury

Alongside the revenue budget, councillors also reviewed the council’s borrowing and investments through the treasury management report.

Despite the Bank of England cutting interest rates twice in the first half of the year, the council’s investments have continued to perform well, earning an average return of 4.66 per cent.

The average interest rate on the council’s borrowing, which totals more than £700m, is 3.41 per cent.

The Council has not taken out any new loans so far this year and does not plan to for the rest of 2025/26.