Decision details

The Executive Member for Finance submitted a report for Executive’s consideration, the purpose of which was to discharge the responsibilities of the Executive to manage and control the revenue budget, capital programme, and overall balance sheet position of the Council.

 

The Council’s Scheme of Delegation gave Executive collective responsibility for corporate strategic performance and financial management / monitoring, together with associated actions. Standing Orders and Financial Procedures required Executive’s approval for major virements between revenue budgets, and in-year changes to the Council’s Capital Programme within approved Council resources.

 

The report enabled Executive to discharge its financial management responsibilities by setting out the following position at Quarter One (30 June 2025):

 

·         General Fund Revenue Budget forecast outturn;

·         Virements

·         Statement of the Council’s reserves and provisions;

·         Capital Programme forecast outturn;

·         Statement of the Council’s borrowing and prudential indicators;

·         Statement of the level of debt owed to and to be recovered by the Council;

·         Actions that have been taken and are planned to be taken in order address the issues identified.

 

Financial Procedure Rule 18.38.3 of the Council’s constitution required Executive’s approval of revenue and capital programme budget virements over £250,000 and Financial Procedure Rule 18.80.2 required approval by Executive of the write off of debt over financial thresholds set out in the Financial Limits Annex of the Council’s Constitution.

 

The forecasts within the report, as of 31 March 2026, were prepared using the following major assumptions:

 

·         All known staffing changes had been captured

·         Agreed pay award of 3.2% for local government officers for 2025/26 included

·         Income and Expenditure forecasts had been prepared in conjunction with budget holders using the best information currently available.

 

 

The 2025/26 Revenue Budget, Medium Term Financial 2025/26 to 2028/29, and Council Tax report to Council on 19 February 2025 set out the future financial position of the Council.

 

Executive were advised that both the report presented, and the report submitted to Council, should be read together to fully understand the context within which the Council was operating and the financial challenges it faced.

 

As part of the report submitted to Council, a net revenue budget for 2025/26 of £143.304m was approved by Full Council. Within the report the Director of Finance and Transformation (S151 Officer) issued his Section 25 Report which set out the basis upon which the revenue budget was seen as robust and the basis upon which reserves were considered adequate.

 

While the Council had achieved significant improvement in its financial position since the start of 2024/25, there was still a need to control expenditure within the approved 2025/26 budget. There was also a need to develop further savings and income generating opportunities through the Recover, Reset, Deliver Transformation Portfolio to balance the MTFP and stabilise the Council’s financial position as well as rebuilding its financial resilience.

 

This required the delivery of all approved 2025/26 savings plans in full. Budgetary control measures as detailed in the 2024/25 Revenue and Capital Outturn report to Executive on 11 June 2025 would continue to be implemented during 2025/26.

 

Table one in the report summarised the overall position per Directorate and showed that the 2025/26 forecast year-end outturn position, as of 30 June 2025 (Quarter One), was an overspend of £10.677m (7.5%) against the approved budget of £143.304m.

 

Table one in the report showed if actions to reduce the overspend were not successful it was proposed to use central contingencies, which were set aside for this purpose. This would be done alongside other central budgets to reduce the forecast year end overspend to £4.482m (3.1%).

 

This would mean there would be limited central contingencies for use in 2025/26.  Therefore, Directorates needed to make every effort to reduce their forecast overspends and achieve a balanced budget by the end of 2025/26.

 

A summary of the main variances for each Directorate was detailed in paragraphs 4.17 to 4.30 of the report and included any recovery plans proposed by Directorates.

 

The Mayor commented that future reports of this nature needed to reflect that overspends, in most cases, were predictions. There was a need to be realistic and take the management of public funds seriously, especially in the face of current pressures.

 

The Mayor also stated he had seen an action plan for Children’s Services that helped to address the issues identified in the report and he was confident in its approach, especially in light of rising service costs.

 

The Mayor, and the Council were working with government to ensure Middlesbrough received a better funding settlement from government.

 

The Mayor requested a Member Briefing be set up to explain the current position within Adults and Children’s Services once the full situation was understood.

 

OPTIONS

 

The alternative would be to not approve the revenue budget virements over £250,000 and the changes to the Council’s capital programme, and to not report on the Council’s forecast year-end financial outturn for the financial year 2025/26. This would not enable the Executive to discharge their responsibilities to manage and control the revenue budget, capital programme and overall balance sheet position of the Council.

 

 

ORDERED that Executive:

 

1.    Approves budget virements over £250,000 within the revenue budget (Appendix 1)

2.    Approves the inclusion of new schemes and additions to existing schemes to the Capital Programme totalling £5.004m for 2025/26, of which £1.818m were externally funded and £3.186m was from existing Council funded resources (detailed in Appendix 5). Subject to approval this will increase the approved 2025/26 Capital Programme budget to £87.575m

 

AGREED that Executive:

 

1.    Notes the Council’s financial performance and forecast year-end financial outturns for revenue and capital budgets for the financial year 2025/26 as at Quarter One, including that if there was no further action the overspend on the revenue budget at year end was currently forecast to be £4.482m (3.1%) after the proposed use of central contingencies and other budgets.

2.    Notes the requirement for Directors to develop and submit further recovery plans and mitigations in order to reduce their forecast overspends and seek to achieve a balanced budget for their Directorate by the end of 2025/26, and also that corporate revenue budget spending controls would continue to be applied during 2025/26.

 

REASONS

 

To enable the effective management of finances, in line with the Council’s Local Code of Corporate Governance, the Scheme of Delegation and financial regulations.