Agenda item - 2025/26 Revenue & Capital Year End Outturn

For decision.

ORDERED that Executive:

1. Approve budget virements over £250,000 within the revenue budget as detailed in Appendix 1 of the report.

2. Approve budget virements over £250,000 within the Capital Programme detailed in paragraph 4.93 of the report.

3. Approve the inclusion of new schemes and additions to existing schemes to the Capital Programme totalling £1.057m for 2025/26, which were all externally funded to either new or existing schemes which were detailed in Appendix 5 of the report. This would increase the approved 2025/26 Capital Programme budget to £89.508m.

AGREED that Executive:

1. Note the Council’s year-end financial outturn for the financial year 2025/26, with the final revenue outturn position being £1.793m overspend at year-end after the use of central contingencies and other budgets.

2. Note that this sum was to be met from the Savings Delivery Risk reserve of £2.000m, put aside to manage uncertainty in this area.

3. Note the improved year-end position in relation to reserves in those usable unrestricted reserves had increased from £21.654m to £25.941m, an increase of £4.287m demonstrating that the overall financial position of the Council had again improved this year.

4. Note that provision was made in the 2026/27 budget for service demand pressures and re-basing of budgets (including for reduced income levels and legislative requirements) which addressed some of the key areas which contributed to the overspend in 2025/26.

The Executive Member for Finance submitted a report for Executive's consideration.

The purpose of the report was to present the Council’s final Revenue and Capital Year-End Outturn position for 2025/26, including the overall financial performance, budget virements, updates to the Capital Programme and the impact on reserves and financial resilience.

The Executive was advised that the report formed part of its responsibility for financial management, governance and control, and that it enabled oversight of the Council’s financial position at the end of the 2025/26 financial year.

Members noted that the final revenue outturn position was an overspend of £1.793m after the use of central contingencies and other corporate resources.

It was highlighted that this represented a significant improvement from earlier forecasts in the year and demonstrated strengthened financial management and oversight.

The Executive heard that the overspend would be met from the Savings Delivery Risk Reserve and that, despite the overspend, the Council’s overall financial resilience had improved. Usable unrestricted reserves had increased from £21.654m to £25.941m during the year with the Executive Member for Finance drawing Executive’s attention to the graph on page 22 of the report.

Members were informed that the outturn position continued to be driven largely by demand-led pressures, particularly within Children’s Social Care, which reported a significant overspend due to high-cost placements and workforce pressures. Adult Social Care also reported pressures associated with demand for complex care.

The Executive noted that these pressures had been partially offset by underspends within central budgets and other service areas, alongside the application of corporate contingencies and one-off funding.

It was reported that delivery of budget savings remained a key issue, with several savings not fully achieved during the year. These had been reviewed through the Medium-Term Financial Plan and either removed, reprofiled, or incorporated into future budgets.

Members considered the Capital Programme outturn, noting that total expenditure for 2025/26 was £56.477m against a revised budget of £89.508m, resulting in an underspend primarily due to slippage in project delivery. It was noted that funding remained in place and would be reprofiled into future years.

The Executive was also advised of the position regarding the Dedicated Schools Grant, noting a cumulative deficit of £29.317m and the ongoing national arrangements and local actions in place to manage this pressure.

Members acknowledged that the Medium-Term Financial Plan continued to face challenges, including demand-led pressures, inflation, income volatility and workforce issues, and that robust governance, financial discipline and delivery of savings would remain essential going forward.

The Executive Member commented that there was a need to maintain spending controls in areas that were demand-led, such as Children’s Services.

The Mayor drew Executive’s attention to Appendix 5 and the Capital Programme. The Mayor stated that the additional Capital funds needed to be re-invested in areas that needed it, such as Middlesbrough Theatre.

OPTIONS

The Executive considered the option of not approving the proposed revenue and capital budget virements or not formally noting the outturn position. This was not supported, as it would limit the Executive’s ability to effectively manage and control the Council’s financial position, weaken governance arrangements and reduce transparency and accountability.