Agenda item

A presentation will be given in respect of financial monitoring for the General Fund, Revenue, Designated School Grant, Housing Revenue Account (HRA) and Capital Plan as at Quarter 1 2025-2026, with reference to the report submitted to Cabinet on 9^th September 2025.

Contact: Kevin Mulvaney – Service Director of Finance

Kevin Mulvaney, the Service Director, Finance gave a presentation in relation to the financial monitoring for Quarter 1 2025/26, with reference to the report submitted to Cabinet on 9^th September 2025.

The Portfolio Holder for Finance and Regeneration, Councillor Graham Turner, was present and introduced the item.

The presentation went through:

·       The revenue headlines.

·       Quarter 1 Forecast, with a breakdown across each directorate.

·       The high-level variations for each directorate.

·       Analysis of the variances for each directorate.

·       Housing Revenue Account (HRA) position.

·       Capital headlines and re-profiling.

·       Dedicated Schools Grant (DSG) position.

The following points were highlighted:

·       A projected overspend of £5.9 million was reported for Quarter 1, noting that this was the lowest Q1 overspend since the pandemic and there was optimism about achieving a balanced budget by year-end.

·       Key financial pressures continue to stem from demand-led services such as Children’s Services and Adult Social Care.

·       Investment in future service delivery in these areas was ongoing, although the benefits would take time to have an impact.

·       Children’s Services showed a £3.9 million overspend, primarily due to increased numbers of looked after children, external placements and a rising average weekly cost. It was noted however, that Kirklees compared favourably to statistical neighbours in terms of the numbers of looked-after children.

·       Adult Social Care projected a circa £1.7 million overspend, with significant challenges in achieving savings targets related to client income and debt collection.

·       Place Directorate faced a £1.5 million overspend, mitigated partially by reserves for home-to-school transport. The other pressure areas were property management and maintenance costs and land bank, and parking and highways.

·       Public Health, Corporate and Central showed an underspend of £0.7 million, although attention was drawn to additional demand affecting legal services.

·       The Council was using contingency reserves to manage pressures, including £1.5 million for home to school transport and circa £400k for the delayed care homes transfer.

·       The HRA was broadly balanced with minor variances.

·       The Capital Plan had been reprofiled with approximately 10 million moved to future years.

·       The DSG deficit was forecast to increase by £12.5 million, bringing the cumulative deficit to over £75 million, noting that this was a national issue and a White Paper was expected in Autumn 2025 which would establish the Government’s approach.

Questions and comments were invited from Committee Members, with the following issues being covered:

·       The Council had entered into a ‘Safety Valve Agreement’ with the Department for Education (DfE) to manage high needs block pressures. The Council had committed £10 million over five years, and Government approximately £2.3 million annually plus a significant additional grant to support the provision of two special schools, with the aim of reducing the cost of external placements.

·       In response to a question about the Government’s approach and the conditions attached to such agreements, it was explained that the current government was honouring existing agreements but not entering into new ones.  It was anticipated that future policy would be included in the upcoming White Paper.

·       It was noted that the Council had been commended by the DfE for its work on the Safety Valve.

·       The £9.9 million re-profiling of the Capital Plan had been undertaken since the July rollover report and had contributed to reducing borrowing needs. The estimated revenue saving from reprofiling was generally based on approximately £80,000 per £1 million, if borrowing over 25 years, but calculation was complex as there were two parts, the interest on the borrowing and the Minimum Revenue Provision (MRP).

RESOLVED –

(1)  That the Cabinet Member and Service Director – Finance be thanked for attending to update the Committee.

(2)  That the current position be noted and it be recommended that these reports continue to be submitted to the Committee on a regular basis so that Lead Members can pick up any items within the remit of their Panel that may require further scrutiny.