Lead Member – Cllr Roger Evans, Portfolio Holder for Finance

Lead Officer – James Walton, Executive Director of Resources

REPORT TO FOLLOW

RESOLVED: 

A.     To declare a financial emergency and direct the Chief Executive (in conjunction with the Council Leader) to instruct all Officers to take emergency action to reduce all non-essential spending between September and March to significantly improve the Period 4 forecast of a projected spend over budget of £35.169m. Such action should predominantly focus on reducing spend, delivering remaining savings and significant mitigating actions to control in-year spending pressures.

B.     Direct the Chief Executive to work closely with the LGA and the Council Leader to put in place an independently chaired Improvement Board, as recommended in the recent LGA Corporate Peer Challenge, as soon as practicable.

C.     To note that Operations Boards, to ultimately work with the Improvement Board, are in place from August 2025 to challenge all in-year spending.

D.     To note that the Period 4 position (as at the end of July) forecasts indicative savings delivery of £34.012m (57%).

E.     To note the projected General Fund Balance is now negative (£0.899m), indicating a potentially illegal financial position by the end of the financial year if no further action is taken F. Immediately direct the Chief Executive, working in collaboration with Cabinet, to bring forward a sustainable corporate plan for the authority to Council in December, reflected in a medium term financial strategy that sets out an approach to deliver a sustainable financial position within a timeframe of no more than three years.

The Portfolio Holder for Finance reported that the council’s financial position had worsened, with unplanned and unexpected costs in July leading to a projected overspend of £35.169 million and a negative General Fund Balance. This situation signalled a potential breach of legal financial requirements by the end of the year if no further action was taken. The risk of issuing a Section 114 notice was highlighted, which would result in government commissioners taking control of council spending and severely limiting local autonomy.

While some late savings were identified, these were insufficient to offset the overspend. The council agreed that a financial emergency should be declared, the annual budget target revised, and all non-essential spending reduced between September and March.

Despite the financial emergency, the Leader emphasised that the council remained committed to delivering essential services and maintaining public trust. There was discussion about the confusion among the public regarding capital versus day-to-day spending, and the need for clear communication about funding sources. The importance of partnership working, both within the council and with external bodies, was stressed as a way to find alternative solutions and maintain service delivery in challenging times.

The Leader commented on the length of time taken to set up a new Improvement Board as recommended following the CPC review but confirmed that the council was working closely with the LGA to recruit to the Board and put it in place as soon as practicable.  The new strategic plan would be based on new strategic priorities, the immediate need to avoid a S114 notice and longer term the council would have to reappraise its purpose and level of service it could provide. 

The Leader welcomed the cross-party support expressed for declaring a financial emergency, taking decisive action, and working collaboratively to avoid a Section 114 notice and restore financial stability.

RESOLVED: 

A.      To declare a financial emergency and direct the Chief Executive (in conjunction with the Council Leader) to instruct all Officers to take emergency action to reduce all non-essential spending between September and March to significantly improve the Period 4 forecast of a projected spend over budget of £35.169m. Such action should predominantly focus on reducing spend, delivering remaining savings and significant mitigating actions to control in-year spending pressures.

B.      Direct the Chief Executive to work closely with the LGA and the Council Leader to put in place an independently chaired Improvement Board, as recommended in the recent LGA Corporate Peer Challenge, as soon as practicable.

C.      To note that Operations Boards, to ultimately work with the Improvement Board, are in place from August 2025 to challenge all in-year spending.

D.      To note that the Period 4 position (as at the end of July) forecasts indicative savings delivery of £34.012m (57%).

E.      To note the projected General Fund Balance is now negative (£0.899m), indicating a potentially illegal financial position by the end of the financial year if no further action is taken F. Immediately direct the Chief Executive, working in collaboration with Cabinet, to bring forward a sustainable corporate plan for the authority to Council in December, reflected in a medium term financial strategy that sets out an approach to deliver a sustainable financial position within a timeframe of no more than three years.