To provide a general update and overview of the Council’s financial position against the 2025/26 budget as at the end of December 2025 and looking ahead across the two-year financial plan period (2026/27 and 2027/28).

RESOLVED that -

(a)     the Council’s in-year financial position as at the end of December 2025 along with the latest financial forecast update be noted;

(b)     the proposed adjustments to the budget as set out in Appendix 1H be approved;

(c)     the most up to date CRP budgets as set out within Appendix 1D(i) be agreed;

(d)     the views of the Resources and Service Overview and Scrutiny Committee be invited on the information set out in this report along with the Council’s wider financial position as part of its work programme for the year;

(e)     in respect of the cost pressure of £0.427m in 2026/27 relating to the Investment in Assets (General R&R Priority Items), as set out within Appendix 1H, the Chief Executive, in consultation with the Portfolio Holder for Corporate Finance and Governance, be authorised to allocate this funding across the various associated schemes;

(f)       subject to an associated agreement with Essex Police, the transfer to them of the previously agreed annual contributions for the Harwich PCSO for the period covering 2025/26 to 2027/28 be approved; and

(g)     Pride In Place external grant funding of £0.360m (capital) and £0.232m (revenue), along with associated additional capacity funding of £0.150m to support the delivery of the programme, be accepted ahead of a future separate report that will include further details / associated governance arrangements as necessary.

Cabinet considered a report of the Corporate Finance & Governance Portfolio Holder (A.2) which provide a general update and overview of the Council’s financial position against the 2025/26 budget as at the end of December 2025 and looking ahead across the two-year financial plan period (2026/27 and 2027/28).

SECTION 1 - In-year financial position at the end of December 2025:

It was highlighted that several adjustments had been made to the 2025/26 budget as part of developing the detailed estimates that had been agreed by Full Council in February 2026. With that in mind, and along with a few adjustments included in the earlier Financial Performance Reports, the in-year position at the end of December 2025 continued to broadly perform to the underlying budgetary position, with no new major issues emerging relating to 2025/26.

However, it remained timely to address a limited number of cost pressures that had been identified at the end of Quarter 3, which were set out in Appendix 1H.  Given the two-year approach to the forecast, the items set out covered the period 2026/27 and 2027/28 as necessary, rather than just in-year changes. They were supported by the Corporate Investment Funds / Reserves as necessary which continued the approach set out and adopted as part of the budget setting process for 2026/27 that had been agreed by Full Council in February 2026.

The position to the end of December 2025, as set out in more detail within the appendices, showed that, overall, the General Fund Revenue Account was underspent against the profiled budget by £1.128m (£3.661m at the end of September 2025). However, it was noted that this position continued to primarily reflect the timing of expenditure and income such as the Government’s reimbursement of the cost of meeting housing benefit claims.        

In terms of proposed adjustments to the budget, Appendix 1H set out a limited number of largely ‘business as usual’ type activities where there had been an identified increase in costs or to reflect the on-going outcome from stock condition surveys / reviews. It was expected that further items along with those relating to the investment in priorities etc. would be considered later in the year as necessary.

In-line with the two-year financial plan framework adopted, the overall net impact of the proposed budget adjustments as set out in Appendix 1H would be adjusted against the Corporate Investment Funds and/or reserves as necessary.

In addition to the adjustments set out in Appendix 1H, any further issues that had emerged or developed during the second half of the year along with updates to previously reported matters were discussed in more detail within this report (A.2).

In respect of other areas of the budget such as the Housing Revenue Account, capital programme, collection performance and treasury activity, additional details were set out later on in this report (A.2).

SECTION 2 - Two-year Financial Plan Update:

Members recalled that a summary of the most up to date position had been considered by Full Council on 17 February 2026 as part of agreeing the detailed budgets for 2026/27.

Apart from the proposed changes set out in Appendix 1H, there had been no changes made to the forecast position mentioned above at this stage, but for completeness key issues were highlighted in this report (A.2).

Cabinet was reminded that an initial in-principle approach had been set out within the report to Full Council in February 2026 with the intention of it forming the basis of the Council’s reasonable and balanced financial response to meet its potential obligations to an incoming Unitary Council. The proposed way forward had been ‘built’ on a multiplier approach based on the level of funding remaining within the Forecast Risk Fund at 31 March 2028 expressed as a percentage of the estimated notional budget ‘gap’ in 2028/29 (being the first year of the new Unitary Council).

The above had been based on an initial notional approach and would be subject to further development over the next two years and balanced against the use of the Forecast Risk Fund and Corporate Investment Funds. It did however establish a key principle on how the Council was aiming to meet its obligations to the new Unitary Council that in turn supported their own financial position and stability, leaving them the opportunity to determine their own decisions against the financial foundations left by this Council.

The two-year forecast would therefore be subject to further development against the key principles / ‘framework’ highlighted above during the first half of 2026/27.

In terms of the HRA Business Plan, a summary of the most up to date position had been also considered by Full Council on 17 February 2026 as part of agreeing the detailed budgets for 2026/27. The challenges faced by the Housing Revenue Account also remained significant and included increased expectations and requirements that continued to emerge from the Social Housing Regulation Act and associated enhanced powers of the Housing Regulator.

Similarly to the General Fund and as highlighted within the earlier budget reports, the development of the HRA Business Plan would enable the continuation of a relatively strong financial position and provide flexibility to respond to statutory obligations that were expected to emerge in respect of the new Unitary Council from as early as April 2028.

Earlier reports had also highlighted the importance for the Council to maximise the benefits from the increased flexibilities relating to the Right to Buy regime that had been announced by the Government during 2025. An important first step was to capture all capital receipts and relevant Section 106 money within the HRA Capital Programme, rather than the alternative of it remaining within the balance sheet and only transferred as separate associated decisions were made during the year.

The Council remained alert to any changes that might be required in managing its housing stock with the HRA Business Plan subject to updates during 2026/27.

To set out the financial position for the Council and to respond to emerging issues in 2025/26 and across the two-year financial plan period:-

It was moved by Councillor Stephenson, seconded by Councillor Kotz and:-

RESOLVED that -

(a)     the Council’s in-year financial position as at the end of December 2025 along with the latest financial forecast update be noted;

(b)     the proposed adjustments to the budget as set out in Appendix 1H be approved;

(c)     the most up to date CRP budgets as set out within Appendix 1D(i) be agreed;

(d)     the views of the Resources and Service Overview and Scrutiny Committee be invited on the information set out in this report along with the Council’s wider financial position as part of its work programme for the year;

(e)     in respect of the cost pressure of £0.427m in 2026/27 relating to the Investment in Assets (General R&R Priority Items), as set out within Appendix 1H, the Chief Executive, in consultation with the Portfolio Holder for Corporate Finance and Governance, be authorised to allocate this funding across the various associated schemes;

(f)       subject to an associated agreement with Essex Police, the transfer to them of the previously agreed annual contributions for the Harwich PCSO for the period covering 2025/26 to 2027/28 be approved; and

(g)     Pride In Place external grant funding of £0.360m (capital) and £0.232m (revenue), along with associated additional capacity funding of £0.150m to support the delivery of the programme, be accepted ahead of a future separate report that will include further details / associated governance arrangements as necessary.