Agenda item

Q3 Financial Forecast 2025-26

This report sets out the financial forecast for the General Fund revenue budget, the Housing Revenue Account, the Dedicated Schools Grant and the Capital Programme, as at Quarter 3 2025-26.

Decision:

Cabinet RESOLVED:

(1) To note the overall financial position and the actions being taken to manage the issues arising, as detailed within the report.

(2) To note the savings delivery tracker, as detailed within Appendix A of the report.

(3) To note the prudential indicators for treasury management as detailed within Appendix B of the report.

(4) To approve the virements, as detailed in section 9.19 of the report.

(5) To approve the amendments to the capital budget as set out in paragraphs 12.2 -12.4 of the report.

(6) To delegate authority to the Corporate Director of Neighbourhoods and Regeneration to allocate the Pride in Place Impact Fund budget to specific projects in line with the thematic areas linked to the Borough Plan, as set out in paragraph 12.3 of the report.

Eligible for call-in: Yes

Deadline for submission of call-in: 6pm on Monday 26 January 2026

Minutes:

Councillor Mili Patel (as Deputy Leader and Cabinet Member for Finance & Resources) introduced a report from the Corporate Director Finance & Resources detailing the financial forecast for the General Fund revenue budget, Housing Revenue Account, Dedicated Schools Grant and the Capital Programme as at Quarter 3 2025-26.

In presenting the report, Councillor Mili Patel, highlighted that despite the considerable efforts being made to manage the budget, the operating environment and wider economic and social context faced by the Council remained challenging with the latest forecast position reflecting the scale of the financial challenge and difficult context in which decisions continued to be taken. In recognising the tough financial conditions faced by many councils across the country, the specific challenges arising from the sustained pressure needing to be managed in terms of rising demand, high inflation, elevated interest rates and increasing complexity in delivery of Brent’s statutory services were highlighted with it reported the General Fund was now forecasting an overspend of £12.5m. In terms of the most significant pressures, members were advised these continued to be focussed around housing and temporary accommodation, Adult Social Care, and Children and Young People’s Services with temporary accommodation costs continuing to rise as demand increased, and housing supply remained constrained and Adult Social Care and Children’s Services experiencing higher than anticipated volumes and complexity alongside significant increases in placement and care package costs, with and the operating environment as a result continuing to remain volatile.

Despite the challenging financial conditions outlined it was, however, also felt important to recognise the Council’s continued financial resilience, careful management and collective discipline, with spending controls remaining in place and further strengthened during the year accompanied by the introduction of enhanced assurance, vacancy management and tighter controls on non-essential spend, which had helped to stabilise the in-year position and avoid more severe outcomes, at a time when a growing number of councils nationally were requiring exceptional financial support.

Whilst acknowledging the challenges identified, members were also reminded that the Council continued to seek opportunities to support the development of services. As an example, reference was made to the £326m for new regeneration and infrastructure projects designed to improve outcomes for residents alongside the addition of almost 900 new homes to the Council’s portfolio, helping to reduce the reliance on expensive temporary accommodation whilst also delivering safe and secure housing for families. Members were also reminded of the £1.5m secured through the Pride in Place Impact Fund that would support the Council in continuing to make tangible improvements to the borough’s high streets and public spaces, showing residents that despite the challenges identified investment in the priorities being identified in relation to neighbourhood, cleaner streets, safer parks and thriving town centres could still be delivered on the basis of strong financial discipline remaining the foundation for ongoing progress.

Overall, it was felt the financially sustainable approach outlined demonstrated the seriousness in which the Council took its responsibilities in seeking to address immediate pressures whilst also planning for the future, with the Governments new multi-year funding settlement and updated deprivation measures (which it was highlighted would better reflect housing costs in the borough) also positively welcomed in enabling the Council to continue supporting the most vulnerable whilst also seeking to innovate, collaborate and continue investing in the long-term future of Brent.

In considering the forecast position, Members acknowledged the significant level of financial challenge faced by the Council given the scale and depth of the pressures identified whilst also expressing support for the efforts being made to uphold Brent’s core values in seeking to prioritise the most vulnerable and invest in local communities and to continue lobbying for the necessary reform of local government finance in order to provide a fair allocation of resources reflecting need across the borough. Recognising the real and material nature of the most significant pressures identified in relation to Children and Young People (CYP) services, Adult Social Care and Housing & Temporary Accommodation members felt it important to highlight the mitigations and robust budget management measures which had been identified in response. As part of this reference was made (in relation to CYP) to the work being undertaken to deliver the in-house residential children’s care home, additional spend controls and cost avoidance measures as well as opportunities identified within the Children’s Wellbeing and Schools Bill to deliver wider reform of the child welfare system and continuation of the High Needs DSG Block statutory override in seeking to manage the ongoing pressures in relation to the growth in Education, Health and Care Plans.

In terms of Adult Social Care, reference was made to the wider national context in relation to the funding, cost and increasing demand and complexity in the delivery of care packages and placements, with members noting the wider recognition of these challenges by the government as part of the ring fence included within the current local government financial settlement and work being undertaken locally to manage the current pressures identified whilst also seeking to focus the assessment process on ensuring those requiring care and support could continue to live as independently as possible on the basis of the most cost effective model available, including the use of Supported and Home based care provision. In supporting the need for national reform of the care system and work of the Casey Review, members also recognised the role which the increase in National Insurance, inflation and demographics had created in terms of driving up costs of social care packages and placements being delivered through external providers, although pride was expressed for the Council’s stance (in terms of the wider benefits identified) in supporting payment of the London Living Wage by providers. The opportunity was also taken to highlight the accountability and quality assurance work being undertaken to track mitigations and action to manage and minimise the pressures identified along with the focus on recruitment and retention of staff and partnership work being undertaken with the NHS and Voluntary Sector to manage finances and delivery of social care services across the sector.

In addition, members noted the significant pressures continuing to be experienced in relation to Housing Needs and Support. Whilst the Council was expecting to add a further 892 new properties to its housing portfolio during 2025-26 and 2026-27 and continued to implement a number of proactive interventions aimed at increasing supply and identifying alternative arrangements for clients currently in the most expensive type of placements (including the supply of new temporary accommodation units and private rented sector acquisition programme through i4B) to assist in mitigating the budgetary challenges identified, it was acknowledged that the sustained level of demand still continued to significantly exceed supply. In supporting the targeted programme of work outlined, members also highlighted the work being undertaken to address the financial pressures identified in relation to Supported Exempt Accommodation (which it was noted reflected a wider national challenge), ongoing lobbying in relation to a change in Local Housing Allowance provision as well as to monitor the impact of the Renters Right Act on the private rented sector with members highlighting their broader support for the legislation in relation to the wider protections provided for tenants.

Given the significant pressures and challenges identified, members also felt it important to recognise the range of proactive measures being taken to transform and protect the delivery of services for residents. Support was also expressed for the innovation and transformation being sought in service delivery acknowledging the work being undertaken across the Council to deliver cost avoidance measures and mitigate against the risks, whilst continuing to effectively deliver services in such challenging circumstances.

In acknowledging the challenges identified in seeking to manage demand and address the pressures identified, members highlighted their commitment to continue the work with Corporate Directors in relation to the monitoring and management of budgets in each service area and to take the difficult decisions required in order to deliver and safeguard the council’s reputation for financial, stability, sustainability and to avoid the need in seeking exceptional financial hardship support

Having welcomed the multi-year financial settlement implemented by the government as a means of providing greater certainty in being able to plan for future years and noted the update provided within the report and ongoing focus on delivery, Cabinet RESOLVED: