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The decisions as the council's minutes record them. A plain-language summary follows once it has been written.
Agreed – this will be added to the schools’ outturn and budget report 2 That consideration be given to improving the clarity of reporting on budget virements, how they were presented and aggregated, as the current format made it difficult to understand the overall financial picture where numerous small movements were listed. Agree – we will review the presentation of budget virements in future finance reports.
Apologies for absence were received from Members of Finance Panel, County Councillors; Danny Bebb, Chris Walsh, Corinna Kenyon Wade and co-opted Member Gareth Hall. Cabinet Members County Councillors James Gibson Watt and Matthew Dorrance Officers: J Thomas, C James, D Burgess, E Jones, P Bradshaw, R Jones, C Pinney. Observer: Lynne Hamilton, Chair of Governance and Audit Committee.
There were no Declarations of Interest from Members relating to items to be considered on the agenda.
The Chair was authorised by the Panel Membership to sign off the minutes of the previous meeting held on the 20th of February 2026 as a true record of the meeting.
Background: The Portfolio Holder gave a brief synopsis of the report. The Head of Finance and Deputy S151 Officer advised Members that the continued underspend position was positive but emphasised that it remained relatively small as a proportion of the overall budget. She had highlighted the need for continued rigour in delivering the budget and achieving planned savings by year-end, particularly in light of increasing financial pressures. She had stressed that maintaining financial resilience depended on delivering a balanced budget, limiting the use of reserves, and ensuring robust financial management. She had also indicated that the Council needed to understand the reasons for any variances and apply learning to future budgeting. In addition, she had noted that setting aside reserves from the in-year position would support longer-term financial sustainability and help strengthen the medium-term financial plan. Points raised by the Panel: Responses received from Officers or Cabinet Members. Budget Transfers, Virements and Financial Movements: • Asked what constituted a “temporary virement”, including whether it implied a reversal of funds in a future period and how it differed from permanent budget transfers. • Queried why there appeared to be an increased use of temporary virements, and whether this represented a change in financial practice or simply clearer reporting. • Requested clarity on the total value of budget transfers (“virements/variants”), noting that figures were fragmented across the report and difficult to aggregate. • Asked what the overall sum transferred between services was, seeking a clear single figure rather than multiple line entries. • Questioned large internal budget movements within education (over £5 million) and asked where the funding originated, despite being advised it was a realignment of existing budgets. Officers explained that a temporary virement had been defined as a one-off transfer of budget between services for a specific financial year, often linked to anticipated income that had not yet been fully realised. It had been clarified that this type of virement did not permanently alter base budgets, unlike permanent virements, which reflected ongoing changes in service responsibility or structure. The increased reference to temporary virements had not represented a change in practice, but rather an effort to improve transparency and explicitly distinguish between one-off and recurring budget movements. In relation to the total value of transfers, it had been confirmed that the overall level of virements was in the region of £5.5 million, although this included elements such as grant funding, which made precise categorisation more complex. Officers had explained that many of the larger movements, particularly within education, were administrative realignments of existing budgets following changes to management structures and did not represent new funding or changes in overall service allocations. Delivery of Savings and Cost Reduction Targets: • Raised concern that approximately 23% of planned savings remained unachieved close to year-end and questioned whether this was realistic to deliver within one month. • Asked for an update on the likelihood of achieving these outstanding savings, including whether additional mitigation had been put in place. • Sought clarification on the consequences of failing to deliver savings, particularly whether this would result in overspends or be offset elsewhere. • Requested detailed breakdowns of unachieved savings by service, especially within Highways, Transport and Recycling (HTR), Adults’ Services, Children’s Services and Youth Services. • Asked whether all identified savings (circa £4.3 million) would ultimately be delivered, even if carried forward into the next financial year. Officers acknowledged that a significant proportion of planned savings had remained unachieved at the February position and confirmed that it had been unlikely that all savings would have been delivered by year-end. However, it had been explained that services had mitigated shortfalls in some areas by identifying alternative savings or income streams, thereby limiting the overall financial impact. It had also been confirmed that where savings had not been achieved in-year, actions had either been taken to offset them through other measures or plans had been developed to deliver them in the following financial year. Officers emphasised that service-level commentaries within the report provided further detail on these mitigation approaches and that overall financial performance remained controlled despite these challenges. Service-Specific Savings Issues (HTR, Adults, Children): HTR (Highways, Transport and Recycling) • Questioned the nature of £506,000 of unachieved savings, including whether any elements were undeliverable. • Asked whether under-delivery of savings had implications for frontline services, including potholes and recycling. • Queried whether undeliverable savings had been known at the point the budget was set and whether they had been reported to Council. Adults’ and Children’s Services • Sought explanation for significant delayed savings, including staff transformation, extra care provision, and service redesign. • Queried why some savings had been deferred into future years, particularly where operational or regulatory issues had delayed delivery. • Asked about under-delivered savings in Children’s Services (circa £420k), including whether these would be recovered in-year or carried forward. HTR (Highways, Transport and Recycling) Officers explained that the £506,000 of unachieved savings within HTR had included elements that had been deemed undeliverable in-year, such as reductions in grass cutting, which had subsequently been written off. Other elements, including winter maintenance and service redesign, had been partially achieved or deferred into the next financial year. It had been clarified that the service had still been forecasting a surplus position overall, despite these unachieved savings. Officers also reassured Members that statutory and safety-critical services, such as pothole repairs, had continued to be prioritised and had not been adversely affected, although some non-essential activities had been reduced. Adults’ and Children’s Services Officers outlined that a number of savings within Adults’ Services had been delayed due to operational complexities, including issues with implementation of service transformation models, staffing changes, and external factors such as regulatory delays affecting new service provision. In several cases, savings had been deferred due to unavoidable delays but were expected to be delivered in the following financial year. In Children’s Services, it had been explained that significant work had taken place to reduce costs, including efforts to bring placements in-house and increase local fostering capacity. Although some savings had not been achieved as planned, progress had been made in reducing historical deficits. Officers confirmed that the remaining unachieved savings related largely to areas such as service growth and digital transformation, which had progressed more slowly than anticipated but were expected to improve in future. Use of Risk Budget and Financial Resilience: • Asked why £2 million had been drawn down from the £3 million risk budget despite the Council being in an underspend position. • Queried whether the pressures funded from the risk budget related to prior years or current-year demand pressures. • Questioned why approved utilisation of the risk budget appeared to exceed its original allocation, and whether limits existed. • Sought clarification on how the risk budget operated throughout the year, including fluctuations in allocation and usage. Officers explained that the drawdown from the risk budget had been undertaken earlier in the year, before the full extent of additional income had become apparent. Consequently, although the Council had ultimately been in an underspend position, the use of the risk budget had been justified at the time based on known risks and pressures. It had been clarified that the risk budget operated flexibly throughout the year, with allocations made and adjusted as financial circumstances evolved. Officers noted that the total amount approved for use could exceed the original allocation due to the level of risk inherent in the budget, but actual usage had been lower and had been managed in line with emerging financial performance. Overspend, Underspend and Additional Income: • Queried the reasons for the overall underspend, particularly how much was attributable to late or unanticipated income versus genuine cost control. • Asked whether the underspend indicated over-budgeting at the outset, raising concerns about accuracy in budget setting. • Requested clarity on the scale and sources of additional income (circa £3.1 million) and whether it was recurring or one-off. • Asked what the financial position would have been without this late income, noting it could have resulted in an overspend. • Challenged how late income was presented, suggesting it should be reported separately to avoid distorting the true budget position. • Questioned why income recovery from previous years (for example joint payments) had only been recognised in the current year. Officers confirmed that the overall underspend had largely resulted from additional income of approximately £3.1 million that had not been anticipated at the time the budget had been set. This income had arisen primarily from areas such as retrospective adjustments, partner contributions, and increased service income. It had been acknowledged that without this additional income, the Council would likely have been reporting an overspend at that stage, although officers expressed confidence that corrective actions could have been taken to manage the position by year-end. Officers emphasised that such income was largely one-off in nature and did not form part of the ongoing base budget. In response to concerns about reporting transparency, officers stated that the report had clearly identified the contribution of additional income to the overall position, although they recognised the importance of ensuring clarity in distinguishing between one-off income and underlying budget performance. Forecast Assumptions and Service Pressures: • Questioned why non-critical activity had been deferred when service pressures were reported as being within forecast assumptions. • Asked for clarification of what constituted “non-critical” or “non-statutory” activity, and why it was necessary to reduce such work. • Challenged the consistency of reporting, highlighting apparent contradictions between manageable pressures and service reductions. Officers explained that while overall pressures had remained within forecast assumptions, this had been achieved through active management of service delivery during the year. This had included deferring or reducing non-statutory or non-critical activities in order to offset increases in costs, such as inflation and contractor charges. It had been clarified that non-critical activities referred to services that were not legally required, such as elements of maintenance or enhancement work, which could be reduced or delayed without breaching statutory obligations. Officers acknowledged that the wording within the report could have been clearer in explaining this approach. Reserves and Financial Sustainability: • Queried the projected level of reserves at year-end and into the next financial year, including whether reserves were stabilising or continuing to decline. • Asked about the impact of planned use of reserves (circa £14 million) and the sustainability of this approach. • Sought assurances that the general fund reserve would remain above the minimum threshold. • Questioned long-term trends in reserves and financial resilience, particularly in light of ongoing pressures. Officers advised that there had been planned use of reserves during the year, including the utilisation of approximately £14 million of earmarked reserves. However, they indicated that it had been too early to provide a definitive forecast of reserve levels at the end of the following financial year. It had been stated that while some reserves would continue to be used, the general fund reserve was expected to remain above the minimum threshold. Officers highlighted that transfers of underspend into reserves had been proposed to strengthen financial resilience and support future budget planning, although they acknowledged ongoing uncertainty due to economic pressures. Schools and Education Finances: • Requested the total value of school deficits before netting against surpluses, to better understand underlying financial risk. • Queried the scale of individual school deficits (circa £7.8 million) and implications for future budgets. Officers confirmed that, when school balances had been disaggregated, individual school deficits had totalled approximately £7.8 million. They explained that further work had been underway with schools to validate these figures and understand the underlying causes. It had been acknowledged that this represented a significant financial risk, and officers committed to providing further detailed reporting once the figures had been fully confirmed. Reporting Clarity and Transparency: • Raised concerns about the clarity and presentation of the report, particularly for public understanding. • Asked for clearer explanations of complex financial movements, including virements, reserves, and income adjustments. • Requested improved transparency in separating one-off income from core budget performance. • Highlighted the need for clearer narrative explanations in service commentaries, especially where wording created ambiguity. Officers recognised Members’ concerns regarding the clarity of the report and accepted that some sections, particularly those relating to service commentary and financial terminology, could have been presented more clearly. They undertook to improve future reporting by providing more explicit explanations of key financial concepts and movements. It had also been acknowledged that the distinction between one-off income and ongoing budget performance was important and would be emphasised more clearly in future reports to support transparency and understanding. External Risks and Cost Pressures: • Raised concerns about inflationary pressures and wider global events and their potential impact on council finances. • Questioned the financial implications of increased mileage rates for staff and the overall cost of such measures. Officers highlighted that external factors, including inflation and global events, had already begun to impact costs significantly during the year. They noted that even small increases in inflation could result in substantial additional costs to the authority over time. In addition, officers confirmed that adjustments had been made during the year to staff mileage rates to reflect rising fuel costs, and that these had been funded through budget provisions. These measures had been described as necessary to support frontline staff during a period of increased cost pressures.
Decision as recorded
Agreed – this will be added to the schools’ outturn and budget report 2 That consideration be given to improving the clarity of reporting on budget virements, how they were presented and aggregated, as the current format made it difficult to understand the overall financial picture where numerous small movements were listed. Agree – we will review the presentation of budget virements in future finance reports.
Panel made the following observations: • The Panel endorsed: • The overall forecast underspend position of approximately £3.4 million had been achieved, reflecting prudent financial management across services. • The approach of transferring elements of the underspend into specific reserves had supported the strengthening of the Council’s financial resilience. • The prioritisation of statutory services, particularly within highways and social care, had been maintained appropriately despite financial pressures. • The use of the revenue risk budget had been managed flexibly, with risks being offset through savings elsewhere in the budget. • The Panel welcomed: • Significant additional income of approximately £3.1 million had been secured, particularly within Adult Social Care, improving the overall outturn position. • Progress had been made in reducing historic unachieved savings within Children’s Services and improving financial management practices. • Service areas had demonstrated positive outcomes from transformation activity, including “closer to home” approaches reducing costs. • The continued delivery of the majority (over 70%) of agreed savings by February had demonstrated ongoing effort from services. • The general fund reserve had remained above the recommended threshold, providing a degree of financial stability. • The Panel requested that: • Greater clarity be provided within future reports regarding the distinction between one‑off income and recurring savings, to support transparent financial planning. • Reporting be improved to clearly explain budget virements, including totals and cumulative impact, to aid understanding. • Further detail be provided on school deficit trends over a number of years to enable better scrutiny of financial sustainability. • Clearer narrative be included in reports explaining why non‑critical activity had been deferred, where pressures were stated as being within forecast assumptions. • Future reports strengthen transparency around late or retrospective income, including its impact on the true underlying budget position. • The Panel remained unconvinced about: • The rationale for deferring non‑statutory activity where service pressures had reportedly remained within forecast assumptions. • The clarity and accessibility of the reporting format, particularly in relation to multiple small budget movements and their overall financial impact. • The extent to which late in‑year income had masked the underlying financial position, which may otherwise have reflected an overspend. • The degree of assurance that all unachieved savings would be delivered within the following financial year without further risk. • The Panel expressed concern: • The level of unachieved savings (circa 20%) late in the financial year and the associated reliance on mitigation and future delivery. • The reliance on one‑off additional income, particularly from external partners, to achieve a balanced financial position. • The potential distortion of financial performance reporting and future budgeting arising from late‑year income recognition. • The ongoing financial pressures arising from inflation, fuel costs, and wider global factors, including impacts linked to international conflict. • The scale of school deficits and the implications for medium‑term financial sustainability. • The continued use of reserves and the long‑term trend of reserve levels compared to other authorities. Panel’s Recommendation Accept (plus Action and timescale) Partially Accept (plus Rationale and Action and timescale) Reject (plus Rationale) 1 Information be provided showing the year-end school deficits over the previous five to six years (or across the current council term) in order to enable the panel to review trends in the overall level of school deficits. Agreed – this will be added to the schools’ outturn and budget report 2 That consideration be given to improving the clarity of reporting on budget virements, how they were presented and aggregated, as the current format made it difficult to understand the overall financial picture where numerous small movements were listed. Agree – we will review the presentation of budget virements in future finance reports.
Points raised by the Panel: Responses received from Officers or Cabinet Members. Capital Programme Delivery and Overall Spend • Questioned why the overall capital spend was comparatively low (circa 47%) and whether this represented a deterioration compared with previous years. • Asked whether the level of spend indicated that the capital programme had been under-delivered. • Queried the reasons why a significant proportion of the capital budget remained unspent toward the end of the financial year. • Raised concerns regarding the recurring pattern of underspend and slippage in capital programmes year-on-year. Officers acknowledged that the overall level of capital expenditure had been lower than expected, with delivery at around half of the planned programme by the relevant point in the financial year. It had been explained that capital programmes inherently spanned multiple financial years, and therefore annual spend did not always reflect underperformance but rather the timing of delivery across projects. It had been highlighted that some schemes had progressed into early stages of the following financial year, meaning that expenditure had effectively shifted rather than been lost. Officers emphasised that the reported figure represented a snapshot in time and that additional expenditure had been anticipated before the financial year-end. Profiling, Slippage and Reprofiling of Schemes • Asked why capital schemes were consistently reprofiled into future years and whether improvements could be made to project planning and profiling. • Queried whether the reprofiling of substantial sums (including tens of millions within major programmes) reflected realistic project timelines. • Requested clarity on whether delays were due to internal factors, such as planning and project management, or external influences. • Questioned whether the scale of reprofiling indicated systemic issues in delivering capital schemes within planned timescales. • Suggested that commentary within the report could better explain the reasons behind reprofiling decisions. Officers explained that reprofiling of capital schemes was a common and necessary feature of large capital programmes, particularly where projects were influenced by external timelines such as planning approvals, procurement processes and contractor availability. It had been recognised that while reprofiling could appear as underspend, it primarily reflected adjustments to delivery schedules rather than a failure to progress schemes. It had been acknowledged that improvements in profiling could always be pursued, but officers stressed that many variables affecting delivery, particularly those outside the authority’s control, made precise forecasting challenging. They accepted that the narrative within the report could be strengthened to better explain the reasons for reprofiling and reduce the need for further clarification. Delivery Constraints and Market Conditions • Asked whether difficulties in securing contractors and operating within a challenging market environment had impacted delivery of the capital programme. • Queried whether inflation in the construction sector and rising costs had contributed to delays or reduced activity. • Raised concerns about the impact of supply constraints and delayed availability of materials or equipment (including fleet vehicles). • Requested clarification on whether these external pressures were expected to continue and affect future delivery. Officers confirmed that external market conditions had significantly influenced the pace of delivery. They reported that difficulties in securing contractors, alongside a constrained and competitive construction market, had delayed the progression of some schemes. In addition, rising costs and inflation within the construction sector had required re-tendering in certain cases, which had added further delays. It had also been noted that supply chain challenges, including delays in the delivery of specialist equipment and vehicles, had impacted specific programmes such as fleet replacement. Officers indicated that these were largely external factors and that similar challenges were being experienced across the sector. Resource Capacity and Programme Management • Asked whether there were any internal resourcing limitations affecting the ability to deliver capital projects, including staff capacity within key service areas. • Queried whether the scale of the programme exceeded available internal resources to deliver it effectively. • Questioned whether backlogs of projects or peaks in workload had contributed to delays in implementation. Officers advised that internal resource capacity had generally been sufficient to manage the capital programme. They highlighted that experienced teams were in place and had a strong track record of delivering capital schemes. While there were occasional peaks in workload, these had not been identified as a primary constraint on delivery. Instead, officers indicated that perceived delays were more often attributable to external factors rather than internal staffing or capability issues. They also explained that delivery often occurred in phases, which could result in periods of lower visible activity followed by increased expenditure as projects reached implementation stages. Grant Funding and External Funding Streams • Asked whether specific grant funding (including highways-related funding and other Welsh Government grants) had been included within the report or represented additional allocations. • Queried how grant funding had been profiled within the capital programme and whether delays in funding approvals had impacted delivery. • Asked how lump sum grant allocations (such as levelling-up or similar funding streams) had influenced annual spend profiles. Officers confirmed that grant funding formed a significant proportion of the capital programme and that such funding was often confirmed during the financial year rather than at its outset. This had influenced the timing of expenditure, as projects needed to be designed, approved and procured before funds could be spent. It had been explained that some funding streams, including major grants, had been allocated as lump sums to be delivered over multiple years. This had required careful reprofiling of spend across the lifespan of projects and had contributed to apparent underspend within individual financial years. Officers reassured Members that plans were in place to utilise these funds within the permitted timeframes. Borrowing, Affordability and Financial Strategy • Queried whether any capital schemes had been delayed due to the high cost of borrowing or concerns about affordability. • Asked whether decisions had been taken, or were being considered, to defer capital expenditure to avoid borrowing at unfavourable rates. • Raised concerns about the long-term affordability of the capital programme in the context of rising interest rates and inflation. • Questioned whether there was a strategy to reassess the capital programme if borrowing costs remained high. Officers stated that, at the time of reporting, no formal decisions had been taken to delay capital schemes specifically due to borrowing costs. However, they acknowledged that higher borrowing rates had been a significant consideration and could influence future decisions regarding the timing and prioritisation of capital investment. It had been noted that natural slippage within the programme had, in some cases, reduced the immediate need to borrow during periods of high interest rates. Officers advised that the affordability of the capital programme remained under review and that, should borrowing costs remain elevated, the Council might need to reassess the scale or phasing of its investment plans. Capital Receipts and Asset Disposal: • Asked for clarification on the level of capital receipts achieved to date and the amount expected to be realised by year-end. • Queried whether anticipated receipts were likely to be delivered within the current financial year or would fall into future years. • Raised concerns regarding delays or failures in asset sales and the implications for funding the capital programme. • Questioned whether revised expectations for capital receipts would impact future capital planning. Officers confirmed that a portion of anticipated capital receipts had been realised during the year, with additional receipts expected but not yet guaranteed by the reporting date. They explained that the timing of asset sales was subject to external factors, including market conditions, legal processes and planning requirements, which could delay completion. It had been acknowledged that some planned disposals had not progressed as expected, including instances where sales had fallen through. Officers indicated that revised projections were being developed and that future receipts would be monitored closely to ensure alignment with the capital funding strategy. Programme Performance by Service Area • Asked for updates on progress in specific service areas, including education and community investment programmes. • Queried why certain areas, particularly education, showed significant underspend relative to budget. • Raised concerns about delays to major projects, including school developments and infrastructure schemes. • Requested updates on the progress of community-focused investment programmes and funding bids. Officers reported that performance varied across different service areas within the capital programme. In some areas, such as core highways maintenance, expenditure had been broadly in line with expectations, while in others, including education, progress had been affected by delays linked to procurement, planning, and contractor availability. It was also highlighted that community investment programmes and grant-funded initiatives were progressing through application and approval stages, with outcomes expected to be confirmed in due course. Officers reaffirmed their intention to provide further updates as schemes advanced. Reporting Clarity and Transparency • Raised concerns regarding the clarity of narrative within the report, particularly in explaining large variances and movements. • Asked for clearer explanations of the reasons for delays, slippage, and reprofiling to reduce the need for follow-up questions. • Suggested that improved commentary would enhance understanding of the capital programme’s performance. Officers acknowledged Members’ concerns regarding the clarity of the report and accepted that some sections, particularly around reprofiling and scheme delays, could have been more clearly explained. They committed to enhancing future reports by including more explicit narrative on the reasons for variance, thereby improving transparency and supporting better understanding. The value of providing clearer contextual information alongside financial data to ensure that Members could more easily interpret the performance of the capital programme was recognised. Strategic Planning and Long-Term Approach • Questioned whether the current approach to capital planning adequately reflected long-term service needs and future demand. • Raised concerns about investment decisions being made without sufficient long-term strategic alignment. • Asked whether the capital programme would need to be reconsidered in light of financial pressures, inflation, and borrowing constraints. • Queried whether there was sufficient flexibility within the programme to respond to changing economic conditions. Officers emphasised that the capital programme was underpinned by business cases and subject to rigorous scrutiny, ensuring that investment decisions were aligned with strategic priorities, value for money, and long-term affordability. They confirmed that all major projects were required to demonstrate clear justification before proceeding. However, it had been acknowledged that the wider financial environment, including inflationary pressures and borrowing costs, could necessitate a review of the programme over time. Officers indicated that the Council would continue to monitor these factors and remain flexible in adjusting its capital plans to ensure sustainability while maintaining delivery of priority outcomes.
There were no recommendations made to Cabinet in relation to the Capital Forecast Report 2025/26 as at the 28th of February 2026.
Noted.
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