Committee Report Checklist

Please submit the completed checklists with your report. If final draft report does not include all the information/sign offs required, your item will be delayed until the next meeting cycle.

Stage 1

Report checklist – responsibility of report owner

ITEM	Yes / No	Date
Councillor engagement / input from Chair prior to briefing	Yes	25/06/26
Relevant Group Head review	Yes	23/06/26
MAT+ review (to have been circulated at least 5 working days before Stage 2)	Yes	23/06/26
This item is on the Forward Plan for the relevant committee	Yes
	Reviewed by
Finance comments (circulate to Finance)	AB	17/06/26
Risk comments (circulate to Lee O’Neil)	TC	18/6/26
Legal comments (circulate to Legal team)	LH	25/06/26
HR comments (if applicable)

For reports with material financial or legal implications the author should engage with the respective teams at the outset and receive input to their reports prior to asking for MO or s151 comments.

Do not forward to stage 2 unless all the above have been completed.

Stage 2

Report checklist – responsibility of report owner

ITEM	Completed by	Date rec’d
Monitoring Officer commentary – at least 5 working days before MAT	Yes	18/06/26
S151 Officer commentary – at least 5 working days before MAT	T.Collier	18/06/26
Commissioner engagement
	Delete as applicable:	No issues
	Delete as applicable:	Comments in S. 7
Confirm final report cleared by MAT	YES	23/06/26

Corporate Policy and Resources Committee

13^th July 2026

Title	General Fund Revenue and Capital Outturn for Month 2 2026/27
Purpose of the report	To inform and assure
Report Author	Altin Bozhani, Deputy Chief Finance Officer
Ward(s) Affected	All Wards
Exempt	Appendix D - Yes
Exemption Reason	Appendix D contains exempt information within the meaning of Part 1 of Schedule 12A to the Local Government Act 1972, as amended by the Local Government (Access to Information) Act 1985 and by the Local Government (Access to information) (Variation) Order 2006 Paragraph 3 – Information relating to the financial or business affairs of any particular person (including the authority holding that information) and in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information because, disclosure to the public would prejudice the financial position of the authority in any lease, contract or other type of negotiation with the tenant or developer, who could then know the position of the Council.
Corporate Priority	Resilience
Recommendations	Committee is asked to acknowledge the: 1. Revised 2025/26 Outturn Position 2. Month 2 2026/27 Revenue and Capital forecast 3. Appropriations to and from General Fund reserves (Earmarked and Ringfenced) the final balance at 31.03.26 and projected balance at 31.03.27as set out in paragraph 5.2, table 7.
Reason for Recommendation	The Committee needs to be informed regularly of the Council's General Fund revenue and capital budget and consider any action required as appropriate.

1. Executive summary of the report (expand detail in Key Issues section below)

What is the situation	Why we want to do something
This report sets out the Council’s revenue and capital Month 2 full year forecast position for the 2026/27 financial year and updated 2025/26 Outturn. The revenue budget is forecast to overspend by £5m; (paragraph 2.4, Table 1) against a net Budget Requirement of £10.5m for 2026/27. The majority (£5m) of this overspend is due to an anticipated investment asset sale not being achieved in 2025/26 resulting in a higher Minimum Revenue Provision than anticipated when the Budget for 2026/27 was set. Excluding the £5m MRP impact, the underlying position is broadly in line with the Budget for 2026/27. The 2025/26 Outturn expenditure position has decreased by £0.193m (Table 5, paragraph 4.2) compared to the previous reported version. For full details of movement please see section 4.2 This has had a favourable impact on the starting position of 2026/27 reserve balances by the same amount. Earmarked Reserve balances at 31.03.27 are projected to be 18.5m, £16.1m lower than 2025/26 (Table 7, paragraph 5.2) attributable to net impact of contributions and usage in 2026/27 financial year. The Council’s savings programme is on target to achieve the £5.8m in the budget largely through efficiency measures. Part of the savings (£3.9m) has already been delivered, and the remaining savings are on target to deliver during the year. Please see a summary in section 2.7 and Appendix C for full details. The 2026/27 Capital Programme at month 2 forecast outturn is £11.3m, £0.102m (0.9%) over the approved budget. A summary of the Capital Programme is provided in section 8 and full details in Appendix F, G and H.	Ensuring the financial stability of the Council and that of West Surrey Council. Help the Council to understand any impacts on the budget for 2026/27. Enabling councillors to be made aware of emerging issues on a timely basis to facilitate corrective action to be taken if required.
This is what we want to do about it	These are the next steps
• Identify measures to continue to review and validate savings and the growth of the approved 2026/27 budget and ensure any variances are reflected in medium term financial planning. • Focus on opportunities to deliver additional 2026/27 in-year savings in order to lessen the extent to which reserves are required to close the Budget gap at the year end	• Use the updated projected use of reserves to feed into updated Reserves Strategy and revised 2026/27 Budget figures.

2. Key issues

2.1. This report provides the Committee with the Revenue and Capital Month 2 Forecast outturn for 2026/27, based on expenditure incurred up to the end of May 2026.Further, an updated position of 2025/26 Outturn and MTFs reserve profile is covered as well. Please see Appendix I for a Local Government Finance Glossary.

The 2026/27 revenue budget is projected to overspend by £5.0m, please see Appendix B for full details.

General Fund Revenue Budget Month 2 Forecast Outturn – Overview

2.2. The 2026/27 projected outturn is summarised in Table 1 below.

Appendix B gives a more detailed explanation of variances in the table below.

2.3. The report variances are calculated using the revised budget which has gone through realignments since the 2026-27 Council’s Approved Budget on 26^th February 2026. Appendix A1 shows the movements and the reasons behind them by Service Area.

Table 1: 2026/27 Month 2 Forecast Position per Service Area

The material forecast variances are:

· Service Budgets, £0.612m net overspend

Overspends - £1.055m

o Place, Protection & Prosperity¸ overspend of £0.516m primarily attributable to staffing budget pressure in: Planning Development (£0.433m) where agency staff has been hired to ensure Spelthorne meets the legal duties related to Homes in Multiple Occupation (HMOs) and other areas of activity; Building Control (£0.089m), two new staff are in the process of being recruited to take account of the implementation of the Business Safety Levy and respond to the recent Building Safety Regulator audit and action plan and LGR work demand; Offset by Other (£0.006m).

o Assets Management, overspend of £0.288m primarily attributable to Development Properties. It was assumed in the 2026/27 budget that Thameside house would have been sold in 2025/26, the delayed sale means the Council we are incurring unbudgeted costs, business rates, security costs, and other holding costs.

o Community & Wellbeing, overspend of £0.169m primarily attributable to staffing budget and other running cost in Homelessness (£0.113m), reflecting the proposed consultation with Metropolitan Thames Valley Housing TUPE'd staff to move onto Spelthorne Borough Council's Terms and Conditions; Housing Needs (£0.141m) because of permanent staff pressure and additional staffing resources to assist with reducing numbers in temporary accommodation , helping to deliver the 2026/27 £0.600m saving target; Offset by staffing savings in other areas (£0.085m). Once the cost of staffing involved in delivering the saving is taken into account the net saving forecast to be achieved will be £0.460m.

o Finance and Corporate Resources, overspend of £0.083m primarily attributable to staffing costs including interim staff covering essential and transformational tasks as per the Improvement Recovery Plan and Local Government Reorganisation. Part of the pressure will be funded by the use of capital receipts because the work covers transformational areas.

Offset by underspends - £0.443m

o Neighbourhood Services, underspend of £0.243m primarily attributable to a mixture of staffing, premises cost in areas like Car Parks and Ground Maintenance and increased in reimbursements and fees and charges in Services Management Support area.

o Legal and Elections, underspend of £0.162m primarily attributable to staffing vacancies.

o Commissioning & Transformation, underspend of £0.038m primarily attributable to staffing vacancies.

· Non-Direct Service Budgets, £4.378m net overspend

Corporate Items, net overspend of £5.659m

o Minimum Revenue Position (MRP), overspend of £5.023m primarily attributable to an anticipated investment asset sale not being achieved in 2025/26 resulting in higher Minimum Revenue Provision than anticipated when the Budget was set.

o Interest earnings, overspend of £0.496m primarily attributable to the lower balances available to lend and generate interest earnings.

o Loan Interest Payable costs, overspend of £0.043m, primarily attributable to fluctuations in the market interest rates. The forecast will fluctuate constantly during the year.

o Contributions to/from Reserves Prior to closing the Budget Gap, net contribution to revenue of £0.097m primarily attributable to use of earmarked reserves to offset planned revenue budget pressures.

Offset by Underspends- £1.281m

Investment & Regeneration, underspend of £0.293m

o Primarily attributable to Investment Properties Rental Income (£0.355m); Regeneration Property Income (£0.102m); Offset by higher landlord costs (£0.163m). Please see table 3 in section 3 for a summary.

o External Grants, £0.988m higher than the budgeted figures because of Adjustment Support Grant net of reduction in Revenue Support Grant (RSG) (£0.760m) and Crisis & Resilience Grant (£0.228m). The final settlement was after the Spelthorne’s 2026/27 budget had been approved.

2.4. Appendix A shows Variances by Committee Area.

2.5. Chart 1 below shows the individual service budget variances that contribute to the overall service budget adverse variance of £0.612m

Chart 1: Biggest General Fund Direct Revenue Direct Service (Under)/Overspends

2.6. Details of budget variance and quarterly movements are shown in Appendix B.

2.7. After taking into account the impact of these changes the projected net overspend is £5m (see Table1 above), essentially accounted for by the MRP impact from 2025/26 outturn. This will be funded from reserves.

2.8. The approved budget for 2026/27 included £5.752m in savings. Finance completed a validation of savings achievement in May 2026 with the results shown in Table 2 below.

Table 2: Savings validation

2.9. The table above includes in year savings of £1m which are on target to deliver in full:

· Assets Maintenance Budget £0.4m.

· Temporary Accommodation review £0.6m, see the separate Savings report on this Agenda.

2.10. The General Fund forecast shown in Table 1 includes the savings achieved, as set out in Table 2. Appendix C provides further details and shows the savings status project by project for each directorate and savings found.

2.11. The updated earmarked reserves are lower because of use to cover the budget gap. If the asset rationalisation does not achieve the forecast on capital receipts the reserve balance it is not adequate to cover budget risks in future years. Therefore, it requires close monitoring to ensure that it aligns with the Medium-Term Financial Strategy (MTFS) and to protect the level of reserves passed across to West Surrey Council in 2027/28. Limiting the draw down of reserves was the key rationale for building in £5.8m savings in the 2026/27 Budget. This is a key risk which will continue to be monitored carefully. Section 5 below shows the reserve movement.

2.12. Looking ahead, the Council will continue to maintain strict financial discipline to:

· limit reliance on the use of earmarked reserves,

· managing the investment property portfolio, and

· delivering against the 2026/27 targets for the asset rationalisation programme

· to put West Surrey in the strongest financial position possible.

3. Commercial/Investment Assets

Table 3 - Commercial/Investment Assets

3.1. Table 3 above outlines the income and costs relating to investment properties, with an estimated net (including landlord costs) rental income of £43.6m. This is £0.3m more than assumed in the revenue budget.

3.2. The budget variance is primarily due to higher rental income partially offset by higher landlord costs. Detailed breakdowns are provided within Appendix D, Commercial/Investment Assets Analysis.

3.3. The Landlord cost pressure is due to the 2026/27 Budget assuming an asset would be sold by the end of 2025/26 which was delayed, therefore costs that that had not been budgeted for are being incurred. Part of the cost is offset against some rental income also not budgeted for.

3.4. Table 4 below is a summary of the Appendix D, which is broken down into Investment and Regeneration Assets, and reconciles with Net Rental Income Receivable in Table 3 above.

Table 4 - Commercial/Investment Assets broken down into Investment/Regeneration

4. Updated 2025/26 Outturn Movement

4.1. Table 5 below shows the latest 2025/26 Outturn position and the favourable movement of £0.193m since the prior reported position on the 26^{th of} May Corporate Policy and Resources Committee meeting.

4.2. The material movements and reasons behind this are:

· Community and Wellbeing, increase of £0.282m attributable to revised actual figures on the Housing Benefit Rent Rebates budget. The final Housing Benefit outturn was confirmed after the draft outturn report.

· Finance and Corporate Services, increase £0.145m, attributable to accrual correction on a few areas linked with staffing and other.

· Commissioning and Transformation, increase of £0.078m, attributable to accrual correction on a number of areas.

· Investment and Regeneration, improvement of £0.201m relating to lower landlord costs and improved rental income accruals.

· Contributions to/from Reserves Prior to closing the Budget Gap, increase in reserve usage to offset pressure £0.404m, attributable to revised reserve allocation because of the outturn movement.

· Income from Council Tax, improvement of £0.094m attributable to prior year Ministry of Defence - Armed Forces council tax relief schemes.

· Reserve to close the revenue gap, decrease of £0.193m attributable to reallocation of reserves due to outturn movement explained in above sections.

Table 5 2025/26 Latest Outturn Position and movement since 26^th May CPRC

[PW1] [AB2]

4.3. The table above includes a total earmarked reserve contribution for the year of £17.591m that reconciles to table 6 below. The breakdown is shown below:

Table 6 2025/26 Total earmarked Reserve Contribution to General Fund Revenue Budget

5. Projected Movement in Reserves

5.1. Table 7 sets out the earmarked reserve balances at the end of 2025/26 and the projected balances as at 31 March 2027. Capital receipts are not earmarked reserves but are included in the overall reserve balances shown in Table 8 below.

5.2. As shown in Table 7, £17.6m [PW3] of reserves were used in 2025/26, £7.1m of these were budgeted with the remaining £10.5m r[PW4] [AB5] elating to the revenue overspend. This leaves a balance of £34.6m in earmarked reserves as at 31 March 202[PW6] 6.

5.3. In 2026/27, net earmarked reserve use and contributions are projected at £16.1m, leaving a net balance of £18.5m as at 31 March 2027, as shown in Table 7 below.

5.4. Appendix E provides an analysis of projected General Fund Reserve levels over the MTFS period. [PW7] [AB8]

Table 7: Actual General Fund reserve balances at 31 March 2026 and projected balances at 31 March 2027

* The figure is provisional and subject to change pending the outcome of the review currently being undertaken on the Collection Fund Budget.

5.5. Please note the increase in reserve use in 2026-27 compared to MTFS is due to a £5m increase in MRP. This increase arises from the anticipated capital receipts from the sale of the Summit Centre not materialising as originally expected, as the sale has now slipped into 2026/27.

6. Flexible Use of Capital Receipts and Overall Usable Reserve balance

6.1. Table 8 below shows the overall reserve balances, including the movement in capital receipts. The closing reserve balance as at 31/03/26 is £40.4m.Please note the full balance of capital receipts has been used to fund relevant Capital Projects and Debt Reduction.

Table 8 Overall Usable Revenue and Capital Reserve balance as of 31/03/2026

Please note that the table is a summary of table 7 above, amended to include the Capital Receipts balances.

6.2. The Capital Projects line in Table 8 above covers use of capital receipts as a means to fund one-off and ongoing project costs which enable the process of transformation and the resulting benefit realisation. In applying this funding, several measures have been applied to ensure that the qualifying funding criteria are met. These include a robust approval process that is applied whenever the use of capital receipts is considered and to ensure that this funding source is only applied to qualifying expenditure.

6.3. The Medium-Term Financial Strategy anticipated £22m of receipts from disposing of two assets. Whilst 3 Roundwood Avenue was sold before 31 March 2026, the sale of another asset has been delayed. This reduced anticipated capital receipts by c.£15m in 2025/26. Consequently, the Capital Financing Requirement at 31 March 2026 is c.£15m higher than anticipated.

6.4. The reduction in capital receipts in 2025/26 has no impact in 2025/26 but means that Minimum Revenue Provision for 2026/27 will be c.£5m higher than budgeted and therefore a correspondingly greater use of reserves than anticipated will be required in 2026/27. The reduction in capital receipts in 2025/26 has no impact on external borrowing, because the £6.8m of capital receipts applied to reduce debt in 2025/26 (see Table 8 above) exceeded the loan principal due in 2025/26 – external borrowing remained unchanged at 31 March 2026 at £712m following the debt restructuring in November 2025.The 2026/27 impact will be offset by planned asset sales.

6.5. A full breakdown of capital receipts allocated per project is shown in Appendix G.

7. Improvement and Recovery Programme (IRP) – Funded by base budget

7.1. As required by the Secretary of State’s Statutory Direction issued in May 2025, the Council has established an IRP. This plan was intended to provide the organisation with a clear direction for its improvement journey and a single framework for ensuring that all the Directions were addressed.

7.2. The original plan was approved by Council on 23 October 2025, and the supporting report formed the initial progress report to Commissioners with a commitment to provide a further update six months later.

7.3. Authority was delegated to the Corporate Policy and Resources Committee (CPRC) to approve any changes to the IRP as part of regular reporting arrangements. A revised version of the Improvement and Recovery Plan (IRP) was agreed by CPRC on 17 February 2026 to reflect the transition from recovery into sustained improvement and the focus on ensuring a successful transition to the new West Surrey Council.

7.4. Table 9 below shows the planned and actual spend in 2026/27.

7.5. IRP Budget list shown in Table 9 has been implemented in the finance ledger, Centros, and monitored along the revenue and capital (with Corporate Policy and Resources Committee receiving quarterly reports).

Table 9: IRP Breakdown within implementation Time Frame

8. Capital Budget Month 2 2026/27 Forecast – Overview

8.1. The 2026/27 M2 Capital Programme shows the full year capital programme forecast is £11.3m (Table 10, overleaf). Spend to date is £0.933m, or 8.29% of forecast. The low spend to date is due to several projects starting later during the year.

8.2. Despite a number of projects with significant budget forecast to be completed in the current year there is still a potential risk of slippage in future years.

8.3. A summary of this position is shown in the table below and set out in more detail in Appendix F

Table 10 Summary of 2026-27 Capital Budget Month 2 Monitoring

8.4. Detailed capital project spend monitoring and funding source is provided in Appendices F/ G. Appendix H shows the MTFS Capital Budget allocations.

9. Options appraisal and proposal

9.1. This report is “to acknowledge” only. The Month 2 2026/27 General Fund Forecast will inform the 2026/27 planned mitigations to reduce expenditure and improve cashable efficiency savings. Officers will work to identify further offsetting revenue savings to seek to reduce the extent of the draw down of reserves. Any 2026/27 forecast overspend not mitigated by additional savings/income will be offset by funding from reserves.

10. Risk and assurance implications

10.1. The final outturn position remains subject to audit, and there is a risk that the external audit process may identify adjustments not reflected in the draft figures. These could include material accruals, provisions, asset‑related adjustments or classification changes arising from the review of year‑end assumptions and accounting treatments. Any such adjustments could impact the reported net outturn and, consequently, the level of usable reserves at year end. While processes are in place to ensure estimates are prudent and in accordance with proper accounting practice, the final position cannot be confirmed until the audit is concluded.

10.2. The revenue budget for 2026/27 has been set against a backdrop of ongoing economic uncertainty, including inflationary pressures, labour and contract cost volatility, and continued demand growth for key statutory services. There remains a risk that adverse economic conditions could place additional pressure on service budgets, either through reduced income, increased demand‑led expenditure or higher than anticipated cost inflation. Should these pressures materialise, the Council may need to draw on reserves to maintain financial balance, potentially resulting in greater reserve usage than currently assumed in the medium‑term projections.

10.3. Savings and budget mitigations incorporated into the 2026/27 budget may be subject to delivery risk, particularly where they rely on behavioural change, service transformation or external dependencies. Delays in implementation or under‑delivery would reduce the effectiveness of planned controls and could result in a higher call on reserves than currently anticipated.

10.4. The Council’s reserves projections assume the delivery of planned capital receipts within the forecast period. There is a risk that receipts may be delayed or under‑achieved due to market conditions, changes in asset values, or slippage in delivery timetables. Any shortfall or deferral in receipts would reduce the cash resources available to support the revenue spend and capital programme. The main use of capital receipts for the next three years will be covering Capital Financing Requirements needs, mainly future years’ Minimum Revenue Provision. As the case was in 2025/26 the slipping of the Summit Centre sale to 2026/27, and general, slippage in the asset disposal plan has a real impact on the following year’s budget, and the Council’s ability to comply with the Statutory Direction to reduce debt.

10.5. The improved 2025‑26 outturn position is linked to an action within the Assurance Register relating to the development of a robust and updated Medium‑Term Financial Strategy (MTFS). This improvement has informed revised projections for 2026‑27 and future years, reflecting both one‑off and ongoing pressures and opportunities, and their consequential impact on reserve balances.

11. Legal comments

11.1. Section 28 of the Local Government Act 2003 requires the Council to monitor their income and expenditure against the approved budget throughout the financial year and to take such remedial action as it considers necessary to deal with any projected overspends or variances.

11.2. This report provides a high-level summary of the Council’s financial performance for the year, setting out the overall revenue and capital position at year end and highlighting key variances from budget. Financial information contained in this report has informed the preparation of the Council’s Statement of Accounts which must be published in accordance with the Accounts and Audit Regulations 2015 (as amended).

11.3. Consideration of this report enables the members to satisfy themselves that appropriate financial controls and monitoring arrangements are in place and that the Council’s statutory and fiduciary duties have been complied with.

Corporate implications

12. Commissioners’ comments

12.1. Commissioners are content that the Council is on track to deliver its savings targets for 2026/27 and that the overall budget, other than the MRP overspend, is also on target.

13. S151 Officer comments

13.1. As the report sets out, it is important the Committee is provided with timely information on delivery to date against both Revenue and Capital Budgets to enable corrective action to be agreed on a timely basis. For this Period 2 Revenue monitoring, allowing for the already known £5m MRP overspend, the other variances net off to nil variance. It is important to bear in mind the additional pressure, compared to the original Budget assumptions, that this overspend places on the reserves. The Capital monitoring is highlighting a risk of significant slippage into 2027/28.

14. Monitoring Officer comments

14.1. The Monitoring Officer confirms that the relevant legal implications have been taken into account.

15. Procurement comments

15.1. There are no procurement implications arising directly from this report.

16. Equality and Diversity

16.1. The report’s proposals do not directly impact equality and diversity issues but in any spending decision the Council undertakes there should be due regard to equality, diversity and inclusion issues. If there are impacts an equality impact assessment should be undertaken and mitigation measures identified and put in place.

17. Sustainability/Climate Change Implications

17.1. The implications of this report have little to no impact on the Council’s position on sustainability and climate change actions. The Council continues to strive towards its climate change targets.

18. Other considerations/LGR considerations

18.1. The outturn position on reserves provides the starting point for refreshing the projected reserves anticipated to be passed across to West Surrey in April 2027. The lower usage of reserves in 2025/26 helps improve the medium-term financial projection.

19. Timetable for implementation

19.1. The outturn figures are being fed into the draft Statement of Accounts which will be published by the national target date of 30^th June 2026. The accounts will then be subject to external audit in the autumn.

Contact: Altin Bozhani, Deputy Chief Finance Officer, a.bozhani@spelthorne.gov.uk

Please submit any material questions to the Committee Chair and Officer Contact by two days in advance of the meeting.

Background papers: (These are unpublished papers upon which you have relied in preparing this report). If none state, there are none.

Appendices:

Appendix A - Summary of Month 2 General Fund Outturn Forecast Revenue Budget 2026/27- Committee Structure

Appendix A1 - Summary of 2026-27 Budget Movement since the Council’s Approved Budget on 26^th February 2026 – Service Area

Appendix B - Month 2 General Fund Revenue 2026/27 Outturn Budget Monitoring- Variance analysis by Service Area

Appendix C - Month 2 General Fund Revenue 2026/27 Outturn Budget Monitoring- Savings validation

Appendix D - Month 2 General Fund Revenue 2026/27 Outturn Budget Monitoring- Commercial/Investment Assets Analysis

Appendix E - Month 2 Detailed General Fund Reserve Projections for the MTFS period and Movement

Appendix F - Month 2 General Fund Capital 2026/27 Outturn Budget Monitoring

Appendix G - Month 2 General Fund Capital 2026/27 Outturn Budget Monitoring Detailed funding source per project

Appendix H - General Fund Capital 2026/27-2029/30 Budget

Appendix I- Glossary

Appendix A - Summary of Month 2 General Fund Outturn Forecast Revenue Budget 2026/27- Committee Structure

Appendix A1 - Summary of 2026-27 Budget Movement since the Council’s Approved Budget on 26^th February 2026 – Service Area