The Finance and Performance Scrutiny Sub-Committee are scheduled to meet on 23 September 2025 to discuss the council's financial performance and strategy. The agenda includes updates on performance against key performance indicators, budget monitoring reports for both the General Fund and Housing Revenue Account, a review of treasury management activities, and the draft budget strategy for 2026/27. The meeting will also provide an opportunity for the Sub-Committee to offer comments and observations on the draft budget strategy.

Draft Budget Strategy 2026/27

The sub-committee will be asked to note and comment on the draft Budget Strategy 2026/27. The report pack states that the Budget Strategy sets out the guidelines for preparing the 2026/27 Budget, supporting the Corporate Plan and aligning with the Medium-Term Financial Strategy (MTFS). The revised MTFS to 2029/30 will be presented alongside the council's General Fund budget report in February 2026.

The report pack notes that the Budget Strategy takes account of current and future financial and economic conditions, and is the first report of the council's budget setting process for 2026/27. It sets out the financial pressures the council is facing and suggests an appropriate strategy. The report pack says that as additional information comes to light from central government, such as the Autumn Budget, the budget approach may need to be revised accordingly in later reports.

The Budget Strategy also sets out the underlying assumptions, initial budget-setting proposals and provides a timetable for delivering a balanced budget for approval and final Council Tax setting by Full Council in February 2026. The report pack states that the Cabinet are required to publish initial budget proposals and a timetable, as well as provide details on the arrangements for consultation ahead of the budget framework itself being considered and finalised. The council has a statutory requirement to set a balanced budget and Council Tax annually under the Local Government Finance Act 1992 and Council Tax (Administration and Enforcement) Regulations 1992.

The report pack notes that the objectives for consultation on the 2026/27 budget proposals are to:

• Engage with key stakeholder groups and local residents
• Seek feedback on specific budget proposals for 2026/27
• Seek feedback on general spending and income generation priorities.

The report pack states that this will be achieved through making budget information available to the public, inviting feedback, sharing information with representatives from the business community and attending the Joint Parish Council Committee meeting in January.

Q1 Performance Report 2025/26

The sub-committee will be asked to note the Quarter 1 Performance Report 2025/26. The report pack states that this report provides an update on performance for the first quarter of the year, covering the period from 1 April to 30 June 2025. The report highlights progress made against the agreed set of Key Performance Indicators (KPIs) for 2025-26, approved by Cabinet on 16 July 2025. The report includes both a Corporate Performance Report and a Housing Performance Report.

The Corporate Performance report provides a summary of KPI performance for the Finance, Strategy & Resources, and Housing & Operations directorates (minus the housing landlord service). The Housing Performance report provides a summary of KPI performance for the housing landlord service, including indicators that support the Regulator of Social Housing's new consumer standards.

The report pack notes that across the whole organisation, 35 out of 61 targeted indicators (57%) met their target. 19 indicators (31%) were within 5% of target, or 'on track to achieve year-end target', and 7 indicators (11%) were off target at the end of Q1. The report pack states that the council can demonstrate strong and consistent performance in:

• Planning meeting all targets for determining applications
• Housing Benefit meeting all targets for processing benefit claims
• Environmental protection meeting targets for successful prosecutions and air quality monitoring
• Lifeline, meeting targets for call answering.

The council has also retained 'green flag' status for all four of its managed parks and open spaces.

The report pack notes that the council has seen improved performance in:

• Information governance meeting targets and improving on previous year
• Housing strategy, exceeding annual target for council-home newbuilds and acquisitions.

The report pack states that the council missed target on temporary accommodation, homelessness prevention, rough sleeping, street cleanliness, and for businesses and households accessing grants or support from the Rural England Prosperity Fund (REPF) and UK Shared Prosperity Fund (UKSPF) with no movement to report for Q1.

The report pack notes that the council has created a bespoke report for the housing landlord service to meet the requirements of the Regulator of Social Housing (RSH). The report includes ten indicators that support the new consumer standards or 'Tenant Satisfaction Measures' (TSMs). The council met target for 15 out of 19 targeted housing indicators (79%); with 4 (21%) being within 5% of target or 'on track to meet target at year-end'. No indicators were off target at the end of Q1. The council has provided data for all ten required TSMs and are on target for 6 out of 8 targeted TSMs (75%).

General Fund Revenue Budget Monitoring - 1st quarter (Q1) 2025/26

The sub-committee will be asked to note the General Fund Revenue Budget Monitoring Report for the first quarter of 2025/26. The report pack states that this report summarises the financial monitoring information for the General Fund Revenue as of June 2025. At the end of Quarter 1, the financial position shows a projected year end unfavourable position of £357k from net revenue budget of £22.4m.

The report pack notes that the most significant financial pressure is in Housing Benefits/Rent Rebates and Council Tax Reduction. The district has also seen an increase in number of homeless households within the area. There has been a 10% increase in the number of homeless households from 87 to 96, between 1 April 2025 and the end of June 2025.

The report pack states that the Quarter 1 summary for the 2025/26 general fund revenue net expenditure projection shows an unfavourable variance of £1.094m for service but that is offset by reserve budgeted reserve movements and other adjustments such as a favourable variance against MRP of £742k reducing the overall variance down to £357k.

The report pack notes the following main favourable variances contributing to the Qtr 1 general fund net expenditure:

• Otterpool (Local Planning Authority); (£293k), due to budgeted temporary staff cost not required (£100k) and staff vacancies within Development Management and Building Control (£177k).
• Regulatory & Community Services; vacancies across the entire directorate (£150k), income levels for Garden Waste (£41k) and Car parking (£293k), which reflects an increase in PCN's being issued.

The report pack notes the following main unfavourable variances:

• Council Tax Reduction Scheme; £598k due to budgeted Income for discontinued Scheme.
• Housing Benefits; £319k driven by estimated Rent Allowance payment and related subsidy to be received.
• Rent Rebates; £865k driven by the combination of budgeted rent rebates costs, higher temporary accommodation costs and lower related subsidy received.
• Members allowances and Expenses; £96k due to saving budget assumptions relating to members allowances and the move to a committee structure.

The report pack also notes:

• A favourable variance of (£742k) is projected in Capital Financing due to the revision of MRP charged for capital loan expenditure.
• Pension Back Funding; (£114k), projection based on invoice payment which is lower than budgeted.
• As part of the 2024/25 financial close down £1.4m was realised from the crystallisation of business rates pool position for financial years 2021/22, 2022/23 and 2023/24. It was reported to Cabinet that this additional funding would be used across four priority areas, namely, Leisure Strategy, Homelessness, Local Government Reorganisation and Environmental projects. This work is now ongoing to allocate this funding.

Draft General Fund Capital Programme Budget Monitoring 2025/26 - 1st Quarter (Q1) 2025/26

The sub-committee will be asked to note the Draft General Fund Capital Programme Budget Monitoring 2025/26 report. The report pack states that this monitoring report provides an initial projection of the current financial position for the General Fund capital programme for 2025/26, based on expenditure to 30 June 2025, and identifies variances compared to the latest approved budget. It also includes details on proposed changes to the current approved Capital programme.

The report pack notes that there have been a number of changes since the 2025/26 Capital programme was approved by Council in February 2025 and some of these require Full Council approval so that the Capital Programme can be updated. The report seeks approval to increase the existing budgets for the Coastal Park Play area by £250,000 and the Coastal Park Landship by £100,000.

The report pack states that the schemes listed under ii) are schemes that have funding allocated from CIL but require approval to be added to the Capital Programme:

• Wraightsfield Play Area - £30,000
• The Leas Infrastructure Improvements - £150,000

The report pack notes that the council has received grants in relation to the Coastal Protection and FOLCA 2 schemes. Following a successful application to the Environment Agency for Flood and Coastal Risk Management Capital Grant the council has been awarded the sum of £2,778,340. This will enable the bi-annual beach management works from Folkestone Harbour to Fishermen's Beach in Hythe. The budget allocated to 2025/26 will be £470,000 with the remainder over the next 5 years. The council has also received £1.4m Salix funding in relation to the FOLCA2 project.

The report pack states that the latest projection for the total cost and funding of the General Fund capital programme for 2025/26 is £31.7m, an increase of £0.3m compared to the latest approved budget of £31.4m.

HRA Budget Monitoring Q1 2025/26

The sub-committee will be asked to note the HRA Budget Monitoring report. The report pack states that this monitoring report provides a projection of the end of year financial position for the Housing Revenue Account (HRA) revenue expenditure and HRA capital programme based on net expenditure to 30 June 2025.

The report pack notes that overall at quarter 1 there is a projected increase in net expenditure of £195k to the HRA. The main reasons for this are:

• Decrease in rental income - £214,000
• Decrease in repairs and maintenance - (£15,000)
• Other net variances - (£4,000)

The report pack states that the net decrease in rental income of £214k is attributable to the following factors:

• a decrease in dwelling rents £185k due to an over estimation during the budget setting process
• decrease in non-dwelling rental income of £35k due to a reduction in the number of occupied garages
• increase in charges for services and facilities of (£6k).

The report pack notes that the latest budget for the HRA capital programme in 2025/26 is £20.12m and the projected outturn for the year is £20.12m. Overall, the HRA reserve at 31 March 2026 is expected to be £7.27m compared with £7.47m in the latest budget.

Treasury Management Annual Report 2024-25

The sub-committee will be asked to note the Treasury Management Annual Report 2024-25. The report pack states that this report reviews the council's treasury management activities for 2024/25, including the actual treasury management indicators. The report meets the requirements of both the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities. The council is required to comply with both Codes through Regulations issued under the Local Government Act 2003.

The report pack notes that on 31 March 2025, the council had net investments of £18.4m arising from its revenue and capital income and expenditure, a decrease on 2023/24 of £1.8m. The increase in the council's CFR to £156.8m is due to capital expenditure in 2024/25 including the Otterpool Park Garden Town development (£7.9m) and HRA projects (£3m) and was met from prudential borrowing. The council generated a return, net of fees, of 5.03% for the year from its treasury investments.

The report pack states that the council's chief objective when borrowing has been to strike an appropriately low risk balance between securing lower interest costs and achieving cost certainty over the period for which funds are required, with flexibility to renegotiate loans should the authority's long-term plans change being a secondary objective. The council's borrowing strategy continues to address the key issue of affordability without compromising the longer-term stability of the debt portfolio.

The report pack notes that the Prudential Code states that local authorities who already held commercial investment assets primarily for yield prior to the changes made in 2021 are not required to sell these. However, local authorities who have an ongoing borrowing requirement are expected to review these commercial investment assets as part of their annual treasury management of investment strategies to evaluate the financial returns are commensurate with the risks involved. The council currently holds the Connect 38 office building in Ashford that meets this definition and will now be subject to the annual evaluation process.

Treasury Management Monitoring 2025/26 - Q1

The sub-committee will be asked to note the Treasury Management Monitoring 2025/26 report. The report pack states that this report provides an update on the council's treasury management activities that have taken place during 2025/26 against the agreed strategy for the year. The report also provides an update on the treasury management indicators approved by Cabinet earlier this year.

The report pack notes that on 31 March 2025, the council had net investments of £18.4m arising from its revenue and capital income and expenditure. The overall decrease of £3.7m in net borrowing is due to an increase in cash and cash equivalents of £3.5m. The increase reflects normal cashflow fluctuations arising from the timing of major preceptor payments, which are made over twelve months, while the Council Tax receipts that fund them typically come in over the ten months to January then decline.

The report pack states that two loans matured in the quarter to June 30 2025, £3m from Bedford Borough Council and £2m from Vale of White Horse District Council. These were repaid and not replaced as during the first quarter of the new financial year the council receives significant cash inflows from Council Tax and Business Rates. In April a £5m loan was taken out with the PWLB at a rate of 4.28% to fund HRA affordable housing projects.