The Finance and Budget Monitoring Scrutiny Committee are scheduled to meet to discuss the directorate update from City Operations, Neighbourhoods and Regulatory Services, the Q1 budget outturn, an update on PFI projects, and the medium term financial plan. The committee will also look at the confidential minutes from their previous meeting.

Medium Term Financial Plan Update

The committee is scheduled to receive an update on the Medium-Term Financial Plan (MTFP) for 2026-27 to 2028-29. A report included in the meeting papers indicates that the council faces an estimated budget gap of £15 million in 2026-27. The MTFP approach has been developed to address the main financial challenges facing the council and supports the council's overarching priorities and all Cabinet portfolios. The report to Cabinet in September 2025 sets out information on the national context within which the council will be setting the budget. The report includes an update on the key funding and cost pressure assumptions, and the budget gap over the next three financial years. The report includes an update on the delivery of savings set out in previous budget reports, and provides an update on the approach to setting a balanced budget for 2026-27 to 2028-29.

The report also notes that since 2010, the council has had to achieve savings of £400 million (to the end of 2025-26) due mainly to government-imposed funding cuts and cost pressures.

The report states that the council is seeking to develop its medium term financial plan in the context of the government's consultation on proposed changes to local government funding in August 2025. The council responded to this consultation, highlighting its analysis of the proposed approach and making its case for a fairer settlement.

Quarter 1 Budget Outturn

The committee will discuss the Quarter 1 (2025/26) Budget Outturn and additional performance reporting, including key financial systems. According to the report prepared for the meeting, Cabinet has been asked to approve the write-off of uncollected debt totalling £3.9 million. Cabinet has also been asked to note the General Fund revenue and capital outturn position, the amendments to the General Fund revenue budget, the Collection Fund outturn position, the Housing Revenue Account revenue and capital outturn position, and the performance indicators.

The report sets out the forecast outturn position for all council services and how this compares to the budget agreed by City Council in March 2025. As such the report contributes indirectly to the achievement of all the council's priorities. At the end of quarter 1, the council reported a projected overspend of £5.547 million against the agreed 2025/26 net revenue budget of £293.1 million. There are pressures in Adult Social Care & Prevention directorate (£3.0 million), Children & Families directorate (£5.0 million), Deputy Chief Executive (£0.8 million) and Investment and Growth (£0.5 million).

The report also summarises the performance monitoring for quarter 1 of financial year 2025/26.

Key Financial Systems Performance Monitor

The report also includes a quarterly update on key financial systems, including:

• General Fund sundry income (excluding amounts due from Integrated Care Board¹)
• Amounts due from Integrated Care Board
• Council tax (excluding costs)
• Business rates (excluding costs)
• Housing benefits
• Housing rents
• Commercial property income
• Creditors and general expenditure

Write Offs

The committee will also discuss the write off of £3.9 million of uncollected income. Approval is sought for the write off of £3.9 million which is broken down as:

• £3.634 million relating to the Council's Property Services;
• £0.116 million relating to Council debtors;
• £0.099 million relating to the Housing Revenue Account and;
• £0.055 million relating to housing benefit overpayments.

Directorate Update: City Operations, Neighbourhoods and Regulatory Services

Christine Herriot, Director of City Operations, Neighbourhoods & Regulatory Services, is scheduled to provide the committee with a high-level overview of the directorate's financial performance in the current financial year. The directorate includes:

• Facility Services and Civic Management, including Newcastle Furniture Service (NFS) and Palatine
• Neighbourhoods, Waste & Repairs
• Operations and Parking, including Construction Services
• Public Safety and Regulation
• ICT, including Contact Centre
• Business Management and Coroners Service

The annual expenditure for the directorate is £233m, and is predominately funded from income generation of £186m p.a.

The Transport Service is also currently managed under CONRS since July 2025.

The projected outturn for City Operations, Neighbourhoods & Regulatory Services at quarter one is an underspend of £0.198m.

2025-26 Budget Proposals

In 2025-26 City Operations, Neighbourhoods & Regulatory Services committed to the following budget proposals totalling £4.627m, of which £4.557m are on target to be achieved at Qtr1. The shortfall of £0.070m relates to the 'Review of Business Support to Directorates', which is still under discussion with directorates.

Capital Projects

The report also lists a number of capital projects, including:

• Vehicle Replacement Programme £3.46m
• Estate Management Projects £1.349m
• Digital Libraries £0.153m
• Bereavement Services Infrastructure £2.625m
• IT Technical Refresh Programme £2.154m
• Byker Plant Capital Works £0.269m
• Taxi Test Station Extension £0.9m
• NFS Inventories £2.154m
• Parking Machines £0.143m
• Species Survival Fund £0.440m
• Shared & Street Litter Bin Replacement £0.128m
• Walker Dome Library ² £0.272m

Future Financial Risks

The report also identifies a number of future financial risks, including:

• Environment Act 2021³
• Waste Contracts
• Refuse Collection
• Open Spaces
• Repairs & Voids
• Parks
• Operations and Car Parking
• Facilities Services & Civic Management
• Public Safety & Regulation
• ICT & Customer Contact
• Business Management

PFI Contract Expiry and Asset Transfer

The committee will receive a report on the Private Finance Initiative (PFI) Contract Expiry & Asset Transfer risk. The report describes the implications should the Council fail to effectively manage the transfer of assets and services as PFI contracts reach the end of their term, which could result in service description and increased costs. The PFI contracts have different end dates and begin to expire from 2029, the contracts are:

• Building Schools for the Future (BSF) Phases 1&2 The design, construction, finance, operation and maintenance of eleven schools overall
• Group Schools (Construction of six new schools)
• Kenton and Walker LIFT Hubs
• Libraries PFI (City Library and High Heaton Library)
• Street lighting PFI The Council and North Tyneside Council

The risk has been assessed as medium likelihood (risk is likely to occur in most circumstances) with a critical impact resulting in a Red RAG assessment.

Mansion House Update

The committee will receive an update on the Mansion House.

Other Items

The committee will also review the action list from previous meetings, and the work programme for the coming months.