The Strategy and Resources Committee met on 16 February 2026, discussing the council's financial performance, the medium-term financial plan, and proposals for the London Cancer Hub and Quarry Cottage. Key decisions included approving the Q3 financial update, adopting the 2026/27 budget and medium-term financial plan, and agreeing to changes to the London Cancer Hub boundary and a lease for Quarry Cottage.

Finance and Performance Update (Quarter 3 2025/26)

The committee received an update on the council's financial and performance position for the third quarter of the 2025/26 financial year. Councillor Sunita Gordon, Lead Member for Resources, presented a positive overview, highlighting an improved financial position compared to earlier forecasts. The general fund overspend had been reduced, demonstrating the effectiveness of active management and spending controls. The capital programme showed an underspend, attributed to responsible planning and re-profiling of schemes to align with realistic delivery timelines. Significant progress was reported on planned savings, with the vast majority on track.

However, pressures remain in key areas such as adult social care, children's services, special educational needs and disabilities (SEND), and homelessness, which are described as national challenges requiring careful local management.

Victoria Goddard, Head of Finance, provided further detail. The general fund revenue budget showed an improvement since Quarter 2, with the services overspend reduced to £1.481 million, primarily due to demand in direct care services. This was offset by the release of budgeted contingency, resulting in a net underspend of £519,000, which would be added to the council's reserves if realised. The Dedicated Schools Grant (DSG) position saw a slight improvement, with a forecast deficit of £11.710 million. The Housing Revenue Account (HRA) reported an underspend of £376,000.

Overall, the council was on track to deliver £10.8 million of the £12 million budgeted savings. The capital programme was forecasting a £36.5 million underspend, largely due to the reprofiling of schemes, particularly the last three programme, to align with delivery timescales. The report also included an update on the complaints policy, with a new policy presented for approval.

During the discussion, Councillor Marian James raised concerns about the volatility and forecasting of adult social care costs, questioning the modelling used and whether more realistic growth assumptions could be adopted. The officers explained the complex factors involved, including demographic growth, an aging population, increasing long-term conditions, and the need to consider NHS funding and preventative measures. They outlined the use of spectrum analysis, trend analysis over three years, and benchmarking against statistical neighbours to inform budget setting.

Councillor James also inquired about potential learnings from other local authorities regarding their methodologies. It was explained that all local authorities submit financial data on adult social care spending, which is benchmarked. This process allows for the identification of areas where modelling or performance delivery could be improved.

Councillor Richard Clifton noted the importance of the period between budget setting and the end of the financial year, as adult social care costs had increased in previous years. He expressed hope for a better start to the next financial year by building in appropriate growth. He also highlighted that the forecast overspend in London for adult social care in Quarter 2 was £196 million, indicating the widespread challenge.

Councillor Tim Foster questioned the figures related to the acquisition of 100 portable homes, specifically whether the £36.9 million budget included on-costs. It was clarified that the figure was inclusive of estimated costs for post-purchase renovation and preparation for sale.

Councillor Neil Garratt raised concerns about slippages in the capital programme, specifically the restoration of the Beddington Park wall and the flooding prevention programme. For the Beddington Park wall, it was explained that the delay was due to the complexity of seeking planning advice for the historical structure and exploring cost-effective restoration options. The works had slipped into the next financial year. Regarding the flooding prevention programme, the delay was attributed to design complexities and planning issues, particularly with the large Cuttington Flood Alleviation Scheme, and also to weather conditions preventing work in open spaces.

Councillor Dave Tchil expressed concern about the slippage in the Housing Revenue Account (HRA) budget for building safety works, including alarms, smoke detectors, and lift replacements. It was explained that the primary reason for the delay was in awarding contracts, a common issue across several programmes. The slippage did not mean critical safety works were not being carried out, but rather that the budget was being moved to the next financial year for completion. The need for an up-to-date stock condition survey to inform prioritisation was also mentioned.

2026/29 Medium Term Financial Plan and 2026/27 Budget

The committee considered the updated Medium Term Financial Plan (MTFP) for 2026/27 to 2028/29 and the detailed budget proposals for 2026/27. Councillor Lord introduced the report, emphasizing the challenge of delivering ambitious plans amidst sustained financial pressures in social care, housing, and education. He noted that while the new local government funding formula provided more clarity, it was not perceived as fair for all, with the council's funding reduced by approximately 9%.

Richard Clifton presented the detailed budget, outlining a balanced budget for 2026/27, achieved through a combination of savings and a proposed increase in council tax. The report highlighted that the current forecast for 2025/26 indicated a net underspend of £0.5 million, a positive achievement given ongoing pressures. Significant budget growth was proposed for adult social care (£3.7 million), children's social care (£0.7 million), and temporary accommodation (£0.7 million) to align with current spending levels and anticipate future demand.

The report detailed the impact of the new local government funding formula, which resulted in a £7.1 million increase (3.2% in cash terms) to the council's core spending power for 2026/27, bringing it to £232.4 million. However, this increase was noted as one of the lowest for outer London boroughs, with the average increase being 8.6%. The forecast indicated that by 2028/29, core spending power would be 9.5% lower in real terms than in 2010/11, and 21.3% lower per capita.

The council's general reserve policy of maintaining at least 5% of net general funding spend was discussed, with the forecast indicating the reserve would remain stable at approximately 5% of the revenue budget. The 2026/27 budget proposal included the use of £1.5 million from earmarked reserves to balance the revenue budget.

Concerns were raised about the adequacy of council reserves, with a recent financial resilience report highlighting this as an area of concern. The report indicated that the council had less flexibility in its budgets compared to authorities with higher reserves.

The Housing Revenue Account (HRA) business plan showed an improved position, with a £272 million funding gap reduced to nil over 30 years, attributed to increased rental income and lower cost inflation. However, significant risks remained, particularly in the first five years, related to investment requirements and potential increases in inflation and interest costs.

The Dedicated Schools Grant (DSG) position continued to worsen, with a forecast deficit of £22.3 million by the end of the current financial year. The report detailed government support for local authority DSG deficits, with a high needs stability grant expected to cover 90% of the deficit accrued up to the end of 2025/26, amounting to approximately £20 million for Sutton. This grant is conditional on the submission and approval of a local SEND reform plan. The report also outlined the council's responsibility for a minimum of 10% of the residual deficit by 2028/29, estimated to be between £50-£55 million, requiring £5-£5.5 million to be set aside annually.

Looking beyond 2026/27, the MTFP presented a challenging outlook, with a projected gap of £34.5 million over the following two years, necessitating the delivery of identified savings and strong budget management. The council would need to adapt to a new financial reality of reduced government funding.

Councillor Ryan raised concerns about the implications of these financial decisions for residents and the council's ability to meet its sufficiency duties. He also inquired about measures explored for structured lobbying and legal routes to address perceived unfairness in funding. It was explained that while judicial review was a possibility in cases of unlawful government decisions, financial settlements were complex, and lobbying efforts were ongoing through various channels.

Councillor Tom Drummond questioned the contradiction between extending the UK Emissions Trading Scheme (ETS) and the potential for increased costs for Sutton, given its ward's high carbon production. It was clarified that the ETS extension was not predicated on the incinerator burning more waste.

Councillor Dave Tchil raised concerns about the financial modelling and accounts of SUEZ, the company operating the Beddington incinerator, noting a deterioration in its financial position and the risk this posed to the council, particularly given loans provided by the council and a reduction in interest rates. Officers stated that while SUEZ was not delivering the intern originally set out in its business case, its financial position did not present a material risk to the council's medium-term financial strategy when compared to pressures in adult social care, temporary accommodation, children's social care, and SEND.

Councillor James McDermott-Hill inquired about the drivers behind the increasing fees and charges, such as parking tariffs and permit charges, and whether this trend was temporal or structural. It was explained that pressures in adult social care, temporary accommodation, and SEND were the primary drivers. The council's fees and charges were noted as being low compared to similar authorities, and increases were often for cost recovery, behavioural change, or income generation.

Councillor Tom Drummond further questioned the council's plan for covering the residual deficit in SEND funding, estimated at £5-£5.5 million annually from 2028/29. It was confirmed that this figure was in addition to the £34.5 million gap and would need to be incorporated into future budget planning. The requirement for a SEND reform plan as a condition for receiving the high needs stability grant was also discussed, with details expected following the release of a government white paper.

Councillor Jake Short thanked staff for their work on the HRA, particularly given the challenging external environment. He inquired about the impact of the government's decision on rent convergence on the HRA business plan. It was confirmed that rent convergence, to be implemented from April 2027, would have a reasonably significant impact in a positive way on the financial sustainability of the HRA.

Councillor Sam Martin asked how the council would ensure its transformation programme was positive for the borough and owned by members and the public. It was explained that the programme would be a multi-stage process involving partners, best practices, and internal ideas, with options presented to members for advice before implementation.

Councillor Richard Clifton offered a broader reflection on the council's budget, noting that while the public often perceived local authorities as solely responsible for services like bin collection and pothole repair, the majority of expenditure (around two-thirds) was on adult social care, children's services, and supporting families. He highlighted the positive aspect of this expenditure in helping the disadvantaged and vulnerable.

The committee agreed to recommendations 2.1 to 2.7, which included approving the MTFP and the 2026/27 budget.

London Cancer Hub Update

The committee received an update on the London Cancer Hub project, a £1 billion partnership aiming to create a major centre for cancer research. Councillor Barry Lewis, Leader of the Council, highlighted recent milestones, including the operationalisation of innovation gateways, progress on transport improvements, and the clearing of unused hospital buildings. The committee was asked to agree to changes to the south boundary of the leased land to facilitate the project's progression while safeguarding future flexibility for residents.

Councillor Richard Clifton elaborated, explaining that the proposed changes to the leased land area were to safeguard future development on the adjacent health sites, specifically for potential highway network improvements. The council had previously approved the selection of the development partner, and good progress had been made on site demolition and the transfer of the innovation gateway. The offer from the development partner to release an area of land was to safeguard future provision and relocation of allotments, with the council retaining a first refusal option.

Councillor Tom Drummond questioned the valuation of the land and whether the council was receiving value for money, given the reduced land premium. It was explained that the terms reflected a proportionate reduction based on the percentage of land being removed, and revaluing the site at this stage would be difficult.

Councillor James McDermott-Hill expressed concern about a small piece of land retained by the council on the corner of Cotswold Road, fearing it could become derelict. He proposed developing a plan for its interim use, suggesting a small park or public green space, which would also provide a buffer for the adjacent school. Following discussion, an additional recommendation was agreed for officers to consider options for the meanwhile use of this land, including its potential as a park or open space.

Councillor Jake Short commented that the London Cancer Hub was a once in a generation opportunity and a world-class research facility that would bring significant employment opportunities to Sutton.

Councillor James McDermott-Hill sought clarification on the housing aspect of the development, confirming that key worker housing would be on land owned by the partners, not the council. He also clarified that there was no financial transaction with the NHS related to this land acquisition.

Proposed Lease of Quarry Cottage, Seears Park

The committee considered a proposal to grant an agreement for lease and a subsequent long lease to Your Space Sutton for the restoration and redevelopment of Quarry Cottage in Seears Park. Councillor Sam Martin, Deputy Leader of the Council, introduced the item, highlighting that the cottage had been vacant since 2017 and was in need of restoration. The proposal aimed to bring the property back into community use as a well-being club without requiring capital investment from the council.

Councillor Richard Clifton explained that the transaction involved the council acting as a trustee for the John Sears Park Trust, which gifted the park and cottage. Your Space Sutton would be responsible for securing external funding and planning permission within the first two years, followed by a further two years to complete renovations. This would then lead to a 21-year lease. The proposed hub would offer health and well-being services, preventative care, and contribute to civic pride. The recommendation was to delegate authority to the Director of Assets and Capital Delivery to approve the lease terms.

Councillor Christopher Woolmer, whose ward includes Seears Park, expressed pride in the proposed way forward, noting the building's potential usefulness and thanking those involved. He confirmed that no council capital expenditure would be involved.

Councillor Tom Drummond raised concerns about the lengthy planning history of the cottage and whether the current proposal was deliverable, given previous unsuccessful attempts. It was explained that Your Space Sutton had presented a more viable and deliverable proposal, and the lease structure would allow them to secure funding. The agreement for lease provided a four-year period for planning and fundraising, with the lease commencing only upon practical completion.

Councillor James McDermott-Hill inquired about engagement with the Charity Commission regarding the trustees of the park trust. It was clarified that the council members acted as trustees for the John Sears Park Trust, and there had been no issues raised by the Charity Commission concerning the trustees of Your Space Sutton.

The committee agreed to recommendation 2.1, which involved delegating authority for approving the lease terms. An additional recommendation was also agreed for officers to consider options for the meanwhile use of the land retained by the council in relation to the London Cancer Hub development, including its potential as a park or open space.