Despite ongoing pressures, Derby City Council continues to maintain a stable position halfway through the financial year.
The Council’s Quarter 2 financial monitoring report, which will be reviewed by Cabinet next week, outlines the forecast budget situation halfway through the 2025/26 financial year and the work that is being done to manage increasing demand and rising costs for services.
Crucially, despite the ongoing challenges facing local government across the country, Derby is predicting a minimal overall overspend of just over £0.5 million. Work is ongoing to reduce this further by the end of the financial year so reserves are not required to meet this gap. This position reflects continued responsible and careful management of the Council’s finances.
This predicted overspend, which has been significantly contained by continued strict spending controls, is mainly a result of increases in demand for adult social care and housing and the costs associated with providing these essential services. This is not unique to Derby and a challenge faced by local authorities across England.
As well as managing the overspend, the report highlights several other achievements that the Council is on track to make by the end of the financial year. This includes a forecast to achieve 100% of the £9.8 million savings target, as well as restoring reserves to enable the Council to be more financially stable for the future.
The Council continues to look at ways to deliver improved services whilst delivering value for money, such as the innovative use of Abbey Lodge, where families are housed in permanent accommodation, rather than more expensive and less suitable temporary solutions.
Councillor Kathy Kozlowski, Cabinet Member for Governance and Finance, said:
The challenges we face are not unique to Derby. Councils across the country are facing the same budget pressures for the same reasons, and the root cause is years of underfunding for local government.
We’ve been working hard to mitigate this through responsible financial management and our strategy is working. We anticipated a slight overspend when setting a realistic budget back in February and have a plan in place, whilst continuing to invest more than £40 million into essential services.
Crucially, our continued focus on financial sustainability means we are managing these challenges without relying on reserves to balance the budget.
Over the past decade Derby, like many other councils, has experienced a significant increase in demand for services, such as adult social care. Spending has risen by £101 million (48%), with £60 million of this increase occurring since 2021. As a result, the Council has delivered savings of around £112.5 million since 2016/17.
The Government is currently proposing a change in the way that councils are funded through their Fair Funding Reforms. The proposals aim to simplify the system, move to multi-year funding allocations and align funding with need. The new system, which would take effect from April 2026 if confirmed, would also address long term disparities in funding between councils, meaning that money would be redirected to areas such as Derby with high deprivation, population growth, and a low tax base.
Details of the Government’s 2026/27 funding settlement are due to be announced in late December.
The Cabinet meeting can be viewed online on the Council's YouTube channel at 2pm on Wednesday 12 November.