Southampton City Council puts forward a balanced budget for 2025/26

Yesterday (Monday 17 February), Southampton City Council has published papers on its updated Medium Term Financial Strategy (MTFS) and Transformation Programme, which has confirmed it has put forward a balanced budget for 2025/26

Since the Transformation Programme launched in July 2024, £9.5 million of savings have been delivered. Around £50 million of saving opportunities have now been identified across the medium term financial strategy (MTFS) through to 2028/29. The budget assumes that £34.5 million of this will be delivered in 2025/26.

For the current financial year 2024/25, the month ten position as of January 2025 is a £19 million underspend, with £9.5 million being from early delivery of transformation savings. When the budget was first set for 2024/25, the council expected £39 million would be needed from exceptional financial support (EFS) from the Government. However as the council is now forecasting an underspend, the reliance on EFS to balance the budget for 2024/25 is reduced.

In order for the transformation programme to deliver services in different ways and become more effective and productive, there will be a reduction in the number of people employed. There is a potential for 61-85 Full Time Equivalent (FTE) of redundancies, which will potentially need to be made over the next two years. A slightly lower figure to what was provided in the medium-term financial strategy in October 2024.

Substantial increases in both specific and non-specific government grants were announced in the Chancellor's Autumn Statement and in the Local Government Finance Settlement, this equates to funding increases for Southampton in excess of £11.3 million.

Additionally, the local government financial settlement was higher than expected for this year as the Government has directed more funding to the most deprived local authorities.

Councillor Lorna Fielker, Leader of Southampton City Council said:

“Last year, we made a commitment to residents to balance the City Council’s budget, in just seven months since launching the Transformation Programme, we have made significant strides towards this goal. We've achieved remarkable savings and are on track to save the necessary amount to present a balanced budget, eliminating the need for Exceptional Finance Support to balance the revenue budget.

“I would like to thank everyone involved in getting us to a point where we have made significant savings, whilst protecting those services people in this city rely on.

“While tough decisions continue to lie ahead, we are back on a form footing with the council focussed on getting best value for money from every penny we spend.”

Councillor Simon Letts, Cabinet Member for Finance and Corporate Services said:

"This year's significant increase in funding from Government is worth around £11.3m net to Southampton and has made a massive difference. This additional funding, alongside our efforts to make services more efficient, means we are able to balance the budget, not just for 2025/26 but across the subsequent three years."