The Scrutiny Performance Panel - Service Improvement, Regeneration and Finance met on Tuesday 15 September 2026 to discuss the council's financial outturn for the 2025/26 financial year. Key topics included the Housing Revenue Account, capital expenditure, and overall revenue performance, with particular attention paid to increased repairs and maintenance costs, capital project slippage, and the sustainability of council reserves.

Housing Revenue Account Outturn 2025/26

The panel received an update on the Housing Revenue Account (HRA) outturn for 2025/26, which showed a deficit of £1.454 million compared to the budgeted surplus. The primary driver for this movement was an increase in revenue repairs costs, amounting to £5.322 million. Director of Finance, Ben Smith, explained that these increased costs were due to sustained demand, inflationary pressures, and new service developments such as damp and mould initiatives and improved tenant engagement. While the budget for repairs had been increased, it was not sufficient to cover the full extent of the pressures.

Councillor Geoff Jones raised concerns about whether the overspend on repairs was a one-off issue or an ongoing problem, particularly as the housing stock increases. Mr Smith confirmed that while the budget had been reshaped to accommodate higher repairs and maintenance costs, inflationary pressures and regulatory demands would continue to be factors. He also noted that the overspend had been more pronounced this year than previously. Councillor Jones also enquired about potential impacts on tenants, specifically regarding longer waiting times for repairs. Mr Smith stated he could not comment on operational matters but assured that the budget had been significantly increased. Councillor Jones also questioned if this would impact rent charges, to which Mr Smith clarified that rents are fixed by the Welsh Government.

Councillor Peter Black raised a point about a £1.1 million overspend on empty properties (voids), questioning the reasons for the increased cost and whether properties were being let quickly enough. Mr Smith advised that inflationary pressures were the main factor, rather than extended turnaround times for voids, and that the budget had been rebased to reflect these pressures.

A review of the repairs service, involving specialist advisors, was discussed. The review aimed to strengthen operational and financial data, ensure repairs were delivered through the most appropriate routes, and align responsive repairs with planned maintenance. Several recommendations from this review have already been implemented.

The panel also discussed rent arrears, with Mr Smith noting that while arrears had increased, the overall bad debt provision was reduced due to the proactive approach of the Rent Arrears Team. He also confirmed that housing management costs were lower than expected, partly due to reduced utility costs and fewer disrepair claims.

Capital Outturn and Financing 2025/26

The panel reviewed the capital outturn for 2025/26, noting that the revised budget was £200.739 million, with an outturn of £152.994 million, resulting in a net underspend or slippage of £47.745 million. Councillor Linda James questioned the reasons for this significant slippage across numerous projects. Councillor Rob Stewart, Leader of the Council and Cabinet Member for Economy, Finance and Strategy, explained that the council had set a stretch programme and that reprofiling of projects was an ongoing process to gain a more accurate picture of spend. He added that the council often aims for ambitious targets, and while the original programme was largely met, there is a political desire to spend more quickly.

Mr Smith elaborated on the capital financing strategy, highlighting the use of reserves, including the Capital Equalisation Reserve, to avoid borrowing at elevated interest rates. He also mentioned the establishment of a Capital Oversight Board to improve governance and project management.

Councillor Peter Black inquired about the functioning of the Capital Oversight Board, and it was explained that it is an officer-member board that provides a steering group view across all capital spend, with a role in escalating issues for advice or decision.

The current interest rate environment was a significant point of discussion. Mr Smith detailed the elevated rates for borrowing, noting that while the council had prudently borrowed at low rates previously, current borrowing costs were considerably higher. He outlined the strategy of using reserves to defer borrowing and the flexibility in timing and duration of any future borrowing. Councillor Will Thomas asked about the possibility of borrowing more regularly in the short term, and Mr Smith confirmed this was an option, explaining the current rate differences between short and long-term borrowing.

Councillor Geoff Jones raised concerns about when capital project slippage could create financial risks rather than just being a programme management issue. Mr Smith acknowledged that while slippage could lead to contractual penalties or increased material costs, the council manages its overall borrowing need centrally and does not borrow on a case-by-case basis for individual schemes.

The sustainability of using reserves and cash balances was also discussed. Mr Smith stated that reserves can only be spent once and are not sustainable for the long term. He differentiated between planned and unplanned use of reserves, noting that while general reserves were low, earmarked reserves remained relatively high. He also confirmed that the council had authority for significant additional borrowing if needed, but was currently timing market conditions to avoid borrowing at elevated rates.

The investment in the St Helens development was discussed in relation to potential capital risks if no regional teams were playing there. Councillor Stewart assured that the investment was intended to support wider community sporting facilities and the International Sports Science Park, with benefits extending beyond any single organisation.

Revenue Financial Outturn 2025/26

The panel reviewed the overall revenue financial outturn for 2025/26, which showed a net expenditure overspend of £12.990 million. This necessitated an increased draw from core earmarked reserves and a £4 million draw from General Fund reserves.

A significant factor contributing to the overspend was an increased provision for equal pay claims, which has been charged to the Finance Directorate. Mr Smith explained that the provision had been increased from £15 million to £28 million as a minimum, with further potential liabilities undisclosed due to uncertainty. This increased provision has been financed by temporary draws from General and earmarked reserves and will need to be repaid in future budgets.

The panel noted that the General Fund reserve is now considered very low for a council of Swansea's size. Mr Smith expressed concern about this, stating that the general reserve is £4 million empty compared to what it should be. He acknowledged that while earmarked reserves were high, the general reserve serves as the ultimate backstop.

Councillor Linda James questioned the sustainability of the current reserve levels and whether a larger general reserve should be maintained. Mr Smith confirmed that reserves can only be spent once and are not sustainable long-term, but that the council still holds relatively high earmarked reserves. He also noted that the council's overall financial position remained strong compared to other Welsh authorities.

The issue of Council Tax income being lower than expected was discussed. Mr Smith attributed this to a combination of factors: the cost of living crisis impacting residents' ability to pay, changes to collection arrangements making it harder to collect debt, and his own pushing of the envelope in terms of collection rate assumptions, which had previously resulted in surpluses.

The achievement of planned savings was also reviewed, with 73% of the £13.974 million savings target achieved by 31 March 2026. However, the report indicated that overall savings targets were met through mitigating measures. Councillor Peter Black raised concerns about the realism of future savings targets and the way they are assessed. Councillor Stewart and Mr Smith explained that savings proposals are constantly reviewed and substituted if they cannot be delivered, and that overall the council has outperformed its estimates in recent years.

The panel agreed that matters relating to equal pay should be considered through a dedicated closed scrutiny session at a later date.

Work Plan

The panel noted the work plan for the upcoming meetings, with a particular mention of a forthcoming report on the ferry service.

Letters

The meeting concluded with the noting of letters.