Derby budget underspend strengthens reserves

By Hiyastar News Desk

Published 3 June 2026

Derby City Council is reporting a year-end underspend of just over £4 million for 2025/26, alongside a second consecutive year in which it says it has met its savings target in full.

The figures, due to go before the Derby Cabinet on Wednesday 10 June, point to a stronger short-term position than in recent years. They do not remove the wider pressure on council services, but they show that the authority avoided using its budget risk reserve to balance the books.

The headline figures in Derby’s accounts

The council says the £4 million underspend will be used to increase reserves, rather than cover an end-of-year gap. That matters because reserves give local authorities more room to manage unexpected costs, delays in funding, or demand-led pressures in services such as social care.

Derby’s position was also helped by a change in Government funding arrangements through the Fair Funding Reforms. The report says this strengthened the council’s position, but it is not the same as a permanent guarantee that future budgets will be easier.

Reserves improve after a tighter budget year

The general reserve fund is now reported at £15 million. Derby City Council has framed that as part of a wider plan to rebuild financial resilience after previous budget pressures.

Councillor Hardyal Dhindsa, Cabinet Member for Finance, Governance and Digital, said the council had achieved the position through responsible leadership, service transformation, stronger scrutiny and challenges to historic budgets.

He said Derby is in a much better position than in previous years, while warning that the council must remain vigilant about long-term financial sustainability.

For comparison, other local authorities are still reporting much sharper budget strain, including council budget pressure in Shropshire, where overspending has left services under scrutiny.

Social care and schools funding remain under watch

Children’s social care is reported to be in underspend for the first time in several years. The council links that partly to early intervention work that has reduced the number of looked-after children in the city.

The Dedicated Schools Grant is also in a less severe position than earlier forecasts. Derby had previously reported a predicted in-year deficit of £7.8 million at the end of Quarter 3, now reduced to £7.085 million.

The council also says the Government’s pledge to cover up to 90% of historic SEND deficits could represent around £21 million for Derby. That would ease historic pressure, though it does not erase the continuing demand for special educational needs and disability support.

Cabinet will consider the final position on 10 June

Some parts of the capital programme have been rephased into future financial years to match revised project timelines. The council says this changes timing rather than reducing the scope of projects.

The final year-end position for 2025/26 will be presented to Cabinet on Wednesday 10 June. The meeting is expected to be available to watch on the council’s YouTube channel.

Source: Derby City Council