Cash-strapped Cheshire East is forecasting a £3.1 million overspend this year, in addition to the planned use of £25.3 million exceptional financial support.

The figures are revealed in the first financial review of 2025/26 (FR1) and are based on the council's income, expenditure and known commitments as at the end of June 2025.

And a report to next week's meeting of the finance sub-committee says, while the situation could improve, it could get substantially worse.

"The value of additional mitigation plans not yet reflected as delivered at FR1 are estimated at £2.8 million, giving a potential improved overall forecast of £0.3 million overspend," it says.

"However, should the current mitigations included in the FR1 forecast not materialise, alongside further risks identified, then the forecast overspend position could increase to £18.7 million adverse."

The figures are revealed in the first financial review of 2025/26 (FR1) and are based on Cheshire East Council's income, expenditure and known commitments as at the end of June 2025 (Ryan Parker).

It continues: "The forecast overspend of £3.1 million remains a significant financial challenge for the council when considered in addition to the planned use of EFS of £25.3 million.

"Reserves levels are insufficient to cover this level of overspending."

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Councillors will be told the key areas causing these financial pressures at FR1 include a projected overspend of £9 million within children and families, which is largely due to increased costs of placements and staffing.

The report says a shortfall of £9.7 million is forecast against in-year cross-directorate transformation savings.

But it says some of these pressures have been offset by savings of £4.7 million within the place directorate due to vacancy management and various one-off income items expected in-year.

It adds: "The contingency budget is contributing a further £7.2 million to the overspend position – including the use of £1.6 million to cover the pay inflation pressure – whilst interest and minimum revenue provision (MRP) are forecast to be £3.3 million under budget due to lower than expected borrowing, increased levels of investment and slippage in the capital programme."

The report says mitigations are planned to manage pressures.

These include:

• Line-by-line reviews of all budgets to further identify immediately any underspends and/or additional funding;
• Actively managing vacancies, particularly agency usage and reduce any overspends on staffing as soon as possible;
• Review the borrowing elements of the capital programme to minimise the minimum revenue provision and interest payable;
• Review of capital receipts available and potential surplus assets that can be sold;
• For children and families – reviewing costs of placements, establishment reviews, reunification of children

The finance sub-committee meeting takes place at Macclesfield Town Hall at 10.30am on Wednesday 10 September.