A major cost-saving plan at Southampton City Council is starting to have an impact, the authority’s deputy leader has said.

The council has started work on a 28-project transformation programme, which aims to deliver £32.05million of savings for 2025/26.

Latest forecasts suggest the local authority has a budget surplus of more than £7million for the current financial year.

Deputy leader and cabinet member for finance and corporate services Cllr Simon Letts told cabinet on August 27 that there was a “positive financial update”.

“This is largely down to the starting of our transformation programme, which is starting to bring us some benefits, particularly in adults’ and children’s (services),” Cllr Letts said.

“We have now gone above £7million as a surplus in year and we are making the decision today to transfer £6million of that out of budgets within directorates into a central pot in recognition of the fact that we feel that £6million of it can be bankable.

“That gives us significant additional flexibility in terms of dealing with the budget situation we find ourselves in.”

A report to cabinet said the central pot will act as a contingency to reduce the reliance on the exceptional financial support (EFS), which has minded-to approval from government.

The EFS for the city council allows up to £121.6million of capital resources to be used to cover revenue costs in the current financial year.

This included £39.3million to offset the 2024/25 budget deficit, which was needed to allow the local authority to set a balanced budget back in March.

The cabinet report set out the proposed in-year directorate budget adjustments from transferring £6.13million to the central pot.

They are: £1.06million reduction on residential and independent foster care placements; £3.75million less on care packages and costs; £750,000 smaller school travel service budget; £300,000 reduction for concessionary fares; £270,000 less set aside for the service centre in the resident services directorate.

The report said services areas forecasting overspends are required to develop deficit recovery plans.

Culture and tourism had already successfully implemented such a plan to mitigate a projected overspend.

Bereavement services had partially mitigated its overspend, but it still had £450,000 to resolve.

Further deficit recovery plans are in place or taking shape for the district operating teams (£400,000 forecast overspend), landscaping services (£210,000), waste operations (£250,000) and commercial services (£40,000).

There are also £610,000 of at risk savings identified in children’s social care, with a plan put in place, the report said.