Hampshire County Council is “moving in the right direction” as the authority has spent £21 million less than expected this year.

The savings will allow the administration to reduce the use of its special reserves to balance the 2025/26 budget.

At a cabinet meeting on Tuesday, September 23, the county council’s leader, Cllr Nick Adams-King, welcomed the “good news”.

He added: “Certainly, the steps that we’ve been making to control expenditure are beginning to work along with the SP25 [Savings Proposals] that we made last year. So, we are moving in the right direction.

“The problem is that so much of this cost that we incur is limited only to the number of people who present themselves to use, needing help, and that is an ever-increasing number at the moment.”

In addition to the “good news”, the director of corporate services, Andy Lowe, said that by this time of year, the council expected an overspend of £15 million.

However, Mr Lowe said that in setting the budget for the current financial year, the county council will still be required to draw down nearly £65 million from the Budget Bridging Reserve (BBR), the council’s piggy bank.

Mr Lowe said: “What this underspend would mean is that we’d now only have to draw down £44 million from the Budget Bridging Reserve. So, we are still in a deficit budget position when you take it in the round.”

Therefore, the in-year BBR draw would be reduced from £64.9m to £43.9m, leaving an anticipated £97.9m available for 2026/27, when it is predicted that the council will face a £136 budget shortfall.

An independent expert panel concluded early in the year that even if services are reduced to legal minimum levels, recurring savings and income generation will be insufficient to close the gap.

Resulting in an inevitable deficit of around £84m in 2026/27.

The panel highlighted that without additional government funding or Exceptional Financial Support (EFS), the council has warned that it will likely need to issue a Section 114 notice — effectively declaring bankruptcy — in 2026/27.