Bradford Council finance chiefs are “confident” of balancing the authority’s budget as the latest figures show a vast improvement with a forecast overspend of just £0.8 million – down from £7.5m in the last quarter.

Severe funding cuts mean that £44m needs to be stripped from the Council’s operating budget this financial year with individual departments being asked to cut £22.6m on top of a £21.4m efficiency drive called Changing Our Council.

After the first quarter an overspend of £9.4m was projected but this reduced to £7.5m as the half-year figures were released. Now a massive £6.7m reduction in the forecast overspend has left the authority with three months to go and a “nearly balanced” budget.

The two departments which have seen the most marked improvements are children’s services, which is expecting to break even by the end of the year, down from a £1.5m projected overspend; and adults and community services which has reduced expenditure from £8.6m to £6.1m, partly through additional funding from the primary care trust.

Despite these improved figures, service expenditure is forecast to overshoot the budget by £7.7m, which includes £5.5m of service pressures and £13.1m of unrealised savings – predominantly from the Changing Our Council programme. This is offset by the action taken by departments to partially negate unrealised savings of £10.9m.

The Council’s director of finance, Stuart McKinnon-Evans has said that the magnitude of change needed in the way services are run has shown the savings target to be very challenging.

But he added in the report: “This represents an improved position compared to the mid-year reported potential overspend of £7.5m. While the overall net revenue budget is therefore nearly balanced, departments are forecasting pressures of £7.7m.”

Council leader Councillor Ian Greenwood told the Telegraph & Argus: “We have been working very hard to ensure that we bring the budget in online and we are getting very close to doing that and hope to do so when we get to the end of the year.

“We have to set a very difficult budget this year and if we have to carry a deficit forward it would make it even harder.”

Conservative group leader, Councillor Glen Miller, said he was rather surprised at the scale of the turnaround just a few months after predictions of a £7.5m overspend.

“If this figure is accurate the officers have done an impressive job and should be highly commended.

“My one concern about this revised position is that it feels almost too good to be true and I cannot help but wonder if it is completely realistic. I do hope that the figures are correct and that we can take pride in a job well done, rather than Labour get through the elections and then suddenly announce an ‘unforeseen’ overspend of near £10m.”

When the third-quarter financial report goes to the executive next month, councillors will also be asked to approve the release of £153,000 this year and a further £80,000 next financial year for software and hardware to develop the Council’s website; and for £150,000 to update the Council’s Geographical Information System.

The report will first be discussed by members of the corporate overview and scrutiny committee, which meets at City Hall, on Wednesday at 6pm.