£6.6m overspend predicted for Welsh council

Bruce Sinclair Local Democracy Reporter

A moratorium “on all nonessential expenditure” is to continue as one council is facing a projected overspend of £6.6m in this financial year, up £3m on three months ago.

At the February 12 meeting of Pembrokeshire County Council’s Cabinet, members heard that, on the third quarter of the financial year projections for the 2023-24 budget, the council was currently on course for an overspend of £6.6m on a previously-agreed budget of £287.6m.

The projected 2023-24 outturn, at £294.2m as of quarter three, is £3m up from the predicted overspend in quarter two of £3.6m.

That quarter two figure was a reduction of the previous quarter one figure of a £4.8m predicted overspend, which had led to the moratorium being introduced, and continued in to quarter two.

Demands

A report for members, presented by Cabinet Member for Corporate Finance Cllr Alec Cormack, said there had been significant demands on the council’s budget.

“During Quarter 3, there continues to be an increased level of demand, complexity and cost of packages within our school ALN provision, children’s services, adult services and homelessness with material projected overspends in each of these areas totalling £13.4m.

“This is an increase of £5m on the £8.4m projection at Quarter 2 due in the main to an increase in demand and cost of packages in Children’s and Adult’s Social Care.

“Although work is being undertaken to try to reduce the cost of packages, it should be noted that these demand levels are projected to continue into 2024-25 and future years, creating further additional permanent budget pressures that will need to be met through a combination of additional budget savings, income generation and increased council tax.”

Education overspend

Education Services is projecting to overspend its rolling budget of £113.212m by £4.322m, £3.361m of this to Children’s Residential Placements which is managed by Children’s Social Care, with Children’s Services projected to overspend its rolling budget of £19.924m by £3.929m.

Adult Social Care is projecting to overspend its rolling budget of £72.374m by £4.078m, and the Housing General Fund is projected to overspend its rolling budget of £2.284m by £1.074m, nearly £1m of that from an increase in bed and breakfast costs for homeless people alone.

Partly offsetting these overspends is a slippage in the Capital Programme in 2022-23 and 2023-24 which has resulted in higher levels of investment income and delayed borrowing costs, with a projected underspend of £5.2m in Capital Financing Costs and Investment Income.

Underspends are predicted in some other services including Highways and Transportation at £0.409m, Culture and Related Services at £0.166m,Planning and Development Services at £0.164m, Environmental Services at £0.539m, and Other Central, Corporate and Democratic Services at £0.466m.

Cllr Cormack said: “The financial challenges facing the council have worsened significantly over the nine months of this financial year. Every officer I have spoken to believes there will be a multi-million pound overspend.”

Later in the same meeting, members agreed to recommend a council tax increase for the 2024-25 budget of 16.31 per cent, any increase would be decided at the March 7 meeting of the full council.