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£8.8m shortfall council faces ‘arguably bigger challenge’ than during austerity

12 Oct 2022 3 minute read

Twm Owen, Local Democracy Reporter

Monmouthshire council is facing an “arguably bigger” financial challenge than it did during the austerity period due to an £8.8 million budget shortfall. 

That was what the council’s chief financial officer, Peter Davies, told the council’s scrutiny committee when it met to discuss a report outlining a predicted overspend against what it has budgeted for. 

Among measures the council is considering to bring spending under control are not filling vacant posts and raising extra income from additional property sales.

But assistant finance officer Jonathan Davies warned, in a report, one-off sources of funding cannot be relied on and use of reserves will also need to be managed with next year’s budget in mind. 

Cuts or reductions in services could also be considered, but the report said it is accepted those are relied on by communities while other spending commitments announced by the Welsh Government mean there is “a significant level of uncertainty” over any extra cash for local government. 

Peter Davies, the Section 151 officer, told the committee: “It is unprecedented as an in-year position and we’re heading into unprecedented times arguably more so than the challenge faced during austerity. 

“It is important that I want to give you all some level of reassurance and we have advanced budget recovery plans already.” 

The predicted overspend was first revealed last week when the report was published and a press release issued in which the cabinet member for resources, Rachel Garrick, claimed the previous Conservative administration hadn’t put enough money into reserves.

That claim was rebuffed by the Tory group who pointed out the budget it brought to the council in March was endorsed by the head of finance. 

‘Situation worse’

At the meeting on Tuesday, October 11, finance chief Mr Davies said provision had been made in reserves for four areas identified as a risk in the budget which included a pay award for staff and a drop in visitor numbers to the county’s leisure centres. 

But he said inflation has also impacted the council. He said: “The situation has got worse not better.” 

His deputy, Mr Davies, said while the council had been able to “replenish its reserves quite significantly over the last two years,” it still ranked among the councils with the lowest levels of reserves in Wales.

Tax hike fears

Conservative councillors said residents are concerned they will be expected to make up the shortfall through the council tax. 

Llanbadoc and Usk member Tony Kear said: “Residents do fear a massive hike in the council tax in 2023.” 

Labour cabinet member Cllr Garrick however said she regretted the council hadn’t raised more money through the community charge in recent years. 

The Caldicot Castle member said: “We’ve lost opportunities in the past to repair the roof while the sun is shining in terms of marginal council tax raises.” 

She said she is also working with other councils, through the Welsh Local Government Association, as many are facing similar problems and council tax would have to be considered in light of the financial situation early next year. 

Finance chief Mr Davies said the council still faces uncertainty with the UK Government due to make a further announcement on public finances at the end of October “that creates a risk but also a potential opportunity” and he said “in year pressures” on spending of around £300 million are being reported across Welsh local government.

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