Council predicts £1.5 million budget overspend due to costs of children’s care placements

Elgan Hearn, Local democracy reporter

A council will need to dip into its reserves and find £1.5 million to allow them to balance their budget at the end of March.

The Blaenau Gwent Council overspend had initially been £1.811 million and was brought down due to transfers of £315,000 to and from reserve accounts.

At a meeting of the county borough council’s Cabinet on Monday, February 23, senior Labour councillors will receive a report which updates them on the performance of this year’s budget.

The report as it stood on December 31 last year is showing an overspend of £1.495 million on the Blaenau Gwent 2025/2026 budget of £197.038 million.

This means that the finance chiefs are predicting the council will spend £198.534 million.

The report shows that the council’s finances have worsened by £1.266 million in the three months from October 1 to December 31.

At the end of September, the council was predicting an overspend of £229,000 which was up on the situation at the end of June which had been £192,000.

The report said: “The adverse variance of £1.495 million is a worsening position when compared to the Quarter Two forecast and this is mainly due to increased forecasted costs within Children’s (Social) Services within the Children, Young People & Families Portfolio.”

It is explained in the report that Children’s Services is predicting a £2.615 million overspend this year and that the project of setting up its own residential homes for youngsters has not panned out as well as expected.

The report said: “External residential placements have remained relatively stable in number, but the growing complexity of children’s needs has increased individual placement costs.

“The new Blaenau Gwent children’s residential home continues to provide long-term care and supported living/respite placements.

“However, vacancies within the home cannot currently be used to accommodate children placed externally, due to the complexity of their needs. This limits the potential to reduce external placement expenditure.

“Income from selling placements is lower than anticipated, resulting in a forecast shortfall of £201,000.

“Additional pressures have emerged since Quarter Two, including new placements across fostering, supported living, and mother-and-baby provision, alongside higher one to 0ne support and legal costs.

“National challenges in the fostering market, including providers leaving the introducing independent pricing, continue to affect both placement availability and cost. This has resulted in some children moving into more expensive residential care where fostering placements are not accessible.

“The financial position is under ongoing review, and the service is actively exploring options to manage costs and strengthen local provision.”

However good financial performance in other parts of the council is partially offsetting the issues in Children’s Services.

The other Social Services department, Adult Services is predicting a £317,000 surplus.

The Corporate Services Department had predicted a surplus of £800,000.and the Economy and Place department is predicting a £239,000 surplus.

The report said: “Where services are reporting significant cost pressures, budget holders are required to develop and implement action plans to address these issues.

“Progress against these plans will be monitored and reported quarterly as part of the financial performance framework.”