Council’s £2.2m budget surplus sparks call for Council Tax cut

A senior councillor has questioned whether a predicted £2.2 million council budget surplus will result in lower Council Tax rates next year.

At a meeting of Powys County Council’s Finance Panel on Thursday, September 11, councillors and independent lay members received a report on the 2025/2026 budget performance as it stood at the end of June.

Following the first quarter of the financial year, the council was predicting a surplus of just under £2.2 million on its £367 million budget by the end of next March.

Finance Panel Chairman and leader of the Conservative group Cllr Aled Davies, said: “There’s a real potential of the council being underspent by over £2 million pounds.

“What will happen if the underspend materialises at the end of the financial year, will there be a discount on next year’s Council Tax for residents?”

‘Reasonable position’

Director of Corporate Services and s151 officer Jane Thomas said: “We are in a reasonable position in terms of the forecast that we’ve got now at quarter one.

“However, and I have to point this out, we have an extensive list of potential pressures that could materialise, and they stood at around £10 or £11 million.”

Ms Thomas believed that at least “some” of these pressures would happen during the year, and there was “particular” concern around the expected demand on Social Services during the winter.

Ms Thomas said: “We have to keep a very tight eye on it and take action, if need be, during the year.

“Because if all of that pressure materialises, there’ll be insufficient funds, within the base budget to deliver against it.

In this case, Ms Thomas added that the council’s reserves might also need to be used to plug any gaps.

Ms Thomas said: “If there is an underspend, that will immediately help us offset some of the budget gap that we’re already seeing for next year.”

She added that if the surplus remains to the end of the year, it could “impact” the level of Council Tax rise in next year’s budget, as the council would be looking for “less” money to plug gaps.

Indicative figure

Cllr Davies said: “We look forward to the next quarter’s report, and subsequent quarterly outcomes.”

The committee then noted the report.

Each year the budget calculations start with the assumption of a five per cent increase in Council Tax – although finance chiefs stress at the outset that this is only an indicative figure.

Following the Welsh Government’s annual draft budget announcement in December, all local authorities find out how much funding they should receive in the following year. Then will then firm up their own proposals, including calculating how much Council Tax will be needed to balance the budget.

Powys usually publishes this figure in a draft budget in January – which eventually goes in front of all councillors to be voted upon at a full council meeting, usually at the end of February.