Free bus pass cuts backfire as council faces £500k overspend

Twm Owen, Local Democracy Reporter

A controversial decision to axe free school transport for hundreds of children has failed to produce the expected savings, instead contributing to a projected £500,000 overspend. 

Other factors forcing Monmouthshire County Council into the red are the UK Government’s decision to hike National Insurance contributions for employers, higher than expected inflation, and a failure to fully achieve agreed £10 million savings and costs associated with The Tour of Britain cycle race. 

The council has also warned its 35 schools will hold a collective deficit balance of more than £6m at the end of March, which has increased by nearly £3m from the beginning of the year. 

Spending

Spending and forecast spending for the remainder of the financial year is expected to exceed the £236,778,000 budget agreed in March by more than £1.1m though some underspends reduce the expected deficit to £533,000. 

The 18 schools with deficit budgets, which mean they expect to spend more than they are funded for, must get their recovery plans into County Hall for approval by the October half term. 

They are expecting to draw a further £2.8m from the school reserve, which as a result would be £6.9m in the red, a figure which is carried on the council’s balance sheet and will impact its overall financial resilience and increases it risk exposure by reducing available funds. 

Councils had been expecting the Welsh Government to meet in full the additional costs from the NI increases announced by UK chancellor Rachel Reeves in last October’s budget but in July it was confirmed the Labour government in Westminster would only partly meet the cost for the Welsh public sector. 

As a result councils have to fund their shortfalls though Labour-led Monmouthshire had put a £850,000 contingency in place which covers an outstanding £811,000 following the £2.51m received from Cardiff Bay. The Welsh Government has confirmed funding for the higher NI contributions will be transferred into its grant base from 2026 but will also have to be considered as one of the council’s cost pressures. 

High demand

The overhaul of school transport, which meant children would only get a free bus pass if they live more than two miles from their primary, or three miles from secondary school, failed to deliver expected savings as some routes to school have been judged as unsafe for walking and free transport reinstated. 

The council is also continuing to experience high demand on children’s and adults social services, despite having increased their overall budget this year, and changes to how they work haven’t yet resulted in all of the savings expected. 

It is currently forecasting it will achieve 92.1 per cent of the £10.7m savings that were budgeted for across the council. 

The penultimate stage of the Tour of Britain Cycle race started in Pontypool on the first weekend of September and the route took in Usk, Llanishen north of Chepstow, Monmouth and Abergavenny. 

Monmouthshire County Council made a £25,000 contribution to the race organisers and also had to find a similar amount to cover road closures, cleaning and security and its most recent September finance report reported the event as a £50,000 overspend that hadn’t been budgeted for at the start of the year. 

The council has said it working to address underlying costs and budget mitigation measures include trying to use grants, where possible, to cover its core costs, management of vacancies and how it can use capital receipts if buildings or land are sold to cover the costs reforming its services.