No need to panic over predicted £1.5 million budget overspend, says Welsh council leader

Elgan Hearn, Local democracy reporter

Despite a predicted overspend of just under £1.5 million on this year’s budget, a council’s leader says it’s not time to panic.

At a meeting of the Blaenau Gwent County Borough Council Cabinet on Monday, February 23, senior Labour councillors received 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 overspend had initially been £1.811 million and was brought down due to transfers of £315,000 to and from reserve accounts.

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

Council leader and finance portfolio holder Cllr Steve Thomas (Labour – Tredegar) said: “As things stand, we’re looking at an adverse variance of around £1.5 million after reserve transfers and the bulk of that sits within Children, Young People and Families.”

Due to the strain felt nationally in Children’s Social Services, Cllr Thomas believes the situation would not “surprise any of us.”

Cllr Thomas said: “Demand-led services remain volatile, particularly placements and complexity of need.

“This isn’t a position to panic, but nor should we dismiss it.

“The key point for me is this: demand does not reset on April 1.

“If pressure in Children’s Services continues at the current level, it will influence the starting point for 2026/2027.”

He explained that this is why the work on demand and prevention by the council has been “so important.”

If the budget situation deteriorates further, Cllr Thomas said that more money from reserves will need to be used to balance the books.

Cllr Thomas continued: “That reduces flexibility going into the new financial year.

“What reassures me is that our monitoring is robust; we’re not hiding any pressures and officers have clearly identified where variances sit.”

He added that next year’s budget (2026/2027) already anticipates much of this volatility.

Cllr Thomas said: “The task for us is to continue close monitoring and avoid complacency to ensure that the mitigation measures we have approved land early and firmly.”

Cabinet noted the position.

The report explains that Children’s Services is predicting a £2.615 million overspend this year and that while residential placements outside the county have remained relatively stable in number, the growing complexity of children’s needs has increased individual placement costs.

Extra costs have emerged since the end of September, including new placements across fostering, supported living, and mother-and-baby provision, alongside higher one-to-one support and legal costs.

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

Council chiefs are required to develop and implement action plans to bring budget issues under control.