Council warns of £4.5-million overspend if Covid-19 losses not met by Welsh Government

Monmouthshire council has warned it faces an overspend of more than £4.5 million if costs related to coronavirus are not covered by the Welsh Government.

The county council is urging the Welsh Government to confirm it will fully reimburse income losses related to Covid-19 for this financial year.

A report coming before the council’s cabinet notes a “worst case” forecast deficit of £6.43 million for this financial year.

This includes £5.91 million of costs related to Covid-19, although Welsh Government has since confirmed further funding of £1.78 million to cover income losses.

But the report says there is still a forecast deficit of £4.13 million related to coronavirus costs, as well as a further overspend of £518,000 related to other services.

It says “the key risk and uncertainty continues to be the amount of compensatory Welsh Government funding that the council will receive”.

“We are grateful to Welsh Government for the funding that has been provided to Welsh councils to cover costs to date and that we anticipate could potentially meet the income shortfalls forecast for the remainder of the year,” the report says.

“However, we urge Welsh Government to confirm full reimbursement of the £4.13 million Covid-related income losses and cost pressures as soon as possible and to eliminate financial risk going into the financial year-end.”

The council says it has faced “significant and unprecedented challenges” in 2020, with Storms Ciara and Dennis also hitting the county in February.

It is also facing costs related to an increase in the number of children coming into care and pressures in waste and recycling due to delays in implementing changes.

The authority’s commercial income has also taken a hit, with a forecast overspend of £193,000 related to Newport Leisure Park and Castlegate Business Park in Caldicot.

This is mainly due to a reduction in rental income of £265,000 at Newport Leisure Park – which it bought as a commercial investment for £21 million in 2019 – the report says.

The report says the council will need to “plan and plot a revised course to ensure it remains financially sustainable into the future” due to the challenges faced.

“Going forward more targeted and planned cost reductions will be challenging and the council will as always look to minimise impact on service delivery,” it says.

“Though this cannot be guaranteed and is expected if Welsh Government funding falls short of expectations.”

The council’s cabinet will consider the report at a meeting next Wednesday.