Monmouthshire council is facing a budget shortfall of nearly £6 million, including around £4m which is related to Covid-19 costs.
The latest budget forecast for the current financial year shows an improved picture, but there is still “a huge challenge” facing the authority to make further savings, the council’s cabinet was told on Wednesday.
A report shows the predicted deficit related to core service delivery is £1.94m, which is a reduction of £1.438m from the previous budget forecast earlier this year.
The council is facing a further shortfall of £3.97m related to Covid-19 pressures, which is expected to be met by the Welsh Government’s Covid-19 hardship fund, taking the overall predicted deficit to £5.91m.
Pressures facing the authority include a predicted overspend of £695,000 in children’s services, driven by the requirement for high cost residential placements.
The council’s additional learning needs budget is facing a deficit of £982,000.
This is due to placement costs outside of the county’s schools, a reduction in income from other local authorities and additional support required for pupils attending schools in Monmouthshire.
Adult services, landlord services and the authority’s transport and passenger transport unit are also facing overspends.
These costs have been mitigated by underspending within other areas of the budget though.
Council tax collections have resulted in an expected surplus of £750,000 due to new properties, staff vacancies are expected to save £540,000 while low interest rates are expected to reduce borrowing costs by £230,000.
Jonathan Davies, acting assistant head of finance at the council, said the authority still faced challenges to recover the remaining predicted deficit due to a number of the areas overspending being demand-led.
“It’s a very welcomed improvement in the core service budget position since month two, but we’ve still got a huge challenge there for services to recover circa £1.5m now with only a third of the financial year remaining,” he said.
Cllr Phil Murphy, cabinet member for resources, said it was a “considerably improved position”.
He also called for clarity from the Welsh Government that it would continue to fund Covid-19 related pressures after March next year.
“There remains a significant Covid-19 related cost pressure and income losses forecast after that which presently have no funding commitment from the Welsh Government,” he said.
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