A GWENT council is set to finish the financial year with an underspend of around £1 million for the second consecutive year.
Torfaen Borough Council finished the last financial year with £975,000 in spare funds and the councillor responsible for finance, Sue Morgan, told the cabinet though this year’s predicted surplus reduced by £123,000, from September to November, there is still likely to be cash left over when the financial year closes at the end of March.
She said: “I confidently expect to end the year with a favourable variance in the area of £1 million.”
Figures show at the end of November the predicted surplus stood at £1.1 million, but the council has also been bracing for increased costs and demands on its services of £11.9 million for the 2024/25 financial year.
However after taking account of additional Welsh Government funding and a potential council tax increase of 4.95 per cent, along with savings already identified, that was reduced to £2.816 million. Further savings and use of reserves means the council has to find just £38,000 to produce a balanced budget for the next year.
Pontnewydd Labour member Cllr Morgan said the surplus would “provide a helpful buffer for the financial year ahead.”
The Welsh Government provided a 3.1 per cent increase for local government in December with Torfaen awarded a rise above that, at 3.2 per cent, which has resulted in an additional £5.583 million.
Nigel Aurelius, the deputy chief executive and chief financial officer, said with all so far identified savings, which includes cutting or saving £1.4 million from school budgets, as well as additional cost pressures the authority is £38,000 short of meeting its legal obligation to produce a balanced budget.
The cabinet was also told two “key grants” are being reduced by the Welsh Government as part of its cost-cutting measures.
The social care workforce grant is set to reduce by £10 million on an all-Wales basis to £35 million, while the homelessness grants allocation is reducing by £11 million, from £27.5 million in the current year, to £16 million from April.
Councillor David Daniels, who has responsibility for adult services and housing, said for Torfaen that would mean funding for homelessness reducing by £10 million over the next two years at a time when the Welsh Government is asking it do more to prevent the problem.
The Pontnewydd councillor said: “The reduction in funding is very frustrating the simple truth is to deliver homelessness services we still need more money to do so. I totally appreciate the Welsh Government’s situation, the money is not there and have had to find savings but it’s incumbent on me to point out the contradiction.”
Cllr Daniels also said the £1.4 million underspend in adult social care in the current year’s budget is “not a good thing”.
He said: “It’s related to not being able to recruit to a good many roles.”
The cabinet member said services are being redesigned as a result to “hopefully deliver services more efficiently” in the new financial year.
The main cost pressures on this year’s budget are the children and family services directorate and the economy and environment directorate which includes waste collections.
Higher costs for children’s care placements, which have overall reduced slightly on last year, are almost entirely responsible for the service overspend while vehicle and staff agency budgets have meant the economy and environment directorate has had to draw on a further half a million above its original use of reserves to meet its costs.
The cabinet was told the overspends are being addressed both this year and for next year’s budget.
A council scrutiny committee will be presented with spending plans for coming year at the end of January and the cabinet will consider the final budget plans on February 20 before the council is asked to agree them a week later.