Council faces 'significant challenge' to balance budget

At a meeting of the council’s cabinet on Tuesday, November 8, councillors will find out how the authority’s budget of just under £302 million was progressing at the end of quarter two of the 2022/23 fiscal year which finished on September 30.

Since the budget was set in March this year, much has changed economically as the UK teeters on the brink of a recession.

The report explains that the predicted council budget deficit has increased to £7.064 million at the end of September.

This is an increase of just over £3.2 illion from the end of June when the predicted deficit stood at £3.827 million.

To plug the £7.064 million hole, £5.316 million would be used from “specific” reserves while the remaining £1.748 million comes from “general” reserves.

Head of finance, Jane Thomas said: “The council is facing a considerable challenge to balance its budget this year.

“We must take action to reduce costs and limit the draw on our reserves.

“Reserves are held to mitigate unexpected risks and the use of reserves this year will ensure that we meet our statutory responsibility to deliver a balanced budget.”

While the council reserves held a healthy £63.782 million at the end of March, it is predicted that they will drop to £49.803 million by the end of March 2023.

This money will be needed to plug future budget gaps.

Ms Thomas said: “The challenging environment is not going to end at the end of this financial year, we must ensure that we deliver council services within the resources we are allocated on an annual basis.

“Holding sufficient reserves to manage the ongoing risk as we move into future years is key to maintain our financial sustainability.”

The Welsh Government is expected to announce its draft financial annual settlement for all Welsh local authorities in December and Ms Thomas predicts that it “will not be sufficient” to meet the council’s needs.

This is because the UK Government Chancellor’s autumn statement on November 17 is expected to confirm a return to austerity.

Ms Thomas said: “The autumn statement will provide more information on how much funding public services can expect next year.

“We will have to react quickly when funding levels are confirmed to finalise and balance our financial plans.

“There will be difficult decisions ahead as we consider the implications of our financial position on our ability to deliver appropriate council services to our residents.”

Cabinet members are expected to note the report and approve inter council budget money transfers (virements) of grant funding the council has received during the quarter which is worth a total of £3.128 million.