POWYS: £4million deficit predicted
Budget overspend of £4milllion predicted by Powys council on this year's budget
More reserve funding will need to be used by Powys County Council to plug a predicted financial black hole of just under £4 million at the end of next March.
At a meeting of Powys County Council’s Liberal Democrat/Labour Cabinet on Tuesday, November 19 senior councillors received a report which showed that an overspend on this year’s £341.6 million budget is expected to be £3.938 million by the end of the financial year.
This is the position that the council reported at the end of September following six months of the financial year, and shows the position slipped dramatically from the £510,000 overspend reported at the end of June.
The report explained that a £174,000 overspend was predicted on the schools delegated budget and £54,000 on the Housing Revenue Account that funds the maintenance of the council’s housing stock.
The cost of borrowing is also £1.3 million worse than expected.
But the council’s financial worries are being turbocharged by spending within Social Services.
Adults Social Care is predicting a £3.082 million overspend and Children’s Social Services is predicting a £2.745 million forecast overspends.
A separate detailed report on the situation in Social Services was discussed later in the meeting.
Director of corporate services, Jane Thomas said: “There are a number of things that are impacting on our position significantly this year and will continue to do so as we move into next year and some of these are beyond the control of the council.
“Examples would be, the nationally agreed pay awards and that has a considerable impact on the council’s budget position.
“Some of these have been agreed nationally and we are waiting to see if we’ll receive additional funding for that.
Ms Thomas told councillors that the government had committed to paying increased teacher pension and pay cost.
Ms Thomas said: “It’s important to note that this is a projected position but if it were to materialise at the year-end, we would need to draw on reserves.”
This would see the use of reserves rise from £10.9 million to £14.9 million and would reducing the councils total reserves to £46.6 million,
Ms Thomas said: “Utilising that this year would reduce the financial resilience of the council, and we would have to limit that as much as we can.”
The report explains that “corrective action” is being taken to reduce the deficits.
Measures include delivering the cost reductions which stood at £7.8million, the capital building programme is being reviewed to ensure they are “essential” to the council and departments need to “limit expenditure to all but essential activity.”
Ms Thomas added that a “keen eye” would be kept on the budget for the rest of the year.
Councillors noted the report and agreed a review of all budget lines and where departments have “underspends or higher than expected income” delegated authority will be given to finance chiefs to freeze realign these for budgets for the rest of year.
