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Torfaen council on course for an underspend of around half a million pounds

The Civic Centre in Pontypool
Torfaen Council's Civic Centre

TORFAEN council is on course for an underspend of around half a million pounds this financial year but its cabinet has been warned rising inflation could hit its finances. 

A higher than anticipated for pay offer to non-teaching staff will also cost £1 million above the amount budgeted for but the cabinet has been told this can be met without impacting existing services. 

However assistant chief executive for resources, Nigel Aurelius, told the cabinet they should be braced for a squeeze on finances and said: “I think going forward things are going to get tougher. 

“Very high inflation and high pay inflation was not something we saw when we experienced austerity from 2010 onwards.” 

The council has a net annual budget of £209 million and the cabinet was told keeping a lid on spending this year has helped it meet the unexpected national pay offer to non-teaching staff, that was above the four per cent budgeted for, and which will cost the council £4million. 

The offer will be met through a £2.9m saving on central services and from the Covid recovery fund.  

Service areas are expected to find savings, or time spending decisions accordingly, if overspends are forecast and if they cannot do so must use their service area reserves. 

Mr Aurelius highlighted a projected £418,000 overspend in neighbourhood services and the impact of inflation on its capital budget for projects such as building new schools or making large purchases. 

The council leadership recently approved a contract for building the new Maendy Primary School, in Cwmbran, the overall cost of which has risen more than £5 million in part due to inflation and rising costs hitting the global construction industry. 

Mr Aurelius said: “We do have a real concern around capital projects.” 

He said that is compounded by the council being a “small authority” and he said the only funding for capital projects are grants, sales of council assets and prudential borrowing of which the council has already has a “significant” amount of. However the council is also seeing some increased investment income due to the higher base rate and debt rescheduling. 

Neighbourhood services have been hit by inflation impacting catering in schools, buying road salt and fuel costs, and lower than-expected fees. 

Inflated fuel prices are also hitting the education service because of home to school transport while expensive care packages for some children are still creating an overspend despite a reduction in the total number of children requiring placements. Spending on agency social workers has also been identified as a pressure. 

Adult services are also over budget due to new care packages and an overspend on Ty Glas y Dorlan (The Kingfisher) community hub, in Thornhill, Cwmbran which is a joint project with Bron Afon Community Housing. 

Cllr Sue Morgan, the cabinet member for resources, said the projected underspend “shows the council takes a very considered approach to its financial management in very, challenging times.” 

The Pontnewydd councillor said that contrasted “with the chaotic approach to the cost-of-living crisis in Westminster.”  She said the council is in a “better position than most councils in Wales and nearly all in England”. 

Two Locks councillor, Peter Jones, who is responsible for performance, said it is “possible austerity will be returning” and asked if a financial statement from the UK Government would have a knock on effect on when the council will learn how much money it will be awarded from the Welsh Government. 

Mr Aurelius said the council is still expecting to learn its financial settlement for the next year in December. 

All councillors are due to be updated on the council’s approach to finances this month while chief officers are due to submit their initial spending estimates by the end of this week. 

The council will also run a public consultation on its spending priorities this month before the medium-term financial plan is refreshed in November. The council will also, next month, consider the results of the public feedback. 

Its proposed budget for 2023/24 will be published in early January.

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Torfaen council on course for an underspend of around half a million pounds