The Covid pandemic cost Monmouthshire council nearly £20 million in 2020/21 but the Welsh Government will cover the cost, an Audit Wales report has revealed. 

The report, which focuses on Monmouthshire council’s financial sustainability, says the pandemic cost the council £19.6 million.

This is made up of £11.3 million of additional spending and £8.4 million in income loss.

At the time of the report, the financial year information hadn’t been released but it was anticipated that the full cost would be covered by the Welsh Government’s hardship fund. 

The council also benefited from £3.1 million in covid grants. 

What does the council’s costs look like for the next few years?

The council’s medium term financial plan includes a provision of £5 million a year for any unidentified costs, from 2022/23. 

However, despite it being an increase on the previous £2.5 million that was set aside, Audit Wales has indicated that this may still be too low.

In recent years, additional council costs have “often exceeded £5 million, ranging from £5.6 million in the 2018-19 budget to £10.3 million in the 2021-22 budget”.

As a result, the council has been told to review this estimate to ensure it reflects the recent increases.

What’s the situation with the council’s reserves?

The Audit Wales report says the usable reserves overall “were comparatively low and continued to decline”.

They pointed to a pattern of slowly decreasing useable reserves until the end of the 2019/20 financial year, when the council added an extra £1.8 million from an end of year surplus to its reserve fund. 

The report says: “Over recent years, the council’s level of usable reserves as a proportion of its net cost of services has varied between the third and fifth lowest in Wales.

“The council told us that it finds it challenging to build up its reserves whilst continuing to deliver services.”

What areas is the council overspending?

Overall, the council has underspent against its budget in recent years.

However, the report references particular departments which have struggled to work within their means.

The report says “demand-led budget pressures were placing considerable strain on future budgets”.

Particularly, the report highlights some overspends which pre-date the pandemic. 

These include:

• Children’s Services, particularly costs relating to looked after children

• Additional learning needs

• Passenger transport

• Waste services