NEWPORT council has discovered an extra £2.3million in underspend, and has pledged to give £250,000 to a children's special needs service - the same amount it hoped to save by cutting the service in a reversed decision earlier this year.

They've also pledged almost £1million towards the transformation of Newport's Chartist Tower, delivery of digital services, refurbishment of children’s homes, feasibility studies and this year's Christmas lights.

Last year, the council proposed to leave the regional SenCom childrens special needs collaboration - which supports hundreds of disabled children in the city - to create its own in-house equivalent, which would have saved them a quarter of a million pounds.

But after a backlash, the council reconsidered the plan and has since committed to staying until 2022.

The authority is now proposing to use £250,000 as a commitment to the service, from a bigger than expected underspend of £2.3million.

It is proposed to transfer the underspend into specific earmarked reserve areas.

A report written by the council's head of finance says the underspend has resulted from a combination of lower than expected overspend costs for special educational needs placements and 'unexpected' one-off grant funding from the Welsh Government for social care.

Overspend costs for street lighting and city services is also lower than had been forecast.

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A report due to be discussed by the council's cabinet says: "Under difficult circumstances, the council has managed its overall revenue budget well and the revenue outturn shows an underspend prior to new earmarked reserve transfers of £2,383k, representing a small variance of just 1.3 per cent of the net budget, excluding schools."

The council plans to earmark the money to reserves for future use mainly to fund developments within the city, support priorities and the authority's "ongoing commitment" to SenCom.

Out of the £2.3million, £950,000 will be used towards the transformation of the Chartist Tower into a four-star hotel.

Money has also been allocated towards delivery of digital services, refurbishment of children’s homes, feasibility studies and this year's Christmas lights.

The £2.3million underspend represents a "small variance" of 1.3 per cent on the council's overall budget of £274.6m for last year, the council report says.

The report, giving an update on the council's financial position, says the same pattern of over and under spending has broadly continued.

This includes overspending in demand led social care and special education needs areas and underspending in non-service budget areas.

In education, schools overspent by a total of £727,000 with seven out of nine secondary schools and 14 out of 42 primary schools overspending.

Overspends within secondary schools are "of particular concern", with two schools overspending between £200k and £300k, one over £600k and two schools with deficit reserves of more than £500k.

Newport council's cabinet are set to approve the proposed use of the underspend at a meeting on Wednesday.