MONMOUTHSHIRE council is currently forecasting an overspend of £9 million for the 2021/22 financial year.

Two months into the financial year, the council faces financial pressures from Covid-19 and its own services.

Of the predicted £9 million overspend, nearly £6.5 million comes from Covid-19 pressures.

The council has said this overspend “relating specifically to the Covid-19 impact is presented on a prudent basis in so much that is displays a worst case scenario”.

A council report says the “cabinet can be reasonably assured” that Covid-19 funding will be met by the Welsh Government until the end of September 2021.

However, there are concerns that there would be a funding gap of around £2.5 million at Monmouthshire council if the Covid-19 funding isn’t extended past September. 

Although the council has £2.6 million in reserves set aside specially for Covid-19 related costs, reserve levels at the council are “comparatively low” so this should be seen as “an absolute last resort after exhausting all other alternative possibilities”, the report says.

The Welsh Government created the Covid-19 Hardship Fund to support local authorities with loss of income and increased spending during the pandemic. 

MORE NEWS:

The fund is set to end at the end of September, but there’s been no announcement yet from Welsh Government about whether this will be extended or replaced by another system.

The report says: “From a financial perspective, the response to the pandemic has required the council to incur significant additional expenditure, for example, costs relating to infection control measures, safeguarding the public and employees and support for elderly and vulnerable residents. 

“In addition, income losses have also been substantial, during the period where services either have been closed or have experienced significant reductions in demand or footfall due to restrictions in place.”

The rest of the council’s financial pressures come from its own core service delivery and this totals £2.5 million.

The main concern comes from children’s services, which is set for a £1.1 million overspend.

The report says that despite stabilisation in the looked after numbers, children entering the service “have required high cost residential placements, as opposed to those leaving which have been more in the lower cost fostering/kinship/family placements”.

It says: “A recent legal case has also led to the need to pay kinship carers in line with foster carer rates, along with the increase in payment to foster carers due to increasing skills training.”

Adult services have had to recruit additional carers, which has created a predicted overspend of £500,000.

The report says: “These pressures are in part mitigated by out-performance of budgeted council tax collection of £500,000 and importantly the overall outturn position continues to be supported by £2.2 million of identified eligible expenditure to be funded from capital receipts under the flexible use of capital receipts directive. 

“Reliance on these mitigations is a short term measure only and is clearly not sustainable over the medium term.”