TORFAEN council could be facing a £12.5 million budget shortfall next year, a report has warned. 

Sky-rocketing energy bills are one of the main costs the council anticipates, with the authority braced for a 110 per cent increase in the price of electricity and for gas bills to rise by an eye-watering 250 per cent. 

It is also assuming pay rates, which are agreed nationally, will rise by four per cent, which will result in it having to fund knock-on increases in pension and National Insurance contributions. 

Finance chiefs have taken the UK’s current high inflation rates into account but say: “Should the level of inflation continue to increase into 2023/24, this will again adversely impact the funding gap.” 

The Labour controlled council’s cabinet will be updated on its financial position when it meets on Tuesday, November 22. 

Members will be told current predictions suggest the authority will need to spend a total of £228.7million during the 2023/24 financial year which is £19.1 million above this year’s spending of £209.6 million. 

The blackhole in its spending is expected to be reduced to £12.5 million however due to an anticipated 3.5 per cent increase in funding received from the Welsh Government, which gave the indication at the time it announced this year’s budget allocation, and a council tax increase. 

The council agreed a 1.95 per cent increase on the council tax this year with a commitment to raising council tax by the same amount in April 2023. 

This year’s rise meant bills for band D properties jumped by £27.72 to £1,449.18. 

The total amount expected from the council tax will have to be tweaked in line with the council tax base, which is also due to be presented to the cabinet on Tuesday, which shows an additional 100 homes that would, based on the assumed average for a band D home, generate an extra £145,000 towards the funding gap. 

The Welsh Government is expected to say how much money it is awarding local councils on December 14 and any change from the anticipated 3.5 per cent increase will force Torfaen to reconsider its finances. 

Torfaen’s cabinet is due to consider its budget, and savings and cuts needed, in early January and work is now underway to look at how the council can respond to the shortfall. 

That will also include how the council can use the £18.5 million it holds in three reserve funds to pay for money-saving schemes and it will look to “adopt an aggressive approach to delivering energy efficiency projects to reduce consumption”. 

The council used £5 million from its reserves this year and the latest data, based on September figures, shows an underspend of £801,000 against its agreed budget. 

Areas that are over budget include children’s and families services, which is expected to be £1.18 million over its budget which is due to a “significant increase” in the costs of “a small number of children in short-term high-cost” care placements. 

Difficulties in recruiting staff to work in adult care however are contributing to an expected half a million shortfall in the adult care budget. 

Inflation hitting the school catering service, the cost of highways salt and fuel costs are also blamed, in part, for a £500,000 overspend in the economy and environment division. 

The early closure of Greenmeadow Community Farm, in Cwmbran, for a major revamp of the attraction has also hit the council’s income as have lower than anticipated occupancy levels in Pontypool Market. 

Higher interest rates do however mean the council’s investments are performing better than expected.