Council Overspend Reduced, Cabinet Will Hear

Pembrokeshire still faces its greatest-ever financial challenge despite the council being in a better economic position than previously projected.

Earlier this year, the council’s third quarter of the financial year projections for the 2023-24 budget, the council was currently on course for an overspend of £6.6m on a previously-agreed budget of £287.6m, up from £3m three months previously.

Members of Pembrokeshire County Council’s Cabinet, meeting on July 11, will now hear that figure – at financial year end – has been reduced to a £3m overspend, for a total of £290.6m.

“This represents an improved position from the £6.6m projected overspend reported at Quarter 3 (Q3) mainly due to continued vacancy savings, the moratorium on non-essential expenditure, additional income and grant income received during the final quarter of the year, further reduction in capital financing costs,” the report says.

The report also says that picture is even more rosy: a Minimum Revenue Provision (MRP) adjustment to offset an overpayment of MRP in 2019-20 has resulted in the council’s net expenditure for 2023-24 reducing to £289m; the overspend reducing to £1.4m.

The final financial quarter, Q4, has seen additional and increased demands in many council services, particularly School ALN provision, Children’s Services, Adult Services and Homelessness, partly offset by an underspend of £5.9m in Capital Financing Costs and Investment Income, together with use of the £1.6m MRP.

Additional council tax income, primarily as a result of the ongoing collection of council tax arrears from previous years during 2023-24, has also resulted in £1.1m more than anticipated being collected during 2023-24, the report says.

A report from the Director of Resources and S151 Officer says: “Whilst the reduction in projected overspend of £6.6m to actual overspend of £3m is welcomed, the fact that we have ended 2023-24 with an overspend is disappointing and something we should seek to avoid in future years.

“The MRP adjustment and additional council tax income will mean that the utilisation of reserves to fund the adjusted overspend for 2023-24 will be minimal at £0.253m.”

However, he warned: “The financial challenge for 2024-25 and throughout the Medium Term Financial Plan (MTFP) will be the greatest challenge ever faced by the council.

“There are going to be some extremely difficult decisions to be made and it is virtually inevitable that in order to balance the budget and ensure financial sustainability for 2025-26 and beyond, the council will have to make significant budget savings across virtually all council services, continue to utilise a significant element of the council tax premiums to fund elements of the budget relating to affordable housing and enhancing the sustainability of local communities, and move its Band D council tax level to at least the average level in Wales.”

The report highlights a continued bleak MTFP, with a ‘most likely’ projected funding gap of £84.6m over the period 2024-25 to 2027-28; with £32.3m in respect of 2024-25.

Cabinet members are recommended to approve the Budget Outturn Report, and to approve the appropriation of £0.253m from the Initiative Fund reserve to fund the deficit reported for 2023-24.