Ceredigion is facing an “extremely challenging” financial situation in coming years, with a council overspend of £2.7m forecast, stretching to £8.5m in the medium term, senior councillors were told.
At the 5 December meeting of Ceredigion County Council’s Cabinet, members received an update on the 2023-24 budget.
A report for members at the December meeting stated: “At the mid-point in the year, the financial position still remains extremely challenging.
“A projected year-end position is currently being forecast of a £2.7m overspend (being 1.5 per cent of the 23/24 revenue budget of £180.1m) after taking account of various mitigating actions.”
The report said the situation was a small improvement on the quarter one position, which had forecast a £2.9m overspend, but headline challenges remained the same as the previous quarter; pay awards for staff; a part-year pressure on statutory Home to School Learner transport provision; Out of County Children’s placements; a significant increase in agency staff in care homes; a projected £1.4m overspend in older persons placements.
At present the only significant area of underspend is the Finance & Procurement service, with £2m projected.
Members were told Ceredigion has a financially resilient balance sheet, with £48.8m of earmarked reserves and £6.7m in general balances.
“Therefore, there is adequate scope to be able to mitigate this in-year position, however many of the in-year cost pressures will in turn feature in the ’24/25 budget setting process as base budget challenges.”
Members heard the main changes since quarter one were: Finance & Procurement – underspend has increased by a further £720,000; Porth Cynnal – overspend increased from £1.8m to £2.9m; Schools & Lifelong Learning – a £373,000 underspend is now being reported; and a one-off backdated grant which will be partly treated corporately (£0.5m) under the Leadership Group budget, to assist with the in-year financial position.
The report concluded: “Staff pay awards and inflation on contract prices (both revenue and capital) remain elevated. The level of complexity and volume of challenging placements / cases within both social care and also education continue to show an upward trend, with no signs of relenting yet.
“The recruitment challenge is also showing no signs of abating and it is particularly noticeable in frontline social care (being statutory social worker roles and the critical care & support worker roles in our care homes).
“With the in-year challenge not letting up and cost pressures continuing to rise in the Pyrth Through Age Services, it is essential that all services abide by the framework and measures that Leadership Group has put in place.”
Members also heard: “The 24/25 budget process is now well underway, with the approved Medium Term Financial Plan indicating a budget gap of £8.5m and a savings requirement of £6.4m; using assumptions of a 3.1 per cent Welsh Government funding increase and a five per cent modelled council tax scenario.
“The in-year position poses an upside risk to this scenario which, when taken alongside the Welsh Government’s own financial challenges, means that is highly likely there will be very difficult and unpalatable decisions needing to be made in order to set a balanced budget for 2024/25.”
Members agreed to note the report.