A GWENT council that had to save £10 million in the last financial year finished it with a £1.7m surplus – but is still facing belt tightening. 

Despite finishing the 2023/24 financial year with a surplus equivalent to 0.8 per cent of its annual budget Monmouthshire County Council recorded a £5m overspend across adult social care, children’s additional learning needs, waste services, and homelessness and housing which continue to be described as areas of financial risk. 

It also says in the current financial year services are reporting £873,000 of cost pressures above their allocated budgets that require “prompt mitigating action” to ensure it can finish the year with a balanced budget.  

The authority is also currently preparing a medium term financial strategy, set to be put before the full council when it meets this Thursday, July 18, that sets out how it faces a £34.7m shortfall in funding from 2024 to 2029. 

Councillor Ben Callard, the Labour cabinet member responsible for finance, told the overview and scrutiny committee, that considered the final financial results for 2023/24 and an update on this year’s budget, its problems aren’t that its spending is out of control. 

Asked by committee chairman, Conservative Alistair Neill, why the financial strategy is presenting a need for “radical change” to services with the council having already made savings and cuts, Cllr Callard said: “It’s not a reflection of overspending it’s a reduction in our spending power.” 

The surplus in the last financial year was achieved due to less demand on reserves than predicted and an improvement in financial performance over the final three months of the year. The council had anticipated, at month nine of the financial year, it would end up £314,000 in the red. 

The turnaround is credited to budget recovery action brought in midway through the financial year including staff vacancy restrictions, coupled with improvement in the costs of capital financing as areas of the capital programme experienced delays. 

Labour councillor Jill Bond asked if the “pressure on existing staff” had been considered with the restrictions on vacancies. 

Cllr Callard said the council is still recruiting but said “where we believe we can absorb the capacity within existing teams that has been done.” 

He also said staff absences and sickness and the reasons behind them are monitored and the question was a “good opportunity” to thank staff. 

The report also showed a “significant reduction” in school balances during the year of £5,161,000, taking the cumulative school balances into deficit by £905,000. Thirteen schools ended the year with a deficit balance, with several schools continuing to carry structural budget deficits the council says “will need to be addressed by way of budget recovery action”. 

Conservative Paul Pavia raised concern and the chief officer for children and young people, Will McLean, said while it was “clearly a significant increase” on five schools in the previous year: “Historically it’s not as high as it was prior to the pandemic”. 

There were 15 and 17 schools in deficit positions in the two years leading up to the pandemic which saw the Welsh Government make additional funds available to schools for pandemic recovery.