Council tax levels in Pembrokeshire may have to rise, despite a reduction in the council’s predicted overspend of more than £1m.
Members of Pembrokeshire County Council’s Cabinet, meeting on November 6, heard that, on the second quarter of the financial year projections for the 2023-24 budget, the council was currently on course for an overspend of £3.6m on a previously-agreed budget of £287.6m.
This means council tax may have to rise to the Welsh average long term, alongside a continued halt on non-essential council expenditure.
The budget position for the second quarter is better than the previous quarter one figures released in September, which saw a predicted overspend of £4.8m.
A report for members, presented by Cabinet Member for Corporate Finance Cllr Alec Cormack said the council still faces budget pressures, including a projected £8.4m overspend in School ALN provision, Children’s Services, Adult Services and Homelessness, reduced from £8.7m in quarter one, which was also partly offset by a projected underspend of £3.5m in Capital Financing Costs and Investment Income.
The moratorium “on all nonessential expenditure” introduced during quarter one would continue, Cllr Cormack told Cabinet members “until the projected outturn returns to a balanced budget position”.
Quoting a report from the council’s Director of Resources Jon Haswell, Cllr Cormack said the reduction in overspend was welcomed but “more must be done to reduce this still further and avoid the need to utilise our limited reserves to fund the shortfall”.
It added: “It is clear from recent announcements from Welsh Government that there will not be late grant funding received during 2023-24, as has been the case in many previous years, especially in schools, enabling an improved financial position in the latter months of the year.
“Whilst the moratorium on all non-essential expenditure remains in place, we must accelerate the speed at which it is addressing the projected overspend where possible.”
A report for members again highlighted a bleak longer-term picture for council finances, with an indicative budget gap of £27.2 million for 2024-25 and £47.6 million across the period of the Medium-Term Financial Plan.
The current MTFP assumes an annual council tax increase of 7.5 per cent, with the remaining funding gap being bridged with budget reductions / reduction in service delivery and income generation.
“The financial challenge for 2024-25 and throughout the Medium-Term Financial Plan is almost certain to be the greatest challenge ever faced by the council,” members were told.
They were warned that Pembrokeshire, which historically had one of the lowest average council tax rates in Wales, may have to move closer to the rest of the county.
“There are going to be some extremely hard decisions that have to be made, and it is virtually inevitable that in order to balance the budget and ensure financial sustainability for 2024-25 and beyond, the council will have to move its Band D council tax level to at least the average level in Wales, whilst also making significant budget savings across virtually all council services.”
Cllr Cormack, who stressed Pembrokeshire wasn’t alone in facing significant challenges, moved the budget monitoring report be approved, including the continuation of the moratorium, and for him to work alongside senior officers in identifying savings to address the budget gap.
Members unanimously agreed to note the report and support the recommendations.