A GWENT council is facing its “most significant” first quarter financial position in years due to high-cost children’s care placements.
Children’s services in Torfaen is predicted to overspend its annual budget by £3.2 million and other cost pressures mean the borough council could be over budget by £3.5m by the end of the financial year in March.
The figures are based on spending during the first four months of the financial year, to July, and were reported by the council’s chief financial officer, Nigel Aurelius, to the Labour cabinet at its September meeting.
He warned senior councillors: “This is probably the most significant forecast position we’ve had for some years in terms of its scale.”
The adverse position of £3.5m for the first quarter of the financial year is “more significant than it has been for quite a number of years,” he added.
Most of the projected overspend is within children’s services as placements of children in care have exceeded the number budgeted for and four “high-cost placements, in particular, the main reason behind the additional expenditure” according to a report presented by Mr Aurelius.
That showed it is now anticipated the council will require, on average, 456 placements against a budget of 432 for the year.
A working group of top councillors, senior officers and third party groups was due to meet on Wednesday, September 11 to produce a recovery plan that will be presented to the cabinet in October.
A review of placements has already begun and “appropriate step-down arrangements” are being considered “wherever possible”.
The other overspends are in adult services, which is projecting a £481,000 negative variance, but changes to the service planned for this year are expected to bring it back into a balance position by the end of the year.
A £1.6m underspend due to vacancies in the adult services is also helping to keep the department’s overall costs down.
High cost temporary housing for homeless people which isn’t covered by fixed payments from the Department of Work and Pensions is also contributing to a £369,000 shortfall, with costs again in part offset by vacancies.
The economy and environment directorate is also predicting a £29,000 overspend due to agency costs for waste collection crews, with other vacancies offsetting some costs, but this has been described as “a significantly improved position in comparison to previous years”.
Mr Aurelius said it is intended to address the children’s services overspend this year and so that it doesn’t “negatively impact next year’s budget”.
He said it would be considered on a whole authority basis and said he will also present a further budget monitoring report, “including any further measures I think the authority needs to take to mitigate the postion” to the October cabinet.
He added: “It is important all other services maintain financial discipline.”
The council’s Labour leader, Panteg councillor Anthony Hunt, said “other authorities across the UK are seeing similar presssures in similar areas” and said lobbying nationally is important to address the issue.
Cllr Hunt said the council would act on the projected overspend “calmly, comprehensively and quickly” but also said it should be viewed in the context of a £232m total budget where a change, against agreed spending, of little more than one per cent “comes across as a big variance”.