A COUNCIL which reported a near £3 million gap in its budget for the forthcoming financial year has welcomed a better than expected funding settlement.
Torfaen Borough Council said the difference between what it expects to spend during the 2026/27 financial year, and what it will receive, is likely to be £2.85m.
But that figure was based on an assumed 2.5 per cent increase from the Welsh Government’s local government funding settlement which makes up the bulk of its budget.
The Labour government in Cardiff announced on Monday how much it would award each of Wales’ 22 unitary authorities for the forthcoming financial year with Torfaen’s allocation increasing by three per cent, to more than £202m.
Torfaen’s finance director Andrew Lovegrove told its cabinet, meeting at the Civic Centre in Pontypool on Tuesday: “Our assumption was we’d get an increase of 2.5 per cent. I’m pleased to announce yesterday we were allocated three per cent, a little bit more than assumed and that will go a long way to addressing the gap of £2.85m.”
Mr Lovegrove said his team is still working through the details and a further report will be presented to the cabinet in January.
‘Additional £0.96m’
When the council’s finance committee was briefed on the forthcoming budget it was told an increase by another half a per cent would equal an additional £0.96m to the council.
Neighbouring Newport City Council finished top of the funding table when the Welsh Government announced the forthcoming settlement with an increase of 4.3 per cent.
Blaenau Gwent was the next best placed Gwent authority, with the third highest percentage increase, at 3.3 per cent, with Caerphilly receiving a 2.6 per cent increase while Monmouthshire will only see its award increase by the minimum 2.3 per cent “floor” which puts it in joint 13th place with nine other councils.
Rob Green, Torfaen’s head of finance, said forecast spending against the current financial year’s agreed budget has also improved.
The previous report on spending to August, month four of the financial year, had shown the council on course for a projected overspend of £624,000 but said by month six, October, that had reduced to £464,000 and a further improvement is expected for November.
“Officers are predicting a balanced position or better than that by the end of the financial year,” said Mr Green.
Extra £2.87m for schools
He also said the council intends providing an extra £2.87m for school budgets in 2026/27 which includes an assumed pay increase of three per cent for teaching and non-teaching staff. Schools however will be expected to cover non-pay inflation which is the lesser amount and their budgets will also be adjusted downwards due to a fall in pupil numbers.
As a result the overall budget gap is expected to reduce to £2.536m and steps that could be looked at to close that include possible savings from closer working with Blaenau Gwent and potentially limited use of reserves to cover specific pressures while longer term solutions are developed as well the potential for additional income from council tax if the number of homes in the borough has increased.
The council is still looking at savings across its departments but it was confirmed planning is on a “steady state” basis with the authority continuing to deliver all the services next year it currently provides.
Initial spending estimates have predict financial demands will grow by just over £10m with an expected three per cent, nationally negotiated, pay award for local government workers, inflationary increases across all services amounting and increased demand for council services all identified as the most significant cost pressures.
Savings already achieved have included reductions in children’s services which has meant a £1m fund to cover placements is no longer required as the likely cost can be meet from a reserve already budgeted for.
The council’s Labour leader Anthony Hunt said the “gap” in next year’s budget is the term to describe the shortfall in the amount the council is likely to receive in funding against what it expects it will have to spend. He also said he will continue to ask the Welsh Government to put more money towards local services.
He said: “It’s important to explain the different terms used. The budget gap is different from an overspend, it’s the difference in the forecast in the money you think you will have and the amount it costs to run services.”
The Panteg councillor added the Welsh Government was clear the provisional settlement isn’t the final amount and said: “I and others will continue to lobby for more money for local services to help bridge that gap and hopefully there will be more good news to come from the Senedd to address a very difficult funding situation for local government across Wales.”