A GWENT council had to shore up its budget with £3.5 million from its reserves during the last financial year, a report has confirmed. 

However that was £2.5 million less than had been feared, which will now be ploughed back into Monmouthshire County Council’s ‘rainy day’ fund which councillors have been warned only stands at £15.47 million to cover unexpected costs through to 2027. 

Last October the council first reported it was heading for an £8 million overspend by the end of the financial year – which led to it immediately try to save £2 million as part of a cost-cutting drive. 

A budget statement has now confirmed that the total use of reserves in 2022/23 came in at £3,503,000 to support additional spending from the council’s revenue budget – which finances day to day services from paying staff through to social care. 

That means an extra £2,557,000 from reserves has been carried forward into 2023/24 than previously forecast, which has given the council greater financial resilience in the ongoing financial year which it also describes as “difficult”. 

But its general revenue reserves, which aren’t tied to any specific service or schools, only has £15.47 million to cover the medium term, which is expected to see increasing service demands and costs amid a continuing uncertain economic environment. 

The general reserve stood at £19.72 million, when the financial year closed on March 31 and it’s expected that will fall to £15.47 million by March 2027. 

In total the council currently holds £26.91 million in reserve, which could drop to £22.78 million by March 2027 but those figures include earmarked reserves for specific services and projects as well as school reserves.  

During the last financial year the council was also able to use an additional £990,000 from capital receipts to offset additional spending, rather than use reserves. 

That meant receipts from sales, such as of disused council buildings, amounted to £3.27 million last year, and this is propping up this year’s near £200 million revenue budget to the tune of £3 million – though that will reduce to £508,000 a year from 2024/25. 

The council’s deputy finance officer Jonathan Davies warned its performance and overview scrutiny committee that source could be “extinguished” by the end of March. 

Committee chairman, Conservative Alistair Neill, highlighted that the report warned, in bold, “any future use of reserves is made wisely and prudently if the benefits of investment are to be maximised” and that benefits from using capital receipts had to be “carefully monitored.” 

The Gobion Fawr councillor said: “Those are important to all councillors.” 

The council’s better-than-expected budget position was due to the use of the capital receipts, which was in line with Welsh Government guidance, an extra £1.3 million in grants related to adult social care received during the financial year, and £1.7 million achieved in savings which included leaving staff vacancies unfilled. 

Schools also only drew down £2,698,908 of their balances rather than £4,653,000 that had been forecast at month nine of the financial year, and the year finished with five schools in a deficit position rather than nine that had been expected, though officers have warned there will need to continued monitoring of their budgets. 

The report is next due to be considered by the council’s Labour/Green cabinet in July. Labour was in minority control of the council when the expected overspend was first forecast while the 2022/23 budget had been set by the previous Conservative administration which lost control of the council at the May 2022 elections.