11/10/2024

Cardiff Council is facing significant budget challenges just four months into the 2024/25 financial year. The latest budget monitoring report reveals a projected net annual overspend of £8.865 million as of the end of July 2024. This overspend is driven by a combination of rising costs, increased demand for services, and budget constraints.

The Council's Cabinet will be asked to consider measures to address these financial pressures at their meeting on Thursday, October 17. The report highlights the difficulties the Council is facing, including income shortfalls, unbudgeted holding costs, and pressures within various service areas.

Key points from the report include:

Economic Development: A projected overspend of £1.65 million due to income shortfalls for City Hall Functions and Catering, unbudgeted holding costs at St David's Hall, and pressures within Property Services and Major Projects.

Education: A projected overspend of £4 million primarily driven by demand and price pressures within Home to School Transport and additional costs for ALN placements.

Children's Services: A projected overspend of £5 million primarily due to external placements and escalating costs within CHAD packages.

Despite these challenges, the Council is committed to taking measures to reduce overspends and improve the overall financial position. Mitigating actions are being put in place, including the use of contingencies and earmarked reserves. The Council is also exploring opportunities to deliver in-year efficiencies and controlled spending measures to mitigate the bottom-line position.

Councillor Chris Weaver, Cabinet Member for Finance, Modernisation & Performance, said: "We are facing unprecedented financial challenges, but we are committed to taking the necessary steps to address these issues. Our focus is on ensuring that we continue to deliver essential services to our residents while managing our budget effectively."

The report also highlights the importance of close monitoring and management of the Council's financial position in the coming months. The Council will continue to review opportunities to deliver efficiencies and ensure tight financial control over the remainder of the financial year.

The projected overspend at Month 4 does not include any assumptions over and above the already budgeted pay award of a flat rate of £1,250, a 3.8% average (NJC) for 2024/25. Current pay negotiations are ongoing, and the outcome of any settlement reached - higher or lower - will be reflected in future monitoring reports.

The Council's capital investment programme plays an essential role in stimulating the local economy and delivering local services. However, construction cost inflation and other external factors pose delivery and affordability risks to projects. The Council is committed to ensuring that projects progress within the overall budget framework and that cost overruns are minimized.

The Cabinet will consider the report and the actions therein as part of the Council's financial monitoring process for 2024/25. The Council remains focused on addressing the financial challenges and ensuring the sustainability of its budget in the medium term.

Cardiff Council's Cabinet will take the report at its next meeting from 2pm, on Thursday, October 17. You will be able to watch a live stream of that meeting hereAgenda for Cabinet on Thursday, 17th October, 2024, 2.00 pm : Cardiff Council (moderngov.co.uk)