Monmouthshire County Council is heading for a £3.4 million overspend by the end of March though action is being taken to address it, councilllors have been told.

The council is also facing an expected £11.4 million shortfall in funding to meet all its spending commitments in the upcoming 2025/26 financial year which will start in April.

Demand for high cost services including social care for adults and children, homelessness and inflation that is still impacting on some spending areas have all been highlighted as driving spiraling costs in the current financial year.

Schools are also under increased pressure and it is expected by the end of the financial year the overall school reserves will have been depleted by a further £4.9m meaning collectively the council’s four secondary schools, 29 primaries and the pupil referral unit will be £5.8m in the red.

Headteachers and governors of schools that have set deficit budgets, which meant they’ve planned to spend more than they are to receive in funding, will be meeting with council officers and the Labour-led council’s cabinet members for finance and education in the weeks leading up to the October half term.

Peter Davies, the council’s deputy chief executive, said the authority has already started taking action on its own spending, since it reported a predicted overspend of £800,000 in July, though the reported figure is now £3,388,000.

“The overspend you have in front of you is lessened by the recovery action we’ve taken in recent months if we hadn’t then that arguably would be higher. We are on a successful trajectory to start with, it’s improving,” said Mr Davies.

He added the council “is not alone” with the Welsh Local Government Association reporting likely financial pressures of £220m across Wales’ 22 local authorities next year. The UK budget, at the end of October, could produce additional money for public services said Mr Davies and councils would then have to make the case for extra support to the Welsh Government alongside the NHS.

Councillor Ben Callard, the cabinet member for finance, said he was encouraged that a similar predicted deficit last year was reduced with the council finishing the year with a surplus.

The Labour councillor said: “I guess I’m a little bit anxious about schools but it also gives me confidence to know our officers have their focus on this and have delivered in the past.”

Cllr Callard, in response to a question from Conservative member Cllr Rachel Buckler, said yet to be delivered savings, from a planned package of £10.9m, make up around £2m of the predicted £3.4m overspend.

Councillors were told some changes are intended to produce savings that will be repeated year on year, and improve services, such as reducing use of bed and breakfast accommodation for temporary housing.

Uncertainty over nationally agreed pay rises, rising demands to provide for children with additional learning needs, the impact of the cost-of-living crisis leading to increased demand on council services and an impact on how much revenue the council can generate, higher interest rates and staff shortages are all impacting its budget.