The use of money squirrelled away to be used for a rainy day could see Powys County Council’s budget for this year produce an £894,000 surplus.

A report on the council’s financial position as it stood at the end of December shows an improved position on the £3.938 million deficit the council was predicting to post on its £341.6 million budget at the end of September.

A report outlining the council’s budget position for 2024/2025 as it stood at the end of Quarter Three is set to be placed before councillors at a meeting of the Finance Panel on Tuesday, February 18.

Director of corporate services and s151 officer, Jane Thomas said: “It is pleasing to see that the overspend forecast at quarter two has been mitigated and that the measures put in place have resulted in an improvement although it is acknowledged that a significant part of this was as a result of additional grant funding received from Welsh Government.

“The council continues to face financial challenges, particularly in relation to Social Services and Powys is not unique in this – councils across Wales are seeing this impact.

“We must continue to take every opportunity to reduce costs and ensure the financial sustainability of the council.”

The report explains that during the three-month period the council had agreed to use £2.889 million from the risk budget to partly plug a funding gap of £4.062 million.

The risk reserve is an unofficial reserve of £3 million that is set aside within the council’s main budget to deal with cost pressures as they pop up  during the year.

Along with other tweaks made during the quarter this money transfer leaves the council with a £965,000 deficit position.

To deal with this, £1.859 million will be moved to a “specific reserve” which leaves the council with an underspend position of £894,000.

The report said: “Immediate action was taken to address the forecast overspend position across all services, including a council-wide recruitment freeze.”

This meant that all jobs would need to be signed off at director level and means that “only service critical posts” have been recruited for.

As part of the budget councillors agreed that £12.9 million worth of cuts, efficiencies and savings would need to be made to balance the books.

The report explains that by the end of December, £6.7 million worth of these reductions have been made with assurance given that a further £3.2 million will be delivered.

But this means that £3 million might not be found.

The report said: “Those services that show unachieved cost reductions must explain why they are now not considered achievable.

“At this point in the year, opportunities to reduce spend and bring the targets back on track are diminishing.”

Comments from the Finance Panel will be added to the report, which is set to be received by the Liberal Democrat/Labour Cabinet at a meeting next month.