Social Services in Powys are predicted to be £4.1 million overspent at the end of March next year, as the council’s 2026/2027 budget forecast position deteriorated over the summer.

At a meeting of Powys County Council’s Finance Panel on Thursday, November 19, councillors will receive an update report showing how the council’s revenue budget has progressed during the second quarter of the financial year, between July 1 and September 30.

The position reported by council finance chiefs is just under £1.75 million worse than the prediction at the end of June, when the forecast had been for a £2.12 million surplus.

This year, the council’s budget is £390.55 million, and finance chiefs forecast that the authority will actually spend £390.918 million, which is an overspend of £366,000.

But with the use of £739,000 from specific reserves, the overspend becomes a surplus of £373,000.

The report shows that some of the financial issues come from Social Services, which is predicting a combined overspend of £4.1 million.

At the moment, this sum is “counterbalanced” by the £3.5 million that the council holds in a “risk budget”, which is used to plug gaps in the budget as they emerge through the year and to stop the council having to dip into its reserves.

The report explains that the forecast Social Services overspend is made up of £3.3 million in Adult Services and £800,000 in Children’s Services.

The report said: “The forecast overspend in Adults Services is largely due to increased demand for domiciliary care and the cost of supporting individuals with increasingly complex care needs.

“The significant change in the position from that reported at quarter one is that savings have now been reported as unachievable.”

When the budget was set in February, the department had put forward an expectation of savings and cuts worth £4.672 million to be made this year from an overall council total of £15.427 million.

But it has now emerged that £2.768 million of the departmental target cannot be achieved this year and will be rolled over into 2027/2028.

In the commentary section, head of Adult Services Sharon Frewin said: “Since quarter one, the service has identified that due to the maturity of some of the programmes, delays in implementing the management of changes, recruitment timings and capacity due to staff absences, the planned savings will not be achievable during 2026/2027.”

The papers explain that: “The forecast overspend on Children’s Services is largely a result of the increasing expenditure on placements, both in terms of numbers of placements and the costs of individual placements as a result of increasing complexity of need and a national shortage of placements.”

Director of Corporate Services and s151 officer, Jane Thomas, said: “Whilst recognising that costs remain driven by continued inflation and interest rates, it is disappointing to see that the majority of the change is reflected by the non-delivery of approved savings.

“The submission and scrutiny of the recovery plans proposed will provide the council with assurance that the council’s base budget remains balanced in 2026/27, creating a resilient base for future years.”

Ms Thomas warns that, with a potential budget gap of £10 million to plug next year, there may be a need to “go beyond what we are comfortable with to ensure the financial sustainability of the council.”