Cardiff Council is on course for a “worrying” overspend of £900,000 by the end of the financial year.
The local authority is particularly overspending in children’s services (£1.5m), education (£954,000) and city services (£916,000), which includes rubbish collections and highways.
The overspends have been partly off-set by a £3.6m payment from HM Revenue and Customs (HMRC) in relation to VAT and landfill tax, plus a £1.1m surplus in council tax collections.
According to the authority’s latest budget monitoring report, an overall overspend of £900,000 is forecast by the end of the 2012/13 financial year.
The overspend in children’s services is primarily due to an increase in the number of looked-after children requiring external fostering and residential placements.
The rise in external placements – which cost about £40,000 a year per child – followed the closure of Thornhill Road Children’s Home last year.
The home shut following a damning inspection report, but the council is planning to reopen it in 2013.
The overspend on city services is largely due to a downturn in market prices of recyclable materials, leaving the council with a £660,000 shortfall.
Councillor Russell Goodway, cabinet member for finance, described the situation as “worrying”, adding: “If we overspend in the current year, then it will have implications in what we can do in future years.”
He added: “We do appear to have had difficulties over a period with children’s services, but these are a demand-led service.
“I am, at the moment, exploring whether [a contingency fund] is a more effective way to deal with these issues. Additional resources would only be released if a compelling case – on a case-by-case basis – can be made.”
Other overspends include an extra £45,000 supporting the Doctor Who Experience and a £69,000 shortfall on the Cardiff International White Water attraction.
Labour’s decision to pay 2,000 of the council’s lowest paid staff a living wage of £7.45 – an increase of £1.26 – is also costing an extra £1m.
This is being met by using the council’s reserves, with next year’s £584,000 cost being part of the budget.