Neath Port Talbot council is expected to overspend by £5 million in the year 2020/21 as a result of the coronavirus pandemic, according to its finance director.

A report by Hywel Jenkins, director of finance and corporate services, revealed that despite reimbursements from the Welsh Government, the council will most likely eat into its reserves by £5m due to financial pressures caused by covid-19.

The council’s cabinet member for finance Carol Clement-Williams said: “We are £5m down on our budget for next year and that’s without a predicted second spike and the end of the furlough scheme.”

She added that it is “almost impossible” to predict next year’s budget because “so many unknowns” but the council “has been very careful” with spending.

The Welsh Government announced £78m funding for local authorities to cover loss of income for April to June 2020.

The Welsh Government has not yet confirmed whether any additional funding will be available for the reduction in Council Tax collection rates or any increased cost from new Council tax support claimants that have arisen as during lockdown.

The report shows increased costs arising from council tax relief schemes of £529k over budget. This may increase to over £1m during the remainder of 2020/21.

Council Leader Rob Jones said the Welsh Government has been “scrupulously monitoring” the claims made by local authorities but there is a “finite limit” to what it can offer.

He said the government is “looking at all avenues” for funding.

Plaid Cymru councillor Alun Llewelyn said he hopes the Welsh Government will be able to reimburse the council for its overspends otherwise the it may need to introduce “significant cuts” or increase council tax in the next financial year.

Neath Port Talbot Council submitted a claim for £4.146m loss of income for the period April – June 2020.

So far, the Welsh Government has confirmed it will fund £2.329m and the council is expecting to receive a further £400k.

For additional expenditure, the Welsh Government pledged £188.5m of funding via a Local Authorities Hardship Fund, to assist with the financial difficulties caused during the lockdown the period to the end of June 2020.

From this package, the council has claimed £4.133m for additional expenditure incurred to the end of July with the government agreeing to to reimburse £3.316m.

It is waiting to see if the government will provide £251k social services costs and £409k free school meal costs.

The government announced an extra £264m for local authorities on 17th August 2020.

There are currently no details on how this funding package will be allocated – other than £25m of it will be put towards school cleaning.

The council expects to receive at least an extra £5m which will leave it with an estimated overspend of around £5m for the 2020/21 financial year.

When the council’s 2020/21 budget was set on the March 5 the projected General Reserve position at March 31 was £17.9m.

Cllr Jones said the council’s budget has also been impacted by 10 years of austerity cuts that occurred “predominantly” under a Conservative government.

“We are fortunate that dare I say it we have some of the highest reserves in Wales”, said Cllr Jones, “but at least we’ve got reserves that we can fall on to fill a financial gap should it be required”.

“We’ve resisted calls time and time again to use reserves to offset costs within the austerity budget and likewise when we set the council tax for this year.

“We were asked to set it at a lower rate and I dread to think what we would actually be facing did we a) not keep those reserves and b) not set the council tax at where it was which was the second or third lowest in the whole of Wales.

“We just really don’t know what’s coming over that hill and we have to make sure that we plan appropriately and as long as I’m the leader here then that’s what I will continue to do with my colleagues in the Cabinet.”