After years of council overspends on budgets, Pembrokeshire is projected to underspend by more than £2m this financial year, senior councillors have heard.

A report on Pembrokeshire County Council’s financial position for the first quarter of the current financial year was present to members at the September Cabinet meeting by Cabinet Member for Corporate Finance Efficiencies Cllr Alistair Cameron.

The approved revenue net expenditure budget for 2025-26 is £326.6m, with the projected outturn at Q1 2025-26 is £324.4m, representing a projected underspend of £2.2m, members heard.

Last November, the council was predicted to overspend by £3.9m, later, this February reduced to £1.4m.

Pembrokeshire County Council actually ended the last financial year underspending by £2m, in part due to an extra £1.2m raised through second homes tax

A report for members said: “The continued increase in level of demand, complexity and cost of packages within our School ALN provision, Children’s Services and Adult Services experienced during 2023-24 and 2024-25 has been recognised in base budget increases in these service areas for 2025/26.

“As a result, these budget areas are projecting to outturn on budget at quarter one [of four in the financial year]. It is hoped that the work being undertaken to try to manage the increase in demand and reduce the cost of packages will help to flatten these demand levels into 2026-27 and over the medium-term financial plan.”

Cllr Cameron, referring to the projected £2.2m underspend, said: “Clearly all of us must welcome this achievement, as we all know in recent years we have been consistently over budget.”

He said the reasons for the turnaround in council fortunes were the social care and housing budget, traditionally one of the high demands on revenue, was likely to have a very small overspend compared to a previous significant over-budget demand.

Members also heard residential care for children, another significant demand, was likely to come under budget, along with a significant reduction in the council’s capital projects programme.

However, he warned there were still “significant challenges,” with a shortfall of some £1m in funding for increases in National Insurance contributions, pay increase pressures, and a potential increase in teachers’ pay.

Members also heard the council was on track to achieve 75 per cent of budgeted savings, but still faced a funding gap in the next financial year of £18.3m, stretching to £50.6m in the medium-term financial plan.

Chief Executive Will Bramble said there had been “significant progress” in social care, saying there had been “an enormous amount of effort to improve performance but also make it financially sustainable”.

Damning new figures revealed last month, showed that Pembrokeshire County Council is nearly £200m in the red - with debts soaring by 9.13% over the last 12 months.

The latest BBC Shared Data Unit analysis of data by the Department for Levelling Up, Housing and Communities showed that in Pembrokeshire, the total debt at the end of the last quarter of the financial year was £192,095,000.