Council services in Caerphilly continue to come under “substantial” strain despite a £1.8 million budget underspend last year, with pressures on social care, school transport and temporary accommodation.

Cllr Eluned Stenner, the local authority’s cabinet member for finance, said the underspend against a revenue budget of £477 million “reflects proactive financial management”.

But she warned the council’s joint scrutiny committee a “significant” chunk of those savings were one-offs, and the council continues to face rising bills for the services it provides.

Collectively, schools have overspent by more than £2.3 million and 30 of the county borough’s 82 schools were in the red in April.

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As a result, the overall school balances have shrunk from a £1.9 million surplus to a £375,000 deficit.

Cllr Gary Enright asked what recovery plans were in place for the schools unable to balance the books.

“We try to get a recovery plan within three years,” said Leanne Sykes, the council’s director of financial services. “We put a team around the school – those teams are all in place and we are working on recovery plans at the moment, ready for September.”

Ms Sykes told Cllr Marina-Chacon Dawson the council sets out three-year “forecasts” with the borough’s schools, so “we know when schools are getting into difficulty in advance”.

Another area of overspending relates to the council’s decision to terminate its PFI (private finance initiative) contract for two schools, which was due to run until 2032.

The council hoped it could save around £2 million a year by ending a deal it has spent more than £91 million on so far.

Cllr Kevin Etheridge urged officers to produce a full report on the details of the terminated deal, telling the meeting he believes “ratepayers have a right to be informed.”

Ms Sykes said the deal was terminated but the council was currently “in dispute”, and a report would be presented at a later date.

On temporary accommodation, which fuelled a £532,000 overspend in the housing department, Cllr Nigel Dix asked what was driving a pattern of “spiralling” costs.

Cllr Dix said figures showed annual spending on temporary accommodation was a little over £1 million six years ago, but had risen to more than £8 million last year.

“It’s a huge cost on the council – it needs to be dealt with,” he said.

Ms Sykes said Caerphilly was “not alone in this – you’ll see this across all the councils in Wales”.

“It’s a combination of an increase in demand and in cost,” she explained. “We are looking at how we can deal with it in the short-term, but also how we can… move people on in the future”.

Finance manager Lesley Allen added there was a shortage of one-bed, single accommodation and a “really low” turnover from that type of housing.

The council had brought in several initiatives to increase its supply, and new Welsh legislation would help tackle homelessness, she said.

But Ms Allen warned the council would likely only see “real” positive financial impacts of that new bill from 2028 onwards.