PEMBROKESHIRE County Council ended its recent financial year underspending its budget by more than £5.5m after massive overspends in recent years, the savings being set aside for initiatives which it is hoped may help further savings.

In a report before the July 6 meeting of Pembrokeshire County Council’s Cabinet, presented by Cabinet Member for Corporate Finance and Efficiencies Cllr Jon Harvey, members heard the council ended the 2025-’26 financial year with an underspend of £5.6m, £1.6m better than the end-of-year forecast at the end of the third quarter of the financial year of £4m.

This was set against a net expenditure of £321m from a budget of £326.6m.

Speaking at the meeting, former leader Cllr Harvey said the majority of the council’s services were in, or below, budget, with more than 95 per cent of budget savings targets achieved.

He also referenced the report which said: “Additional council tax income has resulted in £2.4m more than anticipated being collected during 2025-26,” which would have effectively increased the underspend to £8m.

“A large proportion of this relates to the Valuation Office Agency (VOA) backlog in assessment of self-catering properties, with a continued increase in properties moving from Non-Domestic Rates (NDR) and qualifying for Second Home Council Tax (SHCT) premium as a result of not meeting the required 182-day occupancy threshold.”

It said that council tax arrears had increased to £19.5m, with a £2.1m second homes premium level of arrears, relating “specifically to properties that have transferred from NDR to council tax and are currently subject to appeals to the Valuation Office, with the aim of reverting back to NDR”.

It added: “There is likely to be additional debt within this category that has not yet been quantified. It would be prudent therefore, for an element of the £2.4m surplus to be held in reserve for likely refunds following VOA determination and to support the collection of outstanding council tax arrears, and this is recommended.”

Members backed a recommendation to note the report, and to approve the appropriation of the £5.6m budget underspend to the initiative fund to provide resources for improvement and prevention projects to make further potential savings.

They also backed £1m of the additional council tax collected to make provision for repayment of second homes council tax premiums to those who successfully appeal the 182-days occupancy threshold with the Valuation Office Agency; the remaining £1.4m appropriated to the Initiative Fund reserve.

The previous £4m underspend prediction, back in February, In the previous financial quarter report, back in February, compared with a predicted end-of-year underspend of £1m in the previous financial quarter, and predictions of a £2.2m underspend from figures from the first quarter of the financial year.

Pembrokeshire County Council ended the previous 2024-’25 financial year underspending by £2m, in part due to an extra £1.2m raised through second homes tax.

The end of the 2024 financial year had a £3m overspend, an improvement on previous years.