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Attempts to balance the books at Caerphilly County Borough Council could fall short by millions of pounds, senior figures have warned.

The council is trying to plug an estimated £45 million budget gap over the next two years, which it says has opened up because the cost of providing services has outstripped any rises in central government grants.

Council leader Sean Morgan told colleagues, at a joint scrutiny committee meeting on Wednesday November 6, that an ongoing service transformation project – Mobilising Team Caerphilly – has already found millions of pounds worth of savings.

But a report shows any money saved is likely to fall short of the £45m target, according to the latest estimates.

Cllr Morgan said Caerphilly Council is also facing a projected overspend of £6m this year, piling extra pressure on the organisation’s abilities to balance its books in the future.

He said budget gaps are “by no means the fault of councils” and pointed the finger at previous Conservative UK governments, which he alleged were responsible for “14 years of underfunding” to local authorities.

The Mobilising Team Caerphilly project is aimed at saving money by shrinking the council, cutting out unnecessary spending and improving procedures.

Some public-facing aspects of this work have proved unpopular, however, such as the mothballing of Llancaiach Fawr and the abandoned plan to axe a meals on wheels service.

Cllr Morgan said he understood the “passionate response” to proposed cuts and accepted some decisions are “not going to be popular – but they are a necessity if we are to survive this financial challenge”.

A council report shows the local authority found £4.2m in savings last year, falling slightly short of its £5m target.

But a shortfall is expected to grow significantly this year. The council’s target is to find £33m in savings, but has so far identified £12.5m.

Next year, it expects it can find a further £10.4m in savings, placing it just short of the £12m it is aiming for.

Cllr Carl Cuss asked whether the “scale and pace” of the transformation project would prove to be enough.

“We certainly aren’t going too far,” head of finance Steve Harris replied, describing the situation as “unprecedented”.

“No stone will be left unturned,” he added. “Every area of spending across the council will need to be looked at, because of the scale of the challenge that we are facing.”

Mr Harris said it was too early to say whether the next settlement grant – decided as part of the Welsh Government’s own budget-setting process and in turn dependent on the money the UK Treasury gives to Wales – will offer any hope to Caerphilly.

“We won’t know until December 10 what the settlement is going to be,” he said.

The council’s corporate director, Richard Edmunds, noted the expected gap in likely and desired savings is a £23m shortfall over the next two years.

“I don’t think [the next settlement to Caerphilly Council] is going to plug that gap,” he said.