‘Bleak’ budget forecast for council

Richard Youle Local Democracy Reporter

A council is facing “some bleak winter months” as it tries to budget for wage rises it has no control over while reining in overspending, a cabinet member said.

Like all local authorities, Carmarthenshire Council is starting to plan for the 2025-26 financial year while updating its three-year budget outlook.

Given its reliance on central Government for funding, the picture will become clearer when Chancellor Rachel Reeves delivers her first budget on October 30 and the Welsh Government then sets out its spending priorities.

The mood music from UK Labour hasn’t been joyous with much focus on what it claims is a £22 billion black hole in the country’s finances and a need for short-term pain for longer-term gain.

Cllr Alun Lenny, Carmarthenshire’s cabinet member for resources, said the council was currently looking at savings of £11.9 million in 2025-26. He added that there was uncertainty about whether what he said was a 5.5% pay rise this year for teachers would be fully funded by Cardiff Bay.

Cllr Lenny said last year’s teacher pay rises weren’t fully funded in Wales, resulting in a £3 million “hit” for Carmarthenshire. “The Welsh Government must meet the costs of this and other uplifts,” he said at a cabinet meeting.

Cllr Lenny also said funding for pension contributions for teachers and firefighters was still unclear for the current financial year. The Plaid Cymru councillor said the £11.9 million savings forecast, followed by £22 million of further savings over the next two years, was “yet again a huge ask”. He said: “We might have to consider very difficult decisions which are likely to go very much against the grain.”

Forecast

A report before cabinet said council departments were currently forecast to overspend by £17.9 million this financial year – a situation it described as “extremely concerning”. The biggest portion of this projected £17.9 million is schools overspending by £10.8 million collectively.

The council’s budget forecast for 2025-26 assumes a 1% increase in funding from the Welsh Government – taking the figure to £354.1 million – and a 4% council tax hike, bringing in a further £127.9 million. These numbers may well change before full council sets the 2025-26 budget early next year.

Cllr Lenny said: “Once again I’m afraid we face some bleak winter months as we’ll have to cope with a very tight budget timetable, as in recent years, for reasons totally out of our control.”

Plaid council leader Darren Price said it was a concerning time for all local authorities in Wales. “Discussions with leaders and cabinet members right across the country show there is significant concern, really, about local Government’s ability to fund this (budget) gap,” he said. “And clearly there is a massive piece of work for us to do in the next couple of months in terms of lobbying both the UK and Welsh Governments to ensure that these wage and price rises we all face are funded sufficiently over the next year and the medium term.”

The Welsh Government said funding for local Government rose by 7.9% in 2023-24 and then 3.3% this financial year.  A spokeswoman said meeting the cost of teachers’ pay was the responsibility of councils. “Where necessary, we have made additional funding available in-year to local authorities,” she said.

Asked about a 5.5% pay rise for teachers in the current year, she said: “Budgets for 2024-25 were set in March with an expectation about the level of public sector pay. The award we are currently consulting on for teachers is above this level and the Welsh Government will provide additional funding for this.”