£12.5m short council pressing Welsh Govt for share of £1.2bn UK Treasury cash

Twm Owen, Local Democracy Reporter

A council facing a £12.5 million funding shortfall next year will press the Welsh Government for a share of an extra £1.2 billion coming from the UK Treasury. 

The additional funding for Wales, over two years, was announced by UK chancellor Jeremy Hunt during last week’s autumn statement and is the result of spending decisions in England, which mean extra funds are awarded to Wales. 

But it is for the Welsh Government to decide how it spends money allocated to it, and Labour-controlled Torfaen County Borough Council wants a share of the cash, which it thinks should be used to support local authorities. 

Cllr Sue Morgan, the cabinet member for resources, told her colleagues when they met on Tuesday, 22 November: “You will have seen the autumn statement and we will certainly be lobbying really hard to say that element of additional funding for the Welsh Government should be passported to local authorities, and Torfaen in particular.” 

She updated the cabinet on the council’s latest financial position and said it is currently on course for a £801,000 underspend on its agreed budget for the current financial year but warned it is predicting a shortfall next year. 

The Pontnewydd councillor said: “It’s not to gloat, but very few councils are heading for an underspend this year.” 

Despite the budget being in the black she said the council is still facing pressures from overspends in the economy and environment division, in part due to inflation, and a small number of high cost child care placements that “are particularly difficult to manage”. 

Council leader Anthony Hunt said people shouldn’t think the projected underspend meant there is £800,000 of “spare cash” as it is against forecast spending, and he said there may also be confusion over the £18.5 million held in three reserve funds. 

The councillor, who represents Panteg, said: “The reserves are something that sound like a lot but in a budget of £200 million it’s a very small amount of money.” 

Reserves review

Council finance officer Nigel Aurelius said a review of the reserves could be held. He said: “That’s not us taking reserves away just us saying are they all appropriate as the way they are at the moment?” 

Rising energy prices, inflation and the need to fund across-the-board pay increases are all blamed for the expected £12.5 million shortfall in funding for 2023/24. 

The council is still planning to raise council tax by 1.95 per cent again in April while it expects its funding from the Welsh Government to increase by 3.5 per cent. It is expecting confirmation of its financial settlement from Cardiff Bay in mid December. 

Mr Aurelius said the chief executive will look at future spending, to manage the funding gap, by looking across council services rather than making “arbitrary percentage reductions” and will also aim to balance the budget for 2024/25 at the same time to aid planning. 

Leader Cllr Hunt said councils across the UK are facing spending pressures and a reduction in income but said: “We are in a better position in Wales as we have got a government that will talk to us about these things.” 

He said local councils “aren’t just about bureaucracy” but deliver services, from social care to education and protect the environment which he said people value and he wanted to “repeat” his request to central government to fund them. 

In response to the Autumn Statement the Welsh Government said it was “disappointed” as it said it didn’t meet the shortfall in funding it had identified. The Welsh Government claims its budget will be worth £1.5 billion less next year than last November.