Council facing £23 million ‘black hole’ predicts difficult decisions ahead

Lewis Smith, local democracy reporter

Neath Port Talbot Council has warned it is facing a multimillion-pound gap in its budget for the 2025-26 financial year on top of what is expected to be a “seismic economic shock” from thousands of job losses at Tata Steel.

The authority says it could be facing a £23m black hole in its next budget due to increased demands on services, with council leader Steve Hunt writing to the Welsh and UK governments, asking for “fair funding” which allows local councils to run their services.

Speaking at a briefing on September 25, the council said these latest financial pressures are set to the backdrop of thousands of job losses which are expected at the Port Talbot steelworks site in the coming weeks.

A council spokesperson said plans to balance the books will also be looked at by members at a meeting on October 2, with current pressures said to be caused by an increase in people seeking help from social services, housing, education, and spiralling costs for goods, food, and energy prices.

‘Job losses’

Cllr Simon Knoyle, cabinet member for finance, performance and social justice, said without any additional funding the local authority would likely face “drastic choices” such as job losses, cuts to services and increases in costs and charges.

He said: “The cost of providing the essential services people rely on continues to increase as more people look to the council for help and support.

“The Welsh Government has made it clear it does not expect to provide any extra funding to councils across Wales next year to increase our capacity. This means we have another enormous budget gap to address.”

He added: “We know our residents are continuing to be affected by the
cost-of-living crisis and obviously the jobs that are being lost in our local economy as part of Tata’s transition are having a big impact.

“Reducing services, increasing charges and cutting secure jobs isn’t where we want to be but I’m afraid we have little choice unless the UK and Welsh governments invest in the vital public services all councils are struggling to maintain. I really hope the Chancellor of the Exchequer, Rachel Reeves, takes note of what councils up and down the country are saying to her.”

Service cuts

The council’s chief executive Karen Jones said on top of financial pressures that are being felt by all councils across the country, it is also expecting to see a surge in people coming forward following the loss of jobs at Tata.

She said: “It’s a really big ask for Neath Port Talbot. It’s a big ask for the council, it’s a big ask for partners and it’s a big ask for our community as well.

“Inevitably what it means for us in terms of our budget next year, it does mean service cuts, it does mean losing jobs within the councils own employment and it also does mean as well that we’ve got to look at increasing fees and charges and that will be including council tax.”

The council is set to look at its current financial situation at a meeting on October 2, with savings equivalent to 5% of each council directorate expected to be discussed.