Fears council tax could rise by 14% as council faces ‘starkest budget yet’

Bruce Sinclair Local Democracy Reporter

Council tax-payers in one Welsh county could potentially see their bills rise by nearly 14 per cent, an extra £216 a year for the average property, as the council faces its “starkest budget yet”.

The 2024/25 Ceredigion budget requirement is currently £192.470m, an increase of 6.9 per cent from 2023/24.

A report for members at Ceredigion County Council’s Cabinet meeting of January 23, presented by Cabinet Member for Finance and Procurement Services Cllr Gareth Davies said Welsh Government had openly stated that their 24/25 draft budget is “the starkest and most painful since devolution,” with Ceredigion only received a 2.6 per cent Welsh Government funding increase, 14th out of the 22 Welsh local authorities, the lowest increase per head of population across all of Wales.

Significant cost pressures

“It is therefore also Ceredigion County Council’s starkest budget yet and worse than was previously forecast,” the report added.

“The Provisional Local Government Finance Settlement outcome, combined with various individual specific grants being cut, as well as highly significant cost pressures on services that show no signs of abating, means it is no longer possible to continue to protect services.

“There are now incredibly difficult budget choices to be made as part of weighing up how and where to reduce the cost of the council’s services, alongside considering the appropriate level of funding to be raised through council tax.”

Members heard the balance of funding split between Welsh Government and Ceredigion taxpayers would be 68 per cent versus 32 per cent, far lower than the 80/20 per cent split seen more than a decade ago.

Cllr Gareth Davies said: “Welsh Government themselves have recognised their draft budget is the starkest and most painful since devolution.

“This is the most difficult budget we have faced, we have faced challenges in the past but nothing compared to this, and the forecast for next year doesn’t look particularly favourable either.”

In the bleak report, members heard the latest cost pressures faced by the council total were an unprecedented £18.1m, with a budget shortfall of £14.6m which “therefore needs to be found from a combination of budget reductions and Council Tax increase considerations”.

Growing costs

Pressures identified included real living wage costs of an additional £0.9m for 24/25, Social Care related budget pressures of £6.2m, National Living Wage projected cost pressures of c£4.8m, a considerable increase proposed by the Mid & West Wales Fire Authority for the Fire levy, equivalent of over a one per cent increase in Council Tax alone, and a reduction in WG specific grant funding.

The current 2023/24 Band D council tax level in Ceredigion – for all components – is £1,908, just above the Wales average of £1,879, with the county council element currently at £1,553.60.

With the recent increase in the council tax premium on second homes and empty properties, it is suggested 75 per cent of the additional money raised be used to lower an otherwise higher council tax increase.

Members heard that, in broad terms, each one per cent change in council tax now equates to a net benefit of some £450,000 and adds a monthly cost of £1.29 to the Band D council tax level.

“Having factored £8.2m of proposed budget reductions (including the £1.6m council tax premiums aspect) into the draft budget, a shortfall of £4.1m still exists, even after allowing for the modelled five per cent council tax increase (£2.3m).

“Further work is ongoing, but the final gap will need to be funded through council tax.

“It is accepted that the current £4.1m budget shortfall remaining, if entirely funded from council tax on top of the five per cent modelled, would be an increase that is far more than any member would ever wish to levy through council tax.

“At present the figures indicate a potential council tax increase for 24/25 of 13.9 per cent.”

That would work out at an annual increase for Bands A-E of £144, £168, £192, £216 and £264 respectively.

Members agreed to a long string of recommendations in the report including 75 per cent of the council tax premiums on second homes and empty properties be used to support the general budget, to note the financial and council tax positions in the report, and to note that any new or alternative options for the draft 24/25 budget should be considered during the Budget Scrutiny meetings.

The report will now be referred to the council’s budget overview and scrutiny committees, with feedback considered at the February cabinet meeting for final recommendations on the 24/25 budget requirement and the level of council tax increase for 24/25 to full council on February 29.