Newport council gets biggest funding increase, but all local authorities face a real-terms cut

Martin Shipton

Newport council will receive the highest percentage increase in grant funding from the Welsh Government in 2024-25, with Conwy and Gwynedd receiving the lowest.

Overall, funding for councils across Wales will increase by 3.1% on a like-for-like basis compared to the current year. No local authority will receive less than a 2% increase.

CPI inflation came down to 3.9% in November, although local government inflation tends to be higher, with all local authorities therefore facing a real-terms funding cut.

Schools, social services and social care, refuse and recycling collections and other key services provided by local authorities will be backed with £5.7bn in Welsh Government Revenue Support Grant and non-domestic rates.

Protect services

According to the Welsh Government, the settlement reflects its commitment to protect the services we all rely on every day, meaning there have been some difficult decisions to radically redesign spending plans to focus funding on such services.

A package of support for non-domestic rates benefitting every ratepayer in Wales was also announced as part of the draft Budget this week. This includes funding to cap the increase to the non-domestic rates multiplier for 2024-25 to 5%. This is at an annual cost of £18m and provides for a fifth successive year of support for retail, leisure and hospitality businesses.

Finance and Local Government Minister Rebecca Evans said: “In an incredibly tough financial situation, we’ve re-shaped our spending plans so we can protect the core, frontline public services provided by local authorities like schools and social care. As I explained yesterday, our overall funding settlement is not sufficient to meet all pressures. This has meant taking difficult decisions elsewhere in the budget to honour our commitment to councils last year of a 3.1% rise in their funding for next year.

“I appreciate the pressures local government is facing and recognise that demand for services, along with the recent very high rates of inflation, mean local government will still need to make difficult decisions on services, efficiencies, and council tax in setting their budgets.

“We will continue to work closely together to face these shared challenges and strive to make the best use of the resources we have in order to make the most difference to the communities we serve.”

Consultation

A six-week consultation on the provisional settlement has opened today, which will end on January 31 2024.

While most local government funding comes from the Welsh Government, councils also receive revenue from council tax and service charges.

Cllr Andrew Morgan, the leader of the Welsh Local Government Association and of Rhondda Cynon Taf council said: “We knew this was going to be a challenging settlement, and we recognise the Welsh Government’s efforts in seeking to provide a degree of protection for frontline public services. But the outlook remains bleak for local services that are still being seriously affected by ever-rising costs. Even though inflation is slowing, it still means we all get less for our money now than we used to, and this is the same for councils too.

“The UK Government had a chance to address this funding gap in the last Autumn Statement but did not take it. No extra money for schools or social care meant that no consequential funding flowed to Wales. Difficult decisions will have to be taken to ensure councils can meet their legal duty to balance the books and set a balanced budget.

“We have welcomed a close and constructive relationship with the Minister and her colleagues. We will look forward to work closely with her and the Welsh Government to navigate extremely turbulent times for our essential local services and to manage potential implications for our communities.”

Cllr Llinos Medi, WLGA Plaid Cymru group leader and the leader of Isle of Anglesey council, said: “Rocketing demand in adult social care, children’s services, and housing, clearly shows that local services are needed more than ever amidst a Cost-of-Living crisis which is negatively affecting communities. However, whilst we appreciate the difficult circumstances for the Welsh Government, this settlement will do little to ease the pressure on services. I’m disappointed to see that no extra money has been allocated to cover the increase in teachers’ pay, which means that councils will be expected to meet the cost of a Welsh Government spending commitment.”

“Since the onset of austerity, over £1bn has been lost from Welsh local government budgets. Councils have worked hard to find efficiencies and reduce costs, but the easy savings have long gone. Local government cannot continue to be expected to make significant budget cuts without seriously impacting the viability of our services.”

Cllr Mark Pritchard, WLGA Independent group leader and the leader of Wrexham council, said: “For a long time, councils have warned of the enormous pressures that they face after so many years of reduced funding. Unfortunately, today’s settlement does not provide enough funding to meet the severe cost and demand pressures which present serious challenges next year for setting balanced budgets, as is required by law. Whilst on the surface there appears to be a 3.1% boost in core funding, significant cuts to grants – with no extra money to cover the teachers’ pay increase – means that councils will receive far less than the suggested increase.

“Dipping into ‘rainy day’ council reserves is not a solution to plug ever growing gaps which will reappear year after year. The only answer to meeting soaring costs and rocketing demand on services is to fully recognise and meet the funding pressures for local government.”

Cllr James Gibson-Watt, WLGA deputy presiding officer and the Liberal Democrat leader of Powys County Council, said: “Residents, businesses, and communities in all parts of Wales depend on lifeline services delivered by our councils. From social care to economic development, housing to schools, these are cornerstone services which play a key role in all our daily lives. But the impact of over 10% cost inflation, the consequent need to increase staff pay to meet the cost-of-living crisis and a huge increase in demand for social care, have combined to create a perfect storm for council finances.

“In recent times, councils have played an integral role in delivering the ambitions of the UK and Welsh governments. This will become ever harder to achieve if more funding is not forthcoming.”

Cllr Anthony Hunt, WLGA finance spokesperson said: “While core funding has been maintained, other grant funding has fallen in cash terms.  Over the consultation period, we will work with the Welsh Government on this issue and other issues related to teachers’ pay and pensions, and charges for social care.

“Councils will be facing an estimated funding shortfall of £432m even after council tax rises and we will collectively face some very difficult decisions. As well as an ongoing dialogue with the Welsh Government we will have to engage our communities on the difficult choices that lie ahead.”

Allocations to Wales’ 22 local authorities are as follows, in order of percentage increase:

1. Newport: £302.972m; 4.7%

2 Cardiff: £618,958m; 4.1%

3 Swansea: £433.590m; 3.8%

4 Denbighshire: £194.743m; 3.7%

5 Merthyr Tydfil: £122.923m; 3.4%

6 Torfaen: £177.988m; 3.3%

7 Carmarthenshire: £349.441m; 3.3%

8 Wrexham: £231.963m; 3.2%

9 Vale of Glamorgan: £208.901m; 3.1%

10 Bridgend: £257.978m; 3.0%

11 Powys: £234.940m; 2.8%

12 Neath Port Talbot: £284.624m; 2.8%

13 Rhondda Cynon Taf: £384.111m; 2.8%

14 Ceredigion: £132.715m; 2.6%

15 Blaenau Gwent: £143.433m; 2.6%

16 Pembrokeshire: £217.999m; 2.5%

17 Isle of Anglesey: £126.973m; 2.5%

18 Monmouthshire: £125.355m; 2.3%

19 Caerphilly: £347,726m; 2.3%

20 Flintshire: £257.555m; 2.2%

21= Gwynedd: £232.092; 2.0%

21= Conwy: £202.710m; 2.0

Wales total: £5.689689bn; 3.1%