‘No Brexit dividend’ for Anglesey as island’s authority faces making cuts

Gareth Wyn Williams, local democracy reporter

A councillor has claimed “there is no Brexit dividend” as the public purse struggles to recover from the double whammy of the pandemic and leaving the EU single market.

Anglesey voted by 50.9% for Brexit but the island’s councillors have been warned that the vote could result in choppy waters ahead including cuts to public services.

Today Executive members considered its long term financial plan in light of unprecedented government borrowing over the course of the pandemic.

Despite Welsh councils being awarded a relatively generous settlement in 2021/22 to help tackle the pandemic, island decision-makers were told that the long term picture for local government is less certain.

With the council report stating that the UK Government has borrowed £298bn during 2020/21 (representing 14.2% of GDP), the figure represents the biggest amount borrowed in any year since World War II.

But with overall borrowing now exceeding £2.2 trillion, it also noted “the recovery has been slowed due to staffing shortages as a result of Brexit and the need for people to self-isolate.”

It led to a suggestion by Cllr Carwyn Jones, the island’s economic development portfolio holder, that the UK Government “would have to cut quite significantly” to balance the books.

He also cast doubt over the benefits of leaving the EU despite the island narrowly voting to leave in the 2016 Referendum, after the UK cut its ties with the EU earlier this year.

This was despite claims from the environment secretary, George Eustice, that the current HGV driver shortage was not associated with Brexit but rather a consequence of the pandemic.

“We know that furlough has cost a lot but it also looks like the promises made about Brexit won’t be realised, there is no apparent Brexit dividend and it won’t be the land of milk and honey,” said Cllr Jones, the Plaid Cymru member for Seiriol.

“It’s starting to cost now, we know of the issues with gas and Co2 and now labour shortages… these black swan events seem to be coming like buses now and there’s so much uncertainty going forward.”

‘Long term view’

Despite concurrent council tax rises to meet years of dwindling Welsh Government grants  – which makes up the bulk of a council’s income – cuts of £24.6m have been implemented by Anglesey Council since 2013/14.

This was achieved mainly thanks to efficiency savings, reducing staffing levels, outsourcing services, stopping some non-statutory services and increasing fees and charges above inflation.

But 151 officer Marc Jones’ report stated that the time for difficult decisions may not be over, although more detail would be likely when the Chancellor holds his October spending review.

“Once the impact of the pandemic has reduced and the issues surrounding Brexit are resolved, the Government will be in a better position to take a long term view on the state of the economy and how the level of borrowing can be reduced,” he wrote.

“This may be through generating more income through taxation, but it is likely that cuts in public expenditure will be part of the strategy.”

‘Blindfold’

Any reduction in the funding that Wales receives from London via the Barnett formula would be a decision for the Senedd on how much is passed on to Welsh Councils.

But with the UK Government already deciding to increase the national insurance contributions of both employees and employers by 1.25% to fund social care, Mr Jones added that the move would automatically increase the council’s annual staffing costs by £685,000.

He also warned that the move will likely to put pressure on the authority to allow pay increases as unions seek to make up for any income lost to tax, with teaching and schools staff already facing their own pay rises.

With officers also anticipating spikes in demand in both children’s and adults social services as the recovery process continues, members were told there was no room for complacency despite the current levels of reserves (£11.593m) being well above the recommended minimum of £9m.

Any budget and council tax decision for 2022/23 will lbe one for the new year, however, with the Welsh Government’s provisional settlement not likely until late December and the final version not until early March 2022.

This led the finance portfolio holder, Cllr Robin Williams,  to compare the situation to “running a four lap race but having to run the first three with a blindfold on.”

The medium term financial plan was unanimously approved by members.