Rhondda Cynon Taf Council reveals £38 million budget gap
Anthony Lewis, local democracy reporter
Rhondda Cynon Taf Council is now facing a budget gap of just over £38m with a 6.6% increase in funding from Welsh Government planned for next year.
An extraordinary full council meeting was held on Thursday, December 15, for councillors to receive an update on the council’s financial position following the announcement of the provisional local government settlement for 2023/2024.
The revised budget gap stands at £38.32m, which includes an extra £13.89m as a result of the increased settlement but also £15.74m in updates to the council’s base budget requirements compared to the budget gap that was previously included in the council’s medium term financial plan of £36.47m.
The average increase in funding for councils across Wales is set to be 7.9% and the final settlement is expected in early March 2023.
The council’s capital funding allocation has increased by £2.28m having been cut by £2.16m last year with £30m more for Welsh councils as a whole.
Council director of finance Barrie Davies compared the figures to a comparable year during austerity saying that in 2015/2016 when the council received a 3.7% cut in funding they were facing a budget gap of £21.8m so he said it’s a totally different ball game even compared to the austerity years.
Before the provisional settlement was announced and based on a 3.5% increase in funding, the projected £36.47m budget gap included in the council’s medium term financial plan had increased to £52.21m as a result of a provisional 8.2% increase in the fire service levy (£530,000), a reassessment of base budget requirements for things like special school numbers, capital charges, ALN, demand led social care and insurance (£1.45m), the real living wage, pay and pensions (£6.76m) and energy costs (£7m).
But this figure of £52.21m has now reduced to £38.32m as a result of the provisional settlement from Welsh Government.
Councillor Andrew Morgan, leader of the council, said: “In any normal year, in years gone by, a settlement of 6.6% we’d absolutely be welcoming.”
He said over the last 12 years with austerity and in some years negative settlements the extra funding from this latest announcement is absolutely welcomed.
Cllr Morgan said this is more than what the consequentials were from Westminster and that they’ve been lobbying hard to make sure that the education and social services consequentials were passed on.
He said: “If they’d done that it would have meant an all Wales figure of around 7%. To have 7.9 is absolutely welcome.
Cllr Morgan said they are 21st on the list in terms of the funding formula partly because of school numbers and population adding that it’s not that theirs has declined it’s that in some areas there’s been a lot more growth than others.
He said unfortunately this time round they’re on the lower end but that it’s still a good settlement in terms of any normal year but he added: “This year is far from normal.”
Cllr Morgan said they’re looking at a 355% increase in their gas costs next year and a well over 100% increase in energy costs.
He said: “Nobody got elected to make cuts to services and to make those difficult decisions. We all really care about our local communities, our local facilities.”
Cllr Morgan said that if they were to completely do away with departments such as highways, cleansing, libraries, leisure centres and waste and didn’t deliver those ever again it still wouldn’t fill the budget gap they’re facing this year.
He said in the time he’s been leader since 2014 they’ve faced some tough times but they were talking in the low twenties where they were short of funding of £21m/22m for the following year but now they’re close to £40m.
He said there’s lots of work going on to try to find extra savings and efficiencies and said “we don’t want to be seeing a huge hike in council tax.”
He said elsewhere in Wales there are suggestions of close to double digit figures and said although 2% has been included in the medium term financial plan they’re consulting on a figure of 3.5% and this is a more likely figure that they’ll have to go to but if they can keep it below that they will.
But he said: “If we don’t put our fees and charges up, if we don’t put council tax up then it will mean more cuts to services and we’ve got to get the balance right between the two.”
He said with inflation at just below 11%, anything they do below 3.5% would mean a reduction in spending power and might mean a reduction in services and jobs adding that it’s a “difficult balancing act.”
He said: “We’ll do our absolute best to protect schools”. He added that even on the projected figures schools will be getting a double digit increase in terms of millions of pounds.
Cllr Morgan said they will be looking to heavily protect schools compared to other services but they won’t be able to fully protect them and it is a really challenging position but they won’t be cutting school budgets.
He said social services will be the “number one priority” and said there’s a huge amount of work to support the NHS on delayed discharge and that they’ve got a good track record.
Cllr Morgan said none of the service changes they will have to think about will be popular or things that councillors got elected to do but said that energy costs alone at one leisure centre are going to increase by £330,000.
He said they are one of a few councils with leisure services in house and is keen to protect them.
He said if they could keep fortnightly black bin collections he probably would but if it’s a choice between closing leisure centres and libraries or doing things differently then that’s probably where they get to.
He said: “It is going to be a really difficult position and I appreciate not all members will have the same views but this budget round, if people have got ideas whether you’re in the same administration or part as I am or whether it’s members of the opposition, we’ll listen to options. We’ll listen to ideas.”
But he reminded members that they all have a statutory duty to set a balanced budget but said there are support services that people rely on that can’t be cut back.
He said next year is “going to feel like walking up a hill”, the following year with a projected 3% increase is “going to feel like climbing a cliff” and the year after is “going to feel like somebody has pushed you off a cliff” because dramatic cuts to spending on public services are forecast.
Councillor Karen Morgan, leader of the Plaid Cymru group on the council, said although there are pressures she would imagine there are some signs of relief that the settlement was more than expected and that in reality the last two years has been more than expected.
She said this settlement has been uplifted largely due to the fact that Welsh Government have entered into a co-operation agreement with Plaid Cymru to ensure that their budgets are passed.
She said: “This mature way of working in politics has already made an impact on the people we represent.
She said examples include free school meals, childcare provision for two year olds and research and development into a free at the point of need national care service.
She said she doesn’t underestimate the fact that they do face significant challenges but as long as two years ago they knew this was coming.
She said: “The cost of living crisis has overtaken the post pandemic fall out as the main economic challenge for all including the working poor and local authorities.
“So many of our residents are already at a socio economic disadvantage. The situation in our county is one of worsening vulnerability, poverty and unmet need caused mainly as a consequence of policies and issues that are the responsibilities of the Welsh and UK governments.”
She asked if the leader would work with other groups to publish a cost of living action plan so they can avoid making people destitute in terms of services the council is responsible for and hold both national governments to account.
Councillor Sam Trask, the leader of the Conservative group on RCT Council, said: “Although I welcome the large increase, it is a bit disappointing when you compare it to other local authorities.
“RCT seems to be losing out on millions because of the funding formula. Something is fundamentally wrong when RCT’s assessed out of the 22 authorities to have the fifth highest needs in terms of per person spending requirements in order to provide the services that our residents depend on, only to be one from last in terms of funding uplift.
“We are in fact one of only three authorities in Wales proposed to receive less than 7% increase. Cardiff residents have got a significantly lower standard spending assessment, this is per person so it’s irrelevant how large the authority is, but they’re proposed to receive 9%.
“I don’t understand how that can be right and proper.
He said the funding formula is set by the Partnership Council for Wales which is not an independent body but a sub group of the Welsh Government and asked if they’re still fit for purpose.
He said this isn’t a political point but that it is just a criticism of the process that the Welsh Government is using.
Cllr Trask also stressed the importance of the different groups working together.
The view from the independent group
Councillor Will Jones, independent, said they’re in unprecedented times and politics is out of the window adding that the independents will work together with the rest of the council.
He said they’ve got great officers and a very good leader and said that they’ve all got to work together and put politics to one side, saying it’s going to be a hell of a two to three years.
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