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Two Welsh Councils concerned they are facing bankruptcy MSs told

17 Oct 2024 3 minute read
Shadow Finance Minister Peter Fox

Chris Haines, ICNN Senedd reporter

Councils are facing an “unprecedented” £540m budget shortfall, with two local authorities concerned they are facing bankruptcy and more may follow, the Senedd heard.

Peter Fox, the Tory shadow local government secretary, said: “There are many on the brink … and we cannot continue to ignore the situation – it is very real, it is very much growing.”

Mr Fox, who led Monmouthshire Council before his election to the Senedd in 2021, raised concerns about reports of an increase in employer National Insurance contributions.

He pointed out that about 140,000 people are employed by councils as he questioned Wales’ local government minister in the Senedd on October 16.

Mr Fox said the public service workforce, including private contractors, is about 480,000 and even a 1% increase would lead to an estimated £100m bill for councils.

‘Huge hole’

He said: “Councils provide vital public services for the people of Wales and financial pressures will force councils to pass on costs to working families who cannot afford that.”

Warning of a “huge hole” opening up, Mr Fox suggested yet more pressure could be on the way following the UK Government’s budget on October 30.

The Monmouth MS asked whether Welsh ministers are considering any mechanisms, such as a funding floor, to “fend off” potential council bankruptcies.

Mike Hedges pointed out that both Labour and Conservative councils in England, including Birmingham, which is the biggest in Europe, have faced bankruptcy.

The former Swansea council leader said: “We have not had a bankruptcy of a council in Wales because of a better settlement and also good political management and good departmental management. But that can’t continue forever.”

‘Disaster’

Peredur Owen Griffiths, Plaid Cymru’s shadow local government secretary, raised concerns about Rhondda Cynon Taf and Merthyr Tydfil councils’ plans to cut school transport.

“Caerphilly Council is consulting on the same, not to mention huge cuts to libraries,” he said.

Mr Owen Griffiths, who represents South Wales East, warned of a looming disaster, adding that cuts will have a disproportionate impact on the most vulnerable.

Responding for the Welsh Government, Jayne Bryant acknowledged the “huge challenges” that councils across Wales have faced for many years.

Wales’ local government secretary, who was appointed in July, recognised councils are balancing key services such as social care and education amid increasing demand.

‘Frontline’

She stressed that no Welsh council has issued a section 114 (bankruptcy) notice, saying: “We’re working hard and we’re not taking that for granted.”

Ms Bryant said ministers are jointly developing a protocol for councils in case of emergencies, which will include options but not additional funding.

The minister said the Welsh Local Government Association, the voice of Wales’ 22 councils, will present a paper on pressures at the next finance sub-group meeting on October 22.

She told the Senedd that local government will be a key part of the Welsh Government’s draft spending plans for 2025/26 which are due to be published on December 10.

She said: “We will protect frontline public services as far as possible and continue to target support at those in greatest need.”


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William Robson
William Robson
15 days ago

Most councils policies have been bankrupt for years,,they think we are there to serve them

Karl
Karl
14 days ago

So they don’t want NI to rise, when do they think we should all be allowed to retire then? If they are anything like RCT council, there is savings to be made by having someone with a few more brain cells employed. Councils need to stop being afraid of making money, it pays for other elements of the council budget. And stop draining our tax money into usuelss private companies, for serivces needed so often they should be council employees, which would be cheaper. And leave the one off events for more specialised private firms.

Simon Hughes
Simon Hughes
14 days ago

Simple solution for the sennedd, do what the electorate were promised in 1999 and cut these money wasting entities down? Perhaps by doing so they could afford to fund the extra 36 Mse they say they desperately require!

Frank
Frank
13 days ago
Reply to  Simon Hughes

I agree but I do wish people would at least learn how to spell “Senedd” correctly. They can spell “government” with no problem.

Adrian
Adrian
14 days ago

No council that still has jobs with the words diversity, inclusion, or gender in the title can claim to be short of money.

Jack
Jack
14 days ago
Reply to  Adrian

I agree!

David Parry
David Parry
13 days ago
Reply to  Adrian

Excellent point sir!!

Pmb
Pmb
13 days ago

Hardly surprising when you have the clueless in Welsh govt trying to justify their existence by issuing differing edicts ensuring money is wasted unnecessarily , 20mph scheme being a prime example .

Frank
Frank
13 days ago

It would be interesting to know how much these skint councils have invested in various things. I understand that some of them have hundreds of millions in investment accounts. Is that money being used to finance their pension funds. They use our money as if it’s their own. They forget that they work for us.

Honest Welsh
Honest Welsh
13 days ago

Anyone with the slightest bit of common sense are aware that in Wales we have far too many councils. They are all in a close proximity and they all duplicate the same services badly They all have chief executives managers with inflated salaries and pensions advisors and everything and everything that creates huge overheads Most work from home leaving office blocks empty Like Cardiff City Council Who are going to knock theirs down and build a smaller office. They are all given huge amounts of public money from the Welsh government Without any constraints and allowed to use it for… Read more »

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