Welsh council warns of imminent ‘deep cuts to services’ as energy costs skyrocket

A Welsh council has warned of “deep cuts to services” without government help as energy costs skyrocket.

Neath Port Talbot Council is facing an estimated rise in energy costs of more than £8m, they said.

The council currently pays just over £5m for its electricity and gas contracts but that figure could rise in 2023/24 by 162% to more than £13m.

Cllr Simon Knoyle, Neath Port Talbot Council’s Cabinet Member for Finance, Performance and Social Justice, said that there is an “urgent” need for government support.

Local authorities are a devolved issue for Wales but energy prices are regulated by the UK Government and only the Treasury has the financial firepower to counteract such a steep rise in costs.

“There is an urgent need for government support otherwise we face the prospect of deep cuts to services which will have a damaging impact on local people at a time when we are working hard to respond to much higher levels of need following the Covid-19 pandemic,” Cllr Simon Knoyle said.

“Schools, community centres, transport, theatres, leisure centres, social care and many other services are facing bills that outstrip the budgets available. Without government intervention service cuts will be unavoidable.”

Wholesale energy costs have quadrupled since Autumn 2021 and are set to rise another 65% in October 2022. There are many reasons for the increases, including:

• Recovery from the COVID-19 pandemic which reduced production processes globally
• Mast winter being colder than average in Europe and Asia which increased global demand
• Reduced gas reserves and Russia’s invasion of Ukraine.

Unrest

Neath Port Talbot Council said that a number of initiatives were currently being developed and implemented to improve energy performance and advance carbon management.

These included:

The formulation of a net-zero carbon reduction strategy

• An LED lighting improvement programme
• The development of a series of solar photovoltaic projects
• The development of a schools energy efficiency programme (SEEP)
• Re-establishing an AMR (Automatic Metering Reading) programme across its building

Cuts to public services would be another blow to the public’s standard of living at a time when the grim state of the economy is already having an impact on consumers, with prices rising, average annual energy bills going up by 80% in October from £1,971 to £3,549 and widespread anger over wages failing to keep pace with the increase in inflation.

Industrial unrest has already hit the transport networks, criminal barristers in England and Wales are going on strike, and further action could be taken by public sector workers including nurses, teachers and civil servants.

The Bank of England has warned that inflation is set to soar to more than 13% and the economy will be plunged into the longest recession since the financial crisis.

Interest rates were increased by the Bank from 1.25% to 1.75%, the biggest increase for 27 years, in August, something that will add to pressure on household finances for mortgage-holders.

Gross domestic product (GDP), a measure of the size of the economy, is forecast to shrink in every three-month period from October to the start of 2024, falling by as much as 2.1%, the Bank said.