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Financial ‘winter is coming’ according to council budget survey

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Thursday, 27 September 2018 Categories: Finance and Resources News
Thursday, 27 September 2018

In advance of the Welsh Government Budget announcement next week, the WLGA has surveyed the 22 councils across Wales on their financial prospects after eight years of austerity. All have responded. The clear message is that councils have “run out of road” in terms of choices.  Funding has been cut by £1bn over those years and despite Welsh Government efforts to protect services the options for cuts grow more difficult and unpalatable and the unthinkable becomes much more likely.

 

The key messages from the council survey are:

  • Budget pressures for 2019-20 of £264m are now understated due to recent indications by HM Treasury that employer contributions for non-funded pension schemes, including the Teachers’ Pension Scheme, could increase significantly by as much as an additional £46m in year costs.
  • Many authorities are now reporting that financial issues with schools are as acute as social care.
  • Schools’ reserves are being depleted by budget pressures and many schools are running budget deficits.
  • Social care now accounts for around 80% of the total projected overspend of £36m in the current financial year. There is particular concern around the increasing demand in children’s social care and the wider care market.
  • Targets for savings and efficiencies are now moving to all areas, including the larger services.Any remaining smaller discretionary areas, such as youth services, will continue to disappear, reducing community services that in the longer-term help improve well-being.
  • Without additional funding, job losses are estimated to run at up to 7,000 jobs or 5% of headcount a year over the medium term.We cannot estimate what proportion of that will be compulsory redundancies, but the annual headcount reduction approximates to the size of the iron and steel workforce in Wales. This would be a massive blow for individuals, families and communities across Wales.
  • Several authorities are reporting that the scope for avoiding compulsory redundancies is now all but exhausted and there is a sense of fatigue and low morale amongst large parts of the workforce as service resilience diminishes.
  • In terms of forecast savings required over the next three years, councils have indicated that this will only be achieved by stopping services, reducing school budgets, reducing the social care and support councils provide to the elderly and vulnerable and further cuts to the very services that can help prevent pressures escalating.
  • Council tax will rise further as councils strive to maintains valued services

 

Considering these issues there are further choices that Welsh Government can make which can ease the burden.

 

Steve Thomas CBE, WLGA Chief Executive said:

“This year will be the ultimate test of all the Welsh Government’s commitments and promises in strategies such as ‘Prosperity for all’, ‘A Healthier Wales’, the Economic Action Plan and the ground-breaking ‘Wellbeing of Future Generations Act’. All these documents stress the key role of investing in preventative services like social care, housing, leisure, environmental quality, economic development and transport. They stress the vital importance of these services in terms of well-being and keeping people out of hospitals.”

“There is £1.4bn of investment coming down the M4 from the announcement of £20bn additional spend on the NHS in England. The Welsh Government can fully determine this spend. If all the £370m available in 2019-20 goes into the NHS that means that they will have up to a 7% uplift when there was a planned 3.1% increase budgeted already. Local government alternatively may struggle to get to a flat cash outcome with huge pressures to meet on pay, demographics and a crumbling public realm.”

“The warning signs are everywhere with bankrupt councils in England pointing to the grim outcomes of sustained austerity which include heart-breaking cuts for services that the most vulnerable rely on. Council tax payers across Wales need respite and the best way for Welsh Government to do this is honour their words on prevention and properly fund local services”. 

 

The survey was discussed at a meeting of the Partnership Council’s Finance Sub Group on 27th September, which included senior leaders and the Finance Cabinet Secretary Mark Drakeford AM and Local Government Cabinet Secretary Alun Davies AM.

Finance Cabinet Secretary Mark Drakeford AM will also meet with leaders and senior councillors at the WLGA Council on Friday 28th September 2018.

 

http://www.wlga.wales/financial-winter-is-coming-according-to-council-budget-survey