A Cabinet report containing latest financial modelling has made it clear there will be significant challenges in setting the Council’s 2023/24 budget – particularly if no additional funding is made available by the UK Government.
A report to Cabinet on Monday, September 26, provided Members with an update on the Council’s Medium Term Financial Plan, which is presented in advance of the detailed work that is underway to set a balanced budget for 2023/24. The Council’s budget will be heavily determined by the level of funding provided by the UK Government to Welsh Government, this being announced in the autumn, which in turn determines funding levels for local authorities in Wales through the Provisional Local Government Settlement due to be published later in the autumn, 2022.
Monday’s Cabinet report noted that unprecedented challenges lie ahead for services across local government due to the ongoing economic impact of Covid-19, Brexit, the conflict in Ukraine and the Cost of Living crisis. This position is resulting in increased demand and costs across many Council services, particularly Social Care services, with the Council recognising the need to help residents and businesses as much as it can – as communities recover from the pandemic and deal with the impact of rising energy prices and other basic day-to-day living costs.
The Council’s Medium Term Financial Plan has used a number of informed financial modelling assumptions that will be subject to ongoing review and revision, as part of the detailed preparatory work to set the 2023/24 budget. The assumptions include all-Wales indicative funding levels for local authorities that have been previously provided by Welsh Government. Based on these indicative funding levels, the Council’s modelled budget gap would be £36.475m next year and will increase to £77.797m per year by 2025/26.
The report said the UK Government urgently needs to provide assurance to Local Government that additional funding will be made available to address the indicative future resource levels announced in its 2021 Comprehensive Spending Review now being significantly out of line with inflationary and service pressures faced across local government. Due to the absence of such assurance to date, the Council must now review all options to reduce its spend and generate income, in order to meet its statutory duty to provide a balanced budget, with this inevitably meaning the need to consider cuts in service levels and jobs.
The programme of work to urgently identify budget saving options to close the budget gap covers further opportunities for efficiency savings, delivering the Social Services Transformation programme, reviewing all base budget and service requirements including use of assets, maximising invest to save opportunities that include progressing the delivery of climate change ambitions, and keeping a continued focus on the principles of Digitalisation, Commercialism, Early Intervention and Prevention, Independence, and being an Efficient and Effective Organisation.
Councillor Andrew Morgan, Leader of Rhondda Cynon Taf Council, said: “Monday’s Cabinet report was very open about the considerable financial challenges we are set to face in next year’s Budget. The current Budget was delivered while putting significant investment back into vital services – but a year on it’s clear we are in a very different environment, with financial pressures including the Cost of Living crisis which is affecting every household, business and organisation across the country.
“The extent to which our services will be impacted will be directly determined by the Welsh Government settlement, with every 1% change in funding representing around £4.4m for the Council – and I hope the central UK Government Budget in the autumn will reflect the Cost of Living rises and associated pressures being felt. As no assurance has been provided by UK Government around additional financial support for local authorities, the stark reality is that we are having to look at reducing valued Council services in a way that is comparable to the times of austerity we’ve experienced in the past decade – which is the last thing people need in the current economic crisis.
“The Council has an excellent track record of managing its finances efficiently and effectively. We’ve been able to protect key services while also making around £144m of ‘one-off’ resources available for investment priorities since 2015, and at the same time delivered around £100m in efficiency savings over the past 10 years, including £4.9m savings in the current Budget. The Council will continue to do all it can to support our communities through the tough financial times ahead.
“Monday’s Cabinet report confirmed that Council officers are undertaking a detailed review across all services to explore how it could reduce the projected budget gap if no further UK Government support is received. There will be greater certainty on the level of savings required for 2023/24 later this year, when the Welsh Government settlement is announced. In the meantime, the Medium Term Financial Plan will be reported to Full Council and reviewed by the Overview and Scrutiny Committee, and further updates will be reported following the Provisional Local Government Settlement announcement.”
Posted on 27/09/2022