AUDIT WALES is gradually releasing its assessments of Welsh local authorities’ financial sustainability.
And the reading is grim.
So far, the reports have highlighted extreme pressures on services and council budgets. Firefighting to plug massive gaps in central government funding means local authorities are caught between providing services now and ensuring they can provide them in the future.
Audit Wales’s assessments examine each Council’s strategic approach to supporting its financial sustainability. The reports will not review any of Wales’s 22 local authorities’ wider financial management or the individual financial decisions that each has made or plans to make. Instead, Audit Wales focuses on one core question for each local authority: “Does the Council have proper arrangements to support its financial sustainability?”
The answers are not encouraging. The Welsh Government is making discouraging noises about future financial settlements.
THE CLIFF EDGE
At least one Council in Wales, Flintshire, is teetering on the edge of a financial precipice, while others are in financial difficulties for different reasons.
Pembrokeshire, where Council Tax has failed to keep pace with the rest of Wales, is stretched. Councillors in Pembrokeshire are a law unto themselves, and a significant minority (if not a tiny majority) would rather see their Council in special measures than pass the sort of Council Tax rise needed to keep pace with the cost of delivering services. Earlier this year, the current administration dodged that bullet with some last-minute sleight of hand. That won’t happen twice, and there will be considerable pressure to use a significant proportion of the Council’s useable reserves to plug the budget gap.
Meanwhile, Audit Wales has sharply criticised Merthy County Borough Council’s use of reserves to balance its budget for two years running. The absence of clear financial planning for the future, its inability to recruit staff to key roles (including a Director of Finance), high staff churn, and failure to rationalise service delivery mean Merthyr’s future sustainability is at “significant risk.”
In Neath Port Talbot, there is a risk that school budgets will be unsustainable in the short to medium term and require intervention, while the Council does not have a financial strategy to support its financial
sustainability over the longer term.
The issues stem from different factors. In Pembrokeshire, the shifting demographic profile means that the adult social care budget is a timebomb ticking ever louder as young people are displaced by a rapidly growing older population. In the Valleys, the cycle of generational poverty and child poverty is draining Councils’ budgets.
External factors cannot be underestimated.
Welsh local authorities, like those across the UK, have had their budgets reduced in real terms over the last sixteen years since 2008’s financial crash. Billions of pounds of public money pumped into the financial industry might have prevented a worldwide banking collapse. Still, you’d be hard-pressed to see the benefits of the great bailout in the UK’s impoverished areas outside the M25 and South East of England. Slashing public expenditure without securing capital investment in public services has left the UK behind the curve and with a more dysfunctional and unequal economy than almost any other Western European nation.
Budget allocations from Westminster to Wales depend on an abstract formula rather than need. Wales – with its older, sicker, and poorer population – has felt the sting of austerity harder than many parts of England. However, that doesn’t get the Welsh Government off the hook.
NEW AND IMPROVED AUSTERITY
Having bemoaned Conservative austerity for over a decade, Labour in Cardiff Bay now has to spin austerity under Keir Starmer. Things appear unlikely to improve, and the squeeze on local authorities will likely continue. Faced with supporting essential public services and pursuing its private fancies, the Welsh Government will continue to spend on the latter at the cost of the former.
In addition, the Westminster Government’s hairshirt approach to public finances means the glad, confident morning of sunshine and lollipops the Welsh Government hoped for before the General Election is more like 4 p.m. on a wet November Sunday.
Both Plaid Cymru and the Welsh Conservatives have seized on Labour’s rapid retreat from the demands it made of the last Conservative Government.
£4.6bn of claimed HS2 consequential funding, demanded throughout last year, has become a polite request for less than Pembrokeshire County Council’s total annual budget.
Demands for the devolution of Crown Estate funding to Wales once claimed as essential to delivering Wales’s green economic strategy, have evaporated. The same can be said for demands to devolve policing and justice, which were made in Labour’s 2021 Welsh Manifesto when there was a Conservative Government in London. Both have now vanished or been kicked into the long grass of yet another talking shop.
Reforming the formula for public services’ funding has disappeared into the realms of the “nice to have” as opposed to the “needed and now”.
Keir Starmer said the Welsh NHS needs urgent reform, but after 25 years of Labour rule in Wales, the Welsh Government is fighting crises in the Welsh health service wholly of its own making. A coup de theatre before the Labour Party Conference in September, claiming that Welsh patients on NHS waiting lists would benefit from access to English hospitals, has unwound in spectacularly embarrassing fashion.
Claims that a Labour Government in Westminster had a strategy to stave off Tata Steel’s plans to close Port Talbot’s remaining blast furnace turned out to be tinkering at the edges. The blast furnace closed, as planned, long before the General Election.
The Welsh Government has abandoned any plans it might have had to legislate about water pollution and water quality, contracting that out to Westminster – which is not proposing the same legislative overreach in Scotland or Northern Ireland. If the Conservatives had done the same, the Welsh Government would have been up in arms. In fact, it was up in arms when the Conservatives legislated about replacements for European funding bypassing Welsh Government mitts.
Labour in Westminster has abandoned, forgotten, or flatly ruled out everything the Labour Government in Cardiff demanded from the Conservatives. And the Welsh Government has gone along with each betrayal of their 2021 Manifesto without a peep.
With fifteen months to go until the next election for the Senedd, the Welsh Government has suddenly woken up to its pending failure to hit its target of 20,000 new affordable homes by May 2026. After 25 years in office in Wales, this week Labour commissioned another “deep dive” to tell it what to do, suggesting that, when it made its 2021 Manifesto pledge, it had, in Donald Trump’s phrase, only “the concept of a plan”. If that.
Eluned Morgan makes a good point about the Welsh Government’s need to concentrate on delivering the public’s priorities. The cynical might wonder what it has been doing since 1999 and what her excuses are for not doing more sooner.
SPIN AND SPIN AGAIN
The Welsh public is supposed to believe that everything is going swimmingly because ministers from Cardiff Bay are getting along swimmingly with their comrades in SW1A. You can only suppose it means being told “no” with a smile is better than “no” with a dismissive wave of the hand.
Eluned Morgan’s desperate explanations and attempts to spin her Government’s meek acquiescence to Westminster are becoming more laughable by the week.
Labour in Westminster is eroding devolution, and Labour in Cardiff is letting that happen. The worst thing about the Welsh Government’s performance is that it whips its members to absent themselves from the Senedd Chamber whenever motions critical of Keir Starmer’s government are proposed or when they’re asked to stand up for Wales’s interests instead of backing policies Labour voters in Wales reject. When the opposition debated the Winter Fuel Allowance and called on the Welsh Government to call on its Westminster counterpart to think again, Labour MSs showed their contempt for devolution by walking out of the Chamber, failing to listen to the debate, and only returning to vote against the motion.
And that’s not the only time Labour MSs have done that since July 4th and the Senedd’s return from recess. It’s contemptible conduct and contemptuous of democracy.
David Cameron very briefly got away with austerity by claiming, “We’re all in it together.” Keir Starmer won’t be able to say the same and expect the public to swallow it. And neither will Eluned Morgan, especially after over a quarter-of-a-century of non-stop Labour rule in Wales.
The public has become more suspicious of spin and politicians’ attempts to mould news stories to suit themselves. While the public understands the mess the country’s finances are in, they are cynical about Labour’s attempts to claim they’re even worse than thought.
In 1997, Tony Blair swept to power to the strains of “Things Can Only Get Better”. In 2024, we’re all “Back On The Chain Gang”.
