MERTHYR TYDFIL Council is currently forecasting a budget gap of more than £8m for the next financial year.
In its medium-term financial plan (MTFP) set to go before councillors on Wednesday, April 17, it said that there is currently a projected budget deficit of £8.77m for 2025-26.
There is a cumulative budget deficit of £18.9m over the course of the MTFP which covers the financial years 2024-25 to 2026-27 and includes the £10.12m projected for 2026-27.
These figures are based on there being a revenue settlement of +2.4%, a pay award of +2.3%, a council tax increase of 5% a year and no utilisation of reserves from 2025-26 onwards.
The report for cabinet and full council said: “The council faces significant financial challenges over the course of the medium-term and an ongoing programme of transformation will be required to achieve the levels of saving required.”
It added: “Local government is faced with significant demanding future challenges in marrying corporate and service expenditure plans and priorities to scarce available financial resources.
“It is imperative that Merthyr Tydfil County Borough Council (MTCBC) recognises these challenges and aligns budgets and spending plans to corporate priorities through the implementation of a robust rolling programme medium-term financial plan continuously updated to consider changing circumstances, future demands, priorities and initiatives.
“Consequently regular reporting to corporate management team, cabinet, governance and audit committee, scrutiny committees, and council is both desirable and essential.”
Given the amount of savings proposals proposed to achieve a balanced budget for 2024-25 it was not possible to produce a medium-term financial plan in the timeframes required for setting council tax but that work as now been carried out for the remaining period of the MTFP, the report said.
The report said that a medium-term financial plan is one of the cornerstones of sound financial governance and allows the authority to effectively plan the optimal use of resources over the medium-term.
It said that the advantages of it include informing the budget process, allowing timely recognition of future budget pressures, minimising unforeseen demands, allowing budget decisions to be based on priorities rather than the requirement to arbitrarily reduce costs, supporting earlier budget-setting since financial decisions are being recommended earlier in the year, and supporting the integration of council plans and policies.
