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Merthyr Tydfil Politics South Wales

Valleys council facing ‘highest budget gap in recent years’

Merthyr Tydfil Council

A VALLEYS council has said its budget gap of more than £13m for next year is the highest in recent years and savings will “inevitably” impact on staff and services.

The provisional Welsh local government settlement in December resulted in a funding increase of 3.4% for Merthyr Tydfil for 2024-25, the fifth best in Wales and above the average 3.1% rise.

A report due to go before cabinet and full council on Wednesday, January 17, said the council was previously looking at a £10.5m budget gap but this has increased after taking into account increased costs arising from the pay award, high inflation, and unavoidable additional demands.

While the council will receive additional funding of £632,000 from the provisional local government settlement, the budget gap has increased to just over £13m. Savings of £698,000 have also been found through an energy review and £289,000 from an accountancy review of assumptions.

Increases have come from £1.7m for the pay award, £202,000 through council tax base adjustments, £1.97m for additional demands, and £247,000 due to the impact of rising inflation.

The report said the revised budget deficit of £13.024m for 2024-25 is the “highest deficit in recent years” and highlights the challenge faced by the council in addressing “unprecedented additional unavoidable external financial pressures”.

To address it, business plans and other measures are being developed to be brought before councillors in the coming weeks.

The report said: “Given the size of the budget deficit, the setting of a balanced budget for 2024-25 will be incredibly challenging. The size and scale of the challenge cannot be underestimated with difficult decisions needed to achieve the necessary savings. These savings will inevitably impact on staff and services.”