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Gwent Council set to slash jobs due to £14.4m funding shortfall

Monmouthshire County Council

JOBS are likely to be slashed at a Gwent council that has warned it is facing a £14.4 million shortfall in the amount of money it needs to operate. 

A report for Monmouthshire County Council, which has around 4,500 staff, warns: “Given the size of the budget gap, it is likely that there will be redundancies within the council’s workforce in the lead up to, and during the financial year commencing 1st April 2024, notwithstanding every effort being made to avoid them.” 

The Welsh Government had indicated in March this year the funding it awards local government would increase by 3.1 per cent for the 2024/25 financial year which would see Monmouthshire receive an extra £3.8m above the £122.675m basic funding settlement it was provided with for the current financial year. 

But there is no guarantee the council will receive an increase of that amount, with the Welsh Government having already warned inflation is eating into its overall budget, and Labour-led Monmouthshire has said a 3.1 per cent increase wouldn’t be enough to meet its needs anyway. 

It is facing an increasing demand for its services which funding isn’t meeting the cost of providing, inflation and energy prices that are “still far higher than two years ago”.

It is also feared the Welsh Government won’t fully fund pay rises for teachers with the council also facing higher pay demands for other staff and having to meet a likely increase in the Real Living Wage for the lowest paid. 

Councillor Ben Callard, who has been appointed as the part-time cabinet member responsible for the budget, said: “We will ensure that we serve our residents well by delivering the best possible services for the money which is made available.  

“If we do not receive funding which meets the cost of inflation then, inevitably, we will need to reduce the level of some services as well as increase the council tax and service charges.” 

Ben Callard is the Welsh Labour councillor for Llanfoist and Govilon and the Monmouthshire County Councillor cabinet member for resources with responsibility for finance (Pic: MCC)

The Labour member for Llanfoist and Govilon said the council wants the UK Government and Welsh Government, which is largely dependent on Westminster for the bulk of its funding, to “provide the funding which at least covers the cost of inflation and the increased demand on services.”  

The council has warned if the current three per cent figure isn’t increased, it faces a “£14.4m gap between the cost of existing services and the funding available”. It, and other councils through the Welsh Local Government Association, are lobbying Cardiff Bay on funding levels for next year. 

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The Welsh Government isn’t due to announce its provisional local government settlement until December 20 while the amount of money it has available could increase or reduce following the UK Government’s autumn budget statement on November 22. 

The cabinet’s position is that its upcoming budget – which senior councillors and officers are now preparing – must avoid increasing inequality through the council’s actions and prioritise the environment. 

But it has highlighted cuts will have to be made to the council’s biggest spending areas which are social care, education, and communities and place (which includes waste, housing, planning, highways, and transport). They account for 77 per cent of the £197m allocated to services. 

The cabinet report states: “It will not be possible to balance the budget without those three main services areas absorbing a significant proportion of the budget shortfall facing the council.” 

The budget will also have to ensure the council’s day-to-day spending will be met through the funding available during the financial year, rather than using its reserves. In the current year the council has faced an additional £7m in costs which it has managed to mostly meet by using £2.5m from reserves and cutting in year spending by a similar amount. 

But its current budget has also used £3m of capital receipts, which was supposed to be a short-term measure when first used in 2019/20 to meet investment in redesigning services. Cash from the sale of council assets such as properties will continue to have to be used only to meet “one off expenses” related to reforming services rather than simply on-going costs. 

The council also receives Welsh Government grants for specific purposes, with about £70m budget for in the current year though the final award will likely be “much higher” and it will take £24m in fees and charges this year. 

To help meet its cost increase the cabinet intends to “as a minimum” increase fees and charges in line with inflation and look at where it can introduce new fees. 

On top of direct funding from the Welsh Government, which accounts for more than 60 per cent of is budget, the council’s other main source of income is the council tax. A 5.95 per cent increase this year meant a typical band D house had to pay £1,564.66 to the council. 

Its current planning assumes a 5.2 per cent increase, which could deliver an additional £3.4m, but this is only for modelling purposes and no decision has been made on any increase which the report states would need to consider the affordability for households. 

The council agreed to make £10m worth of cuts as part of the current budget, of which around 86 per cent have been achieved. 

The financial situation was outlined to all councillors in a behind closed doors meeting on Monday while the ruling cabinet will discuss the financial situation next Wednesday, November 15.