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Balancing budget fears for Pembrokeshire following below-inflation funding settlement

Pembrokeshire County Council Cabinet Member for Corporate Finance Cllr Alec Cormack has reacted to the funding settlement (Pic: Pembrokeshire County Council)

PEMBROKESHIRE’S below-inflation Welsh Government funding settlement will present the council with “a real challenge” in balancing its budget, a senior councillor has said.

The Welsh Government has said today, December 20, that core revenue funding for local government will increase by 3.1 per cent on a like-for-like basis, compared to the current year, with no local authority receiving less than a two per cent increase.

However, Pembrokeshire and neighbouring Ceredigion are to receive lower than average percentage Welsh Government funding settlements for the next financial year, the lowest such in mid and west Wales.

While the average settlement across the 22 local authorities will see a 3.1 per cent increase, Pembrokeshire will receive 2.5 per cent and Ceredigion 2.6 per cent, ranking them 16th and 14th respectively.

In terms of money, Pembrokeshire will receive an extra £5.372m on top of the £212.626m received for the current financial year.

Ceredigion receives an extra £3.373m, on top of this year’s £129.341m.

Awards are made using a formula intended to take account of need and the ability of councils to raise extra funding from the council tax. 

Welsh Government finance minister Rebecca Evans said it is providing £5.7bn to councils through the revenue support grant – the main funding source for local government.

This includes funding to limit increases in business rates to no more than five per cent, though rate relief is also being reduced, meaning some business will still see large rises in the amount they must pay.

Ms Evans said the Welsh Government’s overall budget isn’t “sufficient to meet all pressures” but said: “This has meant taking difficult decisions elsewhere in the budget to honour our commitment to councils last year of a 3.1 per cent rise in their funding for next year.

“I appreciate the pressures local government is facing and recognise that demand for services, along with the recent very high rates of inflation, mean local government will still need to make difficult decisions on services, efficiencies, and council tax in setting their budgets.”

Last year, Pembrokeshire received a higher-than-expected AEF settlement of 7.9 per cent, against an expected 3.5 per cent.

Pembrokeshire County Council Cabinet Member for Corporate Finance Cllr Alec Cormack has previously said the county was facing a £27.1m funding gap based on the expected 3.1 per cent settlement, warning council tax levels may have to rise significantly to help balance the books.

After today’s announcement, Cllr Cormack said: “Today’s 2.5 per cent increase in Welsh Government funding for Pembrokeshire, significantly under inflation, presents us with a real challenge in balancing our budget on March 7.”

Neighbouring local authorities have had a higher percentage increase: Carmarthenshire receives 3.3 per cent, with Powys receiving 2.8 per cent.

The highest rate is Newport, at 4.7 per cent, and the joint two lowest authorities are Gwynedd and Conwy at 2 per cent each.