A SWANSEA Council director said he was “slightly more optimistic” than some commentators about the financial position facing the authority and did not predict “the end of days” when budgets were set for next year.
Ben Smith said councils had had three good years of financial settlements from central government and that, in Swansea’s case, significant sums had been put into reserves.
Finance director Mr Smith said councils in England were due to get more UK Government funding via business rates than currently – plus an increased revenue support grant of 4.6% or even 6.7%, based on inflation levels in October and September. This matters as these two sources of funding provide around 75% of what councils spend on services, with council tax providing around 25%.
Addressing a meeting of full council, Mr Smith reckoned that the Welsh Government would look to replicate the increase in business rates funding for councils in Wales. He said Welsh ministers were “tight-lipped” about council finances for 2024-25 ahead of an announcement of revenue support grant funding on December 2020.
Mr Smith said councils faced rising demands for services – in part linked to an ageing population – plus significant upfront costs to decarbonise vehicle fleets and buildings, and a requirement to fund national minimum wage and national living wage increases.
He said: “Will it be easy? No. Will it be the end of days for councils? I don’t think so.”
He said savings would be required in Swansea, plus a draw of money from reserves, and whatever council tax rise that councillors decided would be appropriate – all to tackle a shortfall a report before full council estimated at around £25 million.
Councils in Wales will set their budgets for 2024-25 in late February or early March – and Swansea’s leader, Cllr Rob Stewart, said he was worried.
Cllr Stewart said the Welsh Government was only due to receive an extra £305 million from the UK Government, spread over 2023-24 and 2024-25, to pay for services including NHS Wales as well as councils, although he said a further budget announcement by UK ministers was scheduled for February meaning the numbers could change.
The Swansea Labour leader said the £305 million rise was “not defendable”, and that he was also “very concerned” the Conservative Government in Westminster might choose to significantly cut public spending in what was likely to be a general election year in 2024.
Cllr Stewart added that Mid and West Wales Fire Authority was proposing to increase funding again for the fire service via a levy which is part of people’s council tax bill. He said the proposed levy rise equated to an increase of around 1.5% in council tax – and this before the council had set its own budget.
Cllr Stewart urged the fire authority to consider the wider financial landscape when it set the fire service’s budget. He accepted it had pressures but said the council’s were “equivalent if not greater.”
Opposition leader, Cllr Chris Holley, turned his attention to the £200 million-plus that the Labour administration had borrowed in recent years for things like city centre regeneration projects, new schools and City Deal schemes. Much of this, he said, had not been spent yet, and some was being loaned to other organisations to generate interest.
Cllr Holley, Swansea Liberal Democrat leader, said this was similar to what merchant banks did. “Let’s be fair, that’s not what why we borrowed money,” he said.
Cllr Holley also said that money the council has been setting aside to fund borrowing repayment costs in recent years would normally have been used to fund day-to-day services.
Cllr Stewart said wider economic problems had affected the council’s ability to spend the borrowed money and that he remained committed to a “very ambitious capital programme”.
Conservative councillor Richard Lewis said he felt Swansea was doing “extremely well” considering that some councils in England had effectively declared bankruptcy. “I congratulate the leader for borrowing money,” he said.
