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Politics

Welsh ministers ‘creating crisis protocol’ for cash-strapped councils

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THE WELSH Government is developing a protocol in case cash-strapped councils in Wales face financial emergencies such as bankruptcy, a committee heard.

Jayne Bryant, who was appointed local government secretary over the summer, said: “I’ve met with local authority leaders already … and it’s clear to me the severity of the situation.”

She pointed to pressures including years of austerity, the pandemic, inflation and rising demand as she appeared before the Senedd’s local government committee on October 10.

Pressed about financial resilience, Ms Bryant said: “We’re jointly developing, with local authorities, a protocol to apply in case of significant financial challenge.”

Last year, a report warned Welsh councils could face a funding gap of £744m by 2027/28.

Ms Bryant told the committee: “Services have had to be changed, some have faced reductions and councils have had to prioritise. Elected members and officers have been under a significant amount of pressure for a long time.”

Referring to Audit Wales reports on council finances, the Conservatives’ Altaf Hussain warned some face fundamental issues that put their financial sustainability at serious risk.

Ms Bryant replied to Dr Hussain: “If necessary, I do have powers of intervention but of course that would be a step I would not take lightly.”

She said the Welsh Government will have greater clarity after the UK budget on October 30.

The Welsh Government’s draft budget for the 12 months from April will be published on December 10, with the provisional local government settlement set to follow soon after.

Judith Cole, deputy director for local government finance, said if a council faced a section 114 (bankruptcy) notice, it could seek assistance from the Welsh Government.

But she cautioned: “The moral hazard means that we would not be suggesting to the cabinet secretary that she opens up the bank because we haven’t got any.”

She added that councils could use an improvement fund given to the WLGA before getting to the stage of a section 114 notice.

She said: “There is nobody who has formally come to us and said ‘we need help’ at this point, what we are conscious of is the sector as a whole is saying it’s really difficult.”

Ms Cole told the committee the protocol aims to ensure a “no-surprises” approach.

Reg Kilpatrick, director of local government, said the Welsh Government has an “open and frank” dialogue with councils about finances throughout the year.

He recognised “concerning messages” coming out of Audit Wales reports.

Asked about council reserves, and the important distinction between usable and allocated reserves, he said the Welsh Government collects data but has no role in managing reserves.

Mr Kilpatrick cautioned it will “be a while” before the Welsh Government can provide any indicative allocations to councils for next year.

The Conservatives’ James Evans asked about the formula used to allocate council funding, joking that only about four people in Wales understand it.

Ms Bryant said the complicated formula includes more than 4,000 data points and the Welsh Government is reviewing the biggest areas such as social care and education.

Plaid Cymru’s Siân Gwenllian criticised a u-turn on setting up a commission on community assets, “which suggests, perhaps, this isn’t going to receive the specific attention it needs”.

Ms Bryant said the Welsh Government has set up a task and finish group rather than a commission, which reflects financial constraints.

Labour’s Lee Waters raised an Audit Wales report, which found half of councils do not have a digital strategy, as he expressed concern about a “pedestrian” pace of change.

Mr Kilpatrick said the Welsh Government has put more than £7m into supporting the local government chief digital officer’s team, with a £1.3m annual grant.

Mr Waters suggested spending on digital is relatively small in the context of council budgets, warning: “This really isn’t anywhere near the top of the agenda.”

News

Hundreds of Pembrokeshire Council Tax defaulters in court next week

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HAVERFORDWEST Magistrates’ Court will hear cases against hundreds of defendants next week as Pembrokeshire County Council seeks liability orders for unpaid council tax and non-domestic rates.

The session, scheduled for Monday (Mar 17) at 10:00am, will see a block of cases between 12:00pm and 1:00pm dedicated to council tax disputes. The council is applying for liability orders under regulation 34 of the Council Tax (Administration and Enforcement) Regulations 1992.

A total of 341 defendants are listed for non-payment of council tax, while a further 18 cases relate to unpaid non-domestic rates under Regulation 12 of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989.

Liability orders allow the council to take further enforcement action, which may include deductions from wages or benefits, bailiff action, or bankruptcy proceedings.

The Herald will provide further updates following the hearing.

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News

Reimburse charities for NI rise, say Welsh Conservatives

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CHARITIES not-for-profits, and voluntary organisations in Wales face mounting financial strain due to an increase in employer National Insurance (NI) contributions, prompting calls for government intervention.

The UK Labour Government’s decision to raise employer NI contributions has drawn sharp criticism from the Welsh Conservatives, who warn that the move will place an undue burden on charities and voluntary groups. While public sector bodies such as the NHS and local councils will receive compensation for the additional costs, charities providing essential services under local authority contracts will not be reimbursed.

A survey by the Welsh Council for Voluntary Action (WCVA) found that 84% of voluntary organisations are concerned about how they will manage the NI increase.

Senedd debate on reimbursement

Next week, the Welsh Conservatives will bring forward a Senedd debate urging the Welsh Labour Government to press Westminster for financial support for Welsh charities, not-for-profits, and voluntary organisations. The motion argues these groups should be classified under the Office for National Statistics’ (ONS) definition of public sector employees to qualify for reimbursement.

Welsh Conservative Shadow Secretary for Economy, Energy, and Welsh Language, Samuel Kurtz MS, said:

“Welsh charities, not-for-profits, and voluntary organisations play a vital role in delivering public services that the most vulnerable in society depend upon.

“Labour’s decision to increase employer National Insurance contributions will have a detrimental impact on the future and viability of these organisations.

“The Welsh Conservatives are clear: Labour must ensure that Welsh charities, not-for-profits, and voluntary organisations are reimbursed for this rise in employer National Insurance contributions.”

Sector voices concern

The WCVA has also warned that the NI increase could put crucial community services at risk.

A WCVA spokesperson said: “WCVA is deeply concerned about the impact of increased Employers’ National Insurance contributions on voluntary sector organisations across Wales. Many of these organisations already face significant financial pressures, and this increase threatens to put additional strain on their resources and potentially jeopardise vital services delivered to communities.

“We have strongly urged both the UK and Welsh Governments to recognise the invaluable role the voluntary sector plays, especially in partnership with public services. We believe it is critical for voluntary organisations delivering public services to be treated equitably and included in any financial support measures, ensuring they are not disproportionately disadvantaged by these policy changes.

“WCVA welcomes the debate in the Senedd and hopes it will lead to productive discussions and practical solutions to protect the voluntary sector’s essential contribution to Welsh society.”

Motion to be debated

The Senedd motion, set for debate next week, states:

  • Notes the UK Government’s increase to employer National Insurance contributions, coming into effect for the 2025-26 tax year.
  • Recognises the detrimental impact the increase will have on Welsh charities, not-for-profits, and voluntary organisations.
  • Calls on the Welsh Government to make urgent representations to the UK Government to ensure that these organisations delivering public services are included in the ONS-defined public sector category and are reimbursed for the rise in employer National Insurance contributions.

The debate will determine whether Welsh Labour will push for financial support to shield the voluntary sector from these additional costs.

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News

Local Authority is ‘hoarding cash’ as Council Tax rises by 9.35%, says MS

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DEMANDS FOR REFORM AS COUNCIL’S £83 MILLION RESERVES REVEALED

PEMBROKESHIRE residents are bracing for a 9.35% council tax rise, despite local authorities across Wales holding more than £2 billion in reserves. The increase, among the highest in Wales, comes as families struggle with soaring living costs and a series of consecutive tax hikes.

Paul Davies MS: Welsh Government should do more to help keep Council Tax as low as possible (Image: File)

Local Senedd Member Paul Davies has called for urgent reform, criticising the Welsh Government’s Local Government Funding Formula and urging councils to use their reserves to ease the burden on taxpayers.

‘UNFAIR AND UNSUSTAINABLE’

Mr Davies said: “Under the Welsh Government, the Local Government Funding Formula remains broken.

“It cannot be right that people in Pembrokeshire face such a huge increase in their council tax while councils across Wales are sitting on over £2 billion in usable reserves.

“The Welsh Government must do more to keep council tax as low as possible by encouraging the use of reserves, improving efficiency within councils, and promoting the sharing of resources across council boundaries.”

CALLS FOR CHANGE

The Welsh Conservatives have consistently opposed large council tax increases, calling for an independent review of the Local Government Funding Formula. They argue that councils should:

  • Use reserves to reduce tax rises.
  • Improve efficiency by cutting unnecessary spending.
  • Increase cooperation between councils to share services and lower costs.

RISING RESERVES, RISING BILLS

For years, Pembrokeshire had the lowest council tax in Wales, but after a 12.5% rise in 2024-25, it has surged significantly. Despite this, Pembrokeshire County Council holds £82.6 million in usable reserves, equivalent to 28.4% of its annual service expenditure.

In 2016-17, the council held just £47 million in reserves, rising to £83 million in 2021-22. Critics argue that this surplus should be used to relieve financial pressures rather than imposing further tax hikes.

With councils under fire for hoarding cash while demanding more from residents, pressure is mounting on the Welsh Government to overhaul funding and prevent further unaffordable rises.

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