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Politics

Welsh councils ‘on the brink’ due to half a billion pound shortfall

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COUNCILS are facing an “unprecedented” £540m budget shortfall, with two local authorities concerned they are facing bankruptcy and more may follow, the Senedd heard.

Peter Fox, the Tory shadow local government secretary, said: “There are many on the brink … and we cannot continue to ignore the situation – it is very real, it is very much growing.”

Mr Fox, who led Monmouthshire Council before his election to the Senedd in 2021, raised concerns about reports of an increase in employer National Insurance contributions.

He pointed out that about 140,000 people are employed by councils as he questioned Wales’ local government minister in the Senedd on October 16.

Mr Fox said the public service workforce, including private contractors, is about 480,000 and even a 1% increase would lead to an estimated £100m bill for councils.

He said: “Councils provide vital public services for the people of Wales and financial pressures will force councils to pass on costs to working families who cannot afford that.”

Warning of a “huge hole” opening up, Mr Fox suggested yet more pressure could be on the way following the UK Government’s budget on October 30.

The Monmouth MS asked whether Welsh ministers are considering any mechanisms, such as a funding floor, to “fend off” potential council bankruptcies.

Mike Hedges pointed out that both Labour and Conservative councils in England, including Birmingham, which is the biggest in Europe, have faced bankruptcy.

The former Swansea council leader said: “We have not had a bankruptcy of a council in Wales because of a better settlement and also good political management and good departmental management. But that can’t continue forever.”

Peredur Owen Griffiths, Plaid Cymru’s shadow local government secretary, raised concerns about Rhondda Cynon Taf and Merthyr Tydfil councils’ plans to cut school transport.

“Caerphilly Council is consulting on the same, not to mention huge cuts to libraries,” he said.

Mr Owen Griffiths, who represents South Wales East, warned of a looming disaster, adding that cuts will have a disproportionate impact on the most vulnerable.

  • Job losses on the horizon as council battles to plug £45m hole in budget
  • ‘Lifeline’ meals on wheels service saved after widespread opposition to closure
  • Welsh councils braced for multimillion pound ‘black hole’ in next year’s budgets

Responding for the Welsh Government, Jayne Bryant acknowledged the “huge challenges” that councils across Wales have faced for many years.

Wales’ local government secretary, who was appointed in July, recognised councils are balancing key services such as social care and education amid increasing demand.

She stressed that no Welsh council has issued a section 114 (bankruptcy) notice, saying: “We’re working hard and we’re not taking that for granted.”

Ms Bryant said ministers are jointly developing a protocol for councils in case of emergencies, which will include options but not additional funding.

The minister said the Welsh Local Government Association, the voice of Wales’ 22 councils, will present a paper on pressures at the next finance sub-group meeting on October 22.

She told the Senedd that local government will be a key part of the Welsh Government’s draft spending plans for 2025/26 which are due to be published on December 10.

She said: “We will protect frontline public services as far as possible and continue to target support at those in greatest need.”

Health

Planned west Wales ‘super hospital’ on hold for a decade

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A CALL for an urgent meeting between Pembrokeshire’s leader and the local health board has been made after the board recently identified nine ‘fragile’ areas of service.

Late last year, Hywel Dda University Health Board stated a planned new west Wales hospital, based at either Whitland or St Clears, would not be up-and-running for at least a decade.

That scheme would see both Withybush Hospital, Haverfordwest and Glangwili Hospital, Carmarthen being ‘repurposed’, with community hubs developed.

In the meantime, the board heard services across the UK have consolidated and standards increased and Hywel Dda risks falling significantly behind other areas with consequences for patient care and staff recruitment, with work to support nine ‘fragile’ services in the interim of a new hospital already begun.

The board’s executive director of strategy and planning, Lee Davies said at the time: “In the absence of a new hospital in the south of our area to address challenges, we need to consider other options to bring together some of our services.

“We anticipate the emerging model, informed by work on the Clinical Services Plan, will seek to build on the strengths of each of the hospital sites in a way that builds complementary areas of expertise.”

At the March 6 meeting of Pembrokeshire County Council, a submitted question by Cllr Alistair Cameron asked: “On November 28, 2024, Hywel Dda UHB announced that, since financial support is not secured, delivery of a new hospital (to be located in either St Clears or Whitland) is likely to be at least 10 years from now.

“In the same statement the health board stated that it risks falling significantly behind other areas [of the UK] with consequences for patient care and staff recruitment and that it has identified nine fragile services: Critical Care, Emergency General Surgery, Stroke, Endoscopy, Radiology, Dermatology, Ophthalmology, Orthopaedics and Urology.

“Could the Leader of Council seek an urgent meeting between the council and the chief executive of Hywel Dda UHB so that he can explain his strategy for safeguarding these nine fragile services which are vital to Pembrokeshire residents and what action has been taken so far?”

Responding, Leader Cllr Jon Harvey said: “I share your concern about health service provision; contact has been made with the health board with regard to a meeting, a response is awaited,” adding that a seminar for councillors on the issue was also due to be held.

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News

Pembrokeshire becomes latest council to consider devolution of Crown Estate

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SENIOR councillors will consider a bid for Pembrokeshire to become the latest council to support the devolution of Crown Estate assets to Wales.

15 local authorities are currently backing calls for this economic asset to be placed in Welsh hands.

The latest to join the campaign are Rhondda Cynon Taf and Merthyr Tydfil (both on March 5), and Isle of Anglesey (March 6), bringing the total across Wales to 15.

The Crown Estate owns 65 per cent of Wales’ riverbeds and beaches, as well as more than 50,000 acres of land – valued at over £603m.

Proceeds from these go to the Crown Estate, funding the Royal Family and contributing to the UK Treasury.

Responsibility for the Crown Estate is already devolved to the Scottish Government, which has previously been reported as generating £103.6 million into the public coffers in Scotland in 2023.

A notice of motion submitted to the March 6 meeting by Plaid Cymru councillor Michael Williams said: “We ask PCC to support the proposal for the Crown Estate assets to be devolved to the people of Wales, so that profits can be used to invest in the economy and communities of Wales.

“A poll in 2023 showed that 75 per cent of the population were in favour of taking control of the assets of the Crown estate rather than the profits going to the Treasury and the Crown.

“Local Authorities are under huge financial pressure and placing the Crown Estate in the hands of Wales would be a significant step to address the lack of investment in our local government.

“We call upon the Welsh Government to ask Westminster to devolve the assets and revenue of the Crown Estates as a matter of urgency, as was done in Scotland in 2017.

“We demand that Wales is treated fairly and accepts management of the Crown Estate land for the benefit of the people of Wales.”

Members agreed the matter be referred to the council’s Cabinet for further consideration.

Earlier in that meeting, a submitted question by Independent Group leader Cllr Huw Murphy on the subject was heard.

He asked: “Can PCC provide the annual income the Crown Estates derive from Pembrokeshire as the Crown Estates map indicate that the majority of the Pembrokeshire Coastline to include much of the Milford Haven waterway is owned by the Crown Estates?”

Responding to that question, Cabinet member for finance Cllr Joshua Beynon said the total amounted to £59,005, including £26,600 for foreshore lease agreements, £8,520 for the land around Haverfordwest’s Riverside Market, and £12,800 for a sailing centre and care park at Cosheston Pill near Pembroke Dock.

Late last year councillors in neighbouring Ceredigion backed a call for the Crown Estate assets to be devolved to the people of Wales, following a notice of motion by Cllr Catrin M S Davies, seconded by Cllr Alun Williams.

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News

Welsh Government considers Scottish-style income tax changes

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THE WELSH GOVERNEMNT is exploring potential changes to Wales’ income tax system, with Finance Secretary Mark Drakeford commissioning a review into whether a more flexible model, similar to Scotland’s, could be adopted.

Speaking in the Senedd during the Final Budget debate, Drakeford described the current system as too “blunt” and confirmed that “the work has already begun” to examine alternative approaches. He revealed that he had met with the Scottish Finance Secretary to discuss how Scotland has used its wider tax powers.

A more ‘progressive’ system?

At present, Wales can only adjust income tax rates within the existing basic, higher, and additional bands set by the UK Government. The Scottish model, however, allows for more variation, including:

  • An intermediate rate of 21% on incomes between £26,562 and £43,662.
  • A higher rate of 42% on incomes between £43,663 and £75,000.
  • An advanced rate of 45% on incomes between £75,001 and £125,140.

The SNP-led Scottish Government has announced that, from April, it will impose the highest income tax rates in the UK for anyone earning over £30,318. While no specific proposals have been announced for Wales, Drakeford’s comments have fuelled speculation that a similar system could be introduced.

Opposition concerns

Welsh Conservatives have strongly opposed the prospect of increased taxation. Sam Rowlands, the party’s Shadow Cabinet Secretary for Finance, warned: “Further Labour tax rises on hardworking Welsh people would be a disaster for Wales.”

Andrew RT Davies, former leader of the Welsh Tories, also voiced concerns, stating: “The last thing Wales needs is higher and more complex taxes.”

The Welsh Government has not confirmed whether any changes would mean tax rises, but Drakeford emphasised that the review aims to assess whether a more progressive tax system could benefit public services and economic growth.

No immediate changes

While discussions are ongoing, no firm decisions have been made, and any reforms would require extensive consultation. The Herald understands that the Welsh Government is in the early stages of reviewing its options, with further details expected later this year.

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