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Politics

Budget cuts: Social Services and education take two-thirds of all councils’ money

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Pembrokeshire County Council: Pandemic has forced through change to digital services

How will local government services change?

THE FUNDING pressures on local government over the last decade have been a catalyst for change in local service delivery. Increasing costs and lower revenue for local authorities means some services have reduced or are being run differently.The pandemic put significant new demands on local government, exacerbating existing pressures. The future of local government services is uncertain. How it responds to the challenges will shape those services for years to come.
The shape of local authority services has changed significantly over the last decade.

Overall local authority spending has decreased by around 7% since 2013-14 (in real terms). In contrast, expenditure on social services has increased by over 10%. Spending in most other service areas has been cut, including in education.


Planning and economic development services have been hit particularly hard, as have libraries, culture, heritage, sport and recreation services.

WHERE THE MONEY GOES

Together, social services and education made up over two-thirds of total expenditure on services by the 22 local authorities in 2019-20.


But while social services have been protected from the most severe spending reductions, this won’t be enough to ensure its sustainability for the future


A 2017 report by Wales Public Services 2025 found that spending through local authorities on social care for the over 65s is not keeping pace with the growth in the population of older people. Spending may need to have increased by at least £129 million (23%) between 2015-16 and 2020-21 to get back to the equivalent spend per head in 2009-10.


The ONS estimates that, between 2021 and 2031, the population of Wales will grow by just over 60,000 (1.9%). Within that population growth, there’s a projected increase in the proportion of older people. The population of over 65s is due to increase by around 119,000 (17.5%).


Wales Fiscal Analysis notes that, while future demand for care can’t simply be linked to growth in older populations, projected growth in older people with complex care needs is highly likely to mean increased pressure on care services.


It details that the number of older adults living with severe dementia is expected to double to 53,700 by 2040.
The Inter-Ministerial Group on paying for social care estimated that in a ‘high-cost’ scenario, between 2019-20 and 2022-23, the net costs of social care could increase by almost £400 million.
Wales Fiscal Analysis projects that by 2025-26, social services could account for 55% of all local government spending pressures, with school pressures accounting for a further 21%.

INCREASED RELIANCE ON COUNCIL TAX?

Where local authorities get the money to spend on services has also started to shift. There’s been a reduction in grant funding to local authorities over the period 2013-14 to 2019-20, some of which has been mitigated by local taxes. Grant funding still makes up most local authority income.


The amount to be collected from council taxpayers (excluding council tax benefit/reduction scheme funding) was up by almost 30% over the same period.


The overall increase reflects annual increases in council tax paid by residents over the period. Average Band D council tax (excluding the police element) increasED in real terms by £186.


However, local authorities have consistently warned that raising council tax is not enough to fill future funding gaps

Following the UK Budget 2021, Wales Fiscal Analysis notes that “the UK government’s medium-term spending plans make for a more austere outlook for the Welsh budget and Welsh public services” and outlines the possibility of a return to austerity for parts of the Welsh budget.


The financial impact of the pandemic on local government is likely to be felt for many years.
Audit Wales notes that, even in local authorities generating a budget surplus in 2018-19, some had significant overspends in demand-led services like social services. It suggests those pressures are likely to intensify because of the pandemic.

TRANSFORMINGPUBLIC SERVICES:

Local government has embarked on a journey to transform how it delivers services.
Local authorities are thinking differently about improving services for users while reducing the cost of running them.


An example of this is one-stop-shops or ‘hubs’. These hubs host multiple council services under one roof, such as libraries, money advice and adult learning services.

One of the most significant aspects of the transformation programme is to make better use of technology and digital tools.


The Digital Strategy for Wales, launched in March 2021, sets out a national vision for digital transformation. The Strategy seeks a cultural shift in how public bodies “deliver and modernise services” designed around user needs.
Over the past year, local authority resources have been diverted from some of this transformational work. Anticipated financial savings are now uncertain.
The WLGA recently suggested there’s doubt about when, and indeed if, some of those savings will now happen.

MIND THE GAP

Corporate Joint Committees (CJCs) are bodies designed to enable greater regional working and collaboration in areas like education and transport.


However, questions remain about how these new bodies will operate.

Responses to a recent consultation on CJCs by the previous Welsh Government show there’s still uncertainty about how they’ll function and their associated costs and benefits.


Despite the recent increase in the local government settlement for next year and the substantial funding support in response to the pandemic, significant challenges remain.

Wales Fiscal Analysis suggests that to meet cost pressures over the next few years, spending on local services needs to increase, on average, by 3.4% a year (in cash terms) between 2020-21 and 2025-26.


The WLGA recently reported that core pressures, the financial gap in money coming in, and what’s needed to pay for services could amount to £822 million by 2023-24.

Leaning on local taxation, such as council tax, to support critical services like social care and education won’t stem the demand for and cost of providing those services.

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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