County Council faces £40m blackhole

By Elgan Hearn, Local Democracy Reporter

1 month ago

News Politics

Powys County Council is facing a £40 million financial black hole in its budget for 2023/2024, despite getting an additional £18.3 million from the Welsh Government.

At a cabinet meeting on Tuesday, December 20, councillors were given an update on the Medium-Term Financial Strategy (MTFS) for the next five years.

This follows the announcement by the Welsh Government that Powys can expect an 8.7 per cent increase, equating to just under £18.3 million in its provisional financial settlement.

Head of finance Jane Thomas explained that from April the council will have a new energy contract and will see an increase in gas and electricity costs.

She explained that this will have an impact right across the services, including schools, council buildings and street lighting.

Ms Thomas said:

“The cost-of-living challenge more generally is seeing us have to support our residents more,

“We’re seeing an increasing demand for service.

“Increasing levels of homelessness referrals to social services and we are supporting our residents with our money advice team to provide help wherever we can.

“Although having an improved settlement to what we expected, we are still facing significant cost pressures next year.

“The cost pressures we have identified thus far are over £40 million.

“The additional settlement will go some way to breach that gap.

“However, it still leaves us with a considerable gap to balance our budget.”

She explained that an “extensive” level of savings or cuts will be needed as well as deciding the Council Tax in looming budget.

Ms Thomas said: “We are seeing an unprecedented financial challenge, we are in a better place now in terms of our final plan for next year, out of necessity we’ve focussed on the short term.”

She added that the council would need to be mindful of a squeeze on public finances from 2025 onwards following the Chancellor Jeremy Hunt’s autumn statement in November.

“It’s clear we have a significant challenge ahead of us, said Ms Thomas.

Conservative group leader and former finance portfolio holder Cllr Aled Davies challenged the Liberal Democrat/Labour administration to go “nowhere near” the five per cent Council Tax hike which is modelled into the MTFS as an annual increase.

Deputy council leader, Cllr Matthew Dorrance said: 

“Despite the fantastic settlement from the Welsh Government there’s no milk and honey with this.

“We need to fundamentally reshape the way we deliver services to meet those challenges and this document clearly sets that out.

“On Council Tax, we shall face those difficult decision just as he (Cllr Davies) faced them.

“But the priority has to be for us to deliver services that protect the vulnerable in our communities and I hope we can all agree on that.”

Councillors voted to approve the revise MTFS, noted the provisional financial settlement from the Welsh Government and agreed that the MTFS needs updating before the budget proposal is finalised next month.

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