Laura Sharman 19 April 2021

Welsh councils face £178m funding gap next year

Welsh councils face £178m funding gap next year image

Welsh local authorities will face a funding gap of £178m next year due to post-pandemic pressures, a new report has found.

Analysis by Cardiff University’s Wales Governance Centre warns this could rise to £607m next year if the Welsh Government decides to redirect budget resources to fund the projected legacy costs of COVID-19 on the NHS.

The report finds social services will account for 55% of all local authority spending pressures by 2025/26.

Cian Siôn, a researcher on the Wales Fiscal Analysis project, said: 'Even though the block grant is set to grow in real terms over the next five years, growing demand for services, including social care, and significant post-pandemic pressures combine to create a challenging outlook for the Welsh and local authority budgets.

'This challenge kicks in immediately with a substantial funding gap next year, based on current UK Government spending plans.'

The report also reveals that council tax now accounts for 5.4% of the total tax take in Wales, compared to 4.3% in England.

Mr Siôn added: ‘Our analysis suggests that above-inflation increases to council tax here to stay. In our model, we assume a 4.5% annual increase to council tax bills from 2022−23 to 2025−26, and even this is not sufficient to meet funding pressures in full.

’This strengthens the case for revisiting the way the local taxation system operates in Wales. A policy which pivots around inflation-busting council tax increases every year is an unsustainable way of funding local authorities in the long-term.’

SIGN UP
For your free daily news bulletin
Highways jobs

Head of Early Years and Early Help

London Borough of Merton
£90,126 - £98,319
Merton is an Ofsted rated ‘Outstanding’ authority—yet it is our ambition, our humility, and our drive to keep learning that truly define us. Merton, London (Greater)
Recuriter: London Borough of Merton

Specialist Social Worker

North Yorkshire Council
£42,839 - £47,181
A welcome from the Corporate Director of Children and Young People Scarborough, North Yorkshire
Recuriter: North Yorkshire Council

Specialist Social Worker

North Yorkshire Council
£42,839 - £47,181
A welcome from the Corporate Director of Children and Young People Malton, North Yorkshire
Recuriter: North Yorkshire Council

Specialist Social Worker

North Yorkshire Council
£42,839 - £47,181
A welcome from the Corporate Director of Children and Young People Ripon, North Yorkshire
Recuriter: North Yorkshire Council

Specialist Social Worker

North Yorkshire Council
£42,839 - £47,181
A welcome from the Corporate Director of Children and Young People Harrogate, North Yorkshire
Recuriter: North Yorkshire Council
Linkedin Banner