You’d probably have to be living on Mars not to have noticed the fall-out from last week’s mini-budget.
The financial turmoil that’s followed could be further bad news for the worrying budget situation faced by every council. Our current position is that for next year (2023/24) we could have a significant budget gap. That’s largely due to three main issues that have either emerged or worsened beyond anyone’s expectations in the past few months.
Firstly, inflation is running close to 10% which means everything we buy as individuals but also as a council is now far more expensive than we could have predicted. We’re expecting a 3% funding increase from the Welsh Government for next year, but with inflation at almost 10% you can see that’s nowhere near enough to cover our growing costs.
Secondly, the national pay discussions for council staff may result in a rise of about 7 to 8%. We budgeted for a 3% increase at a time when that seemed reasonable. The cost of living crisis means higher pay awards are now very likely. So the gap between what we budgeted for and what’s likely to be agreed could be an extra £12m next year, and possibly a similar amount the year after. We need the Government to fund the pay awards, but there is no guarantee of this.
And the third issue is the cost of energy. We’re all feeling the cost of gas and electricity at home, but the same applies to the council for heating our buildings and fuelling our vehicles. The extra energy cost alone is expected to be £15m. The Government recently announced support for councils with energy costs but, as things stand, this doesn’t save us any money this year and also it doesn’t extend beyond next April.
When we set the budget last March we couldn’t have predicted the turmoil that was to follow. The past five months have been unprecedented, and the last five days has seen further turmoil. There is a further risk with the current financial turmoil that Government will have to reduce public spending which would have a consequential effect on Wales, meaning even less money for councils and making our budget challenges even bigger.
All councils are facing these problems and will be pushing for more financial support to deal with these issues, but we can’t predict with any certainty how the Governments in London and Cardiff will respond to the situation, and how that would impact on our budgets.
So as things stand we have to be cautious and plan on the basis that the Government isn’t going to fund these extra costs. We’re discussing the situation and potential savings options with Cabinet next week. I can update you once we’ve had those talks.
Staff Engagement
Yesterday I met our staff engagement group to discuss the best ways to engage you and get your feedback which I think is particularly important when discussing the budget, our corporate plan and new transformation strategy and other key messages. Their ideas were really useful and due to diversity of our services and the working arrangements we have across the council, we’ll have different approaches for different areas. I hope to be able to finalise our overall engagement strategy in the next few weeks and I will share with you all as soon as I can.
Cost of Living
Linked to the cost-of-living, I want to thank the amazing efforts of our staff in supporting hard-pressed families. In the past three days we’ve had 14,860 applications for fuel payments plus more than 3,000 last-minute cost of living payment applications. Phone inquiries are up by 250%. By yesterday we’d paid £2.11m in fuel payments to 10,558 pre-approved applicants and we have a further 4,302 applications for people we couldn’t pre-approve. Similarly, since Monday we’ve paid £516,450 to 3,443 people who are eligible for the £150 cost of living payment. This is an incredible effort and I’m very grateful for everyone’s efforts, so my thanks to staff in all teams involved – from revenue and benefits, IT and poverty and prevention to housing, libraries and the contact centre.
Thank You
Sian Evans, who works in our elections team, is retiring today after 35 years with us. Sian has worked in many areas including legal and housing. Sian played a huge role during elections and selflessly baked to help feed the team into the early hours on election nights! She met her husband Noel in work and I hope they both enjoy a happy and long retirement together.
To use a well known supermarket 2every little helps” and I can’t help but wonder if the new ways of working that includes home working where possible would reduce the energy bills to the authority as office space becomes less essential. Plus where an office / building becomes redundant could it or the land be sold too.
Hi Steven, all good points and things we as a council are already doing in some way. Our agile policy is there to create flexibility for all, balancing the needs of the business, but we’re mindful that staff are experiencing similar energy cost challenges. We are continuing to review our assets, such as office space, and have over the years released millions of pounds of savings through things like renting excess space to other organisations, moving out of leased premises or selling space we no longer need for redevelopment. Martin.