WLGA says financial pain to follow for local government as a result of WAG provisional settlement

Responding to the publication of today’s provisional local government settlement the WLGA says it confirms that local government is facing a period of severe financial pain and service delivery pressure which will last at least five years.

Last week, the WLGA supported the budget approach taken by the Assembly Government and key Ministers and recognised the clear efforts to seek to protect Wales’ communities by prioritising frontline services. The WLGA has been holding productive meetings with the Assembly Government, vital meetings it says which must continue as local government enters into its most difficult financial period in over 50 years.

Cllr John Davies (Pembrokeshire), WLGA Leader said:

“Last week, Finance Minister, Andrew Davies, rightly stated that in terms of the Assembly’s budget the ‘lean’ years have begun. For local government the past two years have been very tough and whilst not unexpected, this year’s increase presents councils with some very tough and difficult choices.

The complex distribution formula underpinning local government funding means that some local authorities would have seen revenue settlements below 1% were it not for the floor put in place to protect those authorities and to ensure that all councils received a minimum uplift. Overall, councils will see an average increase of 2.1% which objectively is the lowest increase since devolution. Indeed, over half of all Welsh councils will receive an uplift of between 1% and 2% only.

Over the past three years, despite difficult settlements local authorities have managed to set record low levels of council tax rises and will endeavour to keep rises at a reasonable rate again this year. However, councils are facing huge pressures within social care, education, housing, transport and waste which will require difficult resource prioritisation and the stark reality is that not all areas can be protected.

Councils will be forced to make very difficult decisions around service cuts and potential job losses across their workforces. The WLGA will continue to work closely with councils and the Welsh Assembly Government to explain to council taxpayers why these difficult decisions are needed. At the same time councils will need to exhaust every option for increasing efficiency, collaboration and new service models but the scale of the challenge, particularly around capital spending is daunting.

Capital spending in the public sector is set to half over the next four years. We are already seeing the start of the squeeze in the settlement for 2010-11 which sees more than a 10% reduction on 2009-10 levels.”

Cllr Rodney Berman (Cardiff) WLGA Finance Spokesperson said:

“Given the collapse of the public finances, unfortunately this year’s settlement is as good as it gets for Welsh local government. Sadly much worse will follow between 2011 and 2014. With a general election looming there remains real uncertainty about how hard the squeeze on finances across the public sector will be and the pace of cuts at a national level.

There is a real danger that as the private sector begins to emerge slowly from the recession, a second wave could hit the public sector and by implication this will impact on the private sector as a result of the extensive contracts we have with them.

With one third of the Welsh workforce employed within the public sector our communities could be hit especially hard. Protecting and prioritising front line services must therefore be at the heart of all decisions that local government takes. Whilst today’s provisional settlement is properly targeted there can be no escaping that this represents by far the lowest annual lowest increase for ten years with the potential for significant cuts to follow".