Councillors in Merthyr Tydfil have raised concern about their settlement from Welsh Government next year and funding to tackle homelessness.
A report to full council on Wednesday, February 2 mentioned that the provisional local government settlement includes a 9% increase (£9.1m) for Merthyr Tydfil which is currently on course for a budget surplus of £503,000 before a decision is made on council tax.
But Councillor Geraint Thomas highlighted that last year Merthyr Tydfil had the third best settlement – and this year they have the 16th best.
Read more: You can find more stories about Merthyr here.
He asked cabinet member for governance and corporate services Councillor Chris Davies and chief finance officer Steve Jones if they feel Merthyr deserves to be 16th on the list or if they should be higher up given the issues they’ve got with homelessness.
Mr Jones explained that it’s about the magnitude of the settlement increase for next year.
He mentioned the formula which is made up of the revenue support grant and the notional council tax increase.
Because previously the notional council tax increase has been growing at a faster rate than the settlement, Merthyr Tydfil gained from this because it has a lower council tax base.
But because the settlement has increased at quite a significant rate, Mr Jones said areas with higher council tax bases have gained.
The cabinet member for governance and corporate services Councillor Davies said that when the settlement is broken down they haven’t had a particularly great one.
He said it was a “smokes and mirrors” budget and that some of the rich have got richer while Merthyr has stayed the same or got poorer.
He said they all have to make the case to Welsh Government that “communities like Merthyr Tydfil need more if we are going to prosper, if we’re going to develop, we’re going to grow and we’re going to keep people out of poverty.”
The figures
A cumulative budget deficit of £7.62 million is forecast up to the financial year 2024/2025.
The council is using a 3.55% increase in council tax as its model for working out its budget at the moment but no decision has been made on the council tax level yet.
The report said that every 1% increase or decrease to the budgeted council tax increase of 3.55% has a net impact of around £250,000 on the revised budget surplus.
At the moment, the council is looking at a provisional budget requirement of £143.89m with no revisions anticipated in the final Welsh Government settlement which is due to be confirmed on March 1.
The social care specific grant, held outside of the revenue settlement, has reduced from £50 million to £45 million reflecting the transfer into the settlement of £5 million, with Merthyr Tydfil’s share being £107,250.
The £503,000 budget surplus has resulted from an initial deficit of £5.26m based on a 4% funding increase, a £5.36m impact from the provisional settlement, £4.87m in additional demands, £4m in already budgeted demands, £2.06m from the hardship fund, £1.435m in efficiency proposals, £1.432m towards the pay award, and £782,000 towards the real living wage for care workers.
Included in the additional budget demands is a further £1.19 million, over and above the £871,000 already included in the medium term financial plan, relating to the additional cost for homelessness provision in providing temporary accommodation for those individuals presenting themselves as homeless.
The total cost for 2022/2023 of £2.06 million has been factored in for 2021/2022 and claimed from the Covid-19 hardship fund but no Welsh Government financial support is available after.
Homelessness funding
The chief finance officer Mr Jones said that around £600,000 worth of grant in this area could be lost and the authority would then need to find another option to replace this money with the recommendation being to use some of the surplus out turn which he said should be more than £800,000.
Mr Jones recommended they bring something back to council as they’re still waiting to hear what grant they will get.
Councillor Kevin O’Neill said: “For me and I’m sure most people the budget was clear.
“If you are 16th or 15th, us and Blaenau Gwent are sorely left behind.”
He said he knew that the £9m wasn’t really £9m because of all the debits coming out of it.
He said: “It’s not the failing of officers; this is the failing of Welsh Government.”
He said the policy of housing every person who presents as homeless is “naive” adding that many areas in the valleys don’t have the infrastructure, resources or the finance.
He said: “That’s why so many people are now in The Castle Hotel.”
Cllr O’Neill said: “This is not saying that we shouldn’t support those who are homeless. Far from it. I just think it was naive in its extreme.”
He said there were good intentions but it was the application and presentation of it.
He recognised that steps are being taken to remedy the problems and the council officers are working very hard but he said: “I do think that the recognition of the position that we are in is very slow in coming. How many times do we have to raise this issue?”
Cllr Davies said as cabinet members and officers they are as frustrated as councillors are around the significant challenges that they have on homelessness.
“We’ve got a really ambitious town centre master plan for regeneration of areas like Penderyn Square, Pontmorlais and other parts of the county borough and these are being impacted by the issue we have around the town centre.”
Cllr Davies said they will continue to make representations to officials and ministers in Welsh Government.
He praised the work of officers and said: “This has absolutely been a moving feast. It’s been like nailing jelly to a wall.”
Other features of the proposed budget for next year
Efficiencies of £1.435 million have been included for 2022/2023 reflecting additional income and the realignment of budgets by reviewing assumptions in the medium term financial plan.
There is £720,000 worth of efficiencies resulting from investment in initiatives already approved by council.
The council report said no service budget cuts are proposed and no efficiency contribution is being asked for from schools.
On the pay award, a 1.75% increase has been included in the council’s medium term financial plan with a projected extra cost for Merthyr Tydfil in 2022/2023 of £1.432 million.
The real living wage of £9.90 per hour for social care workers in the independent sector (all council employees are already paid more than the real living wage) from April 1, 2022 is projected to cost £782,000.
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