Agenda item

The Chief Executive advised Council of the financial outlook for 2025-26 and the broad approach that will be taken to support the setting of the Council’s revenue and capital budgets for the financial year 25/26.

Council were informed that the Cabinet Secretary for Finance, Constitution and Cabinet Office in her statement of 11th June 2024 recognises the challenging context and makes clear that we must prepare for difficult decisions and trade-offs in our planning. A Welsh Spending Review is to be undertaken and this will drive the Welsh Government’s future annual budgets.

It was highlighted that the statement makes clear that there will be an emphasis on key priorities for Wales – reducing NHS waiting lists; support for children in early years; educational excellence in our schools; better, greener jobs; secure homes; and improved transport links across the country. The incoming Labour Government following the General Election held on 4th July 2024 is yet to signal whether it will adjust current spending plans. Welsh Government advise, for 2025-26, we should base our planning on NO uplift to the Revenue Support Grant.

It was explained that the scale of the challenge a cash flat Settlement presents for Neath Port Talbot County Borough Council was set out in the body of the report and that work has already started to identify the measures that will need to be considered to achieve a balanced budget for the next financial year.

The Chief Finance Officer detailed to members the financial modelling and based on the latest assumptions highlighted to Council that the budget gap for 2025/2026 is £18.061m before any increases to Council Tax.  In his role as the Council’s section 151 Officer, he made it clear to members the very serious financial position the Council is in. He explained there is some resilience in relation to the Council’s reserve position but clarified that this is not a long term solution.

Directors gave detailed breakdowns of the budget pressures being faced in their services areas as detailed in the report:

The Director of Education, Leisure and Lifelong Learning highlighted in particular that Neath Port Talbot is the only Council in Wales where schools are in an overall deficit position. This is in relation to Teachers Pay awards not being appropriately funded, energy costs and the ALN support requirements.

The Director of Social Services outlined the significant increase to demand and complexity to the service. Concerns were raised regarding Welsh Government and Home Office policy decisions which are resulting in an unsustainable position for Local Government given the ever increasing numbers of vulnerable people in our communities.

The Director of Environment and Regeneration made particular reference to energy costs, construction inflation and costs of raw materials as well as the ambitious unfunded decarbonisation targets from Welsh Government WG decarbonisation targets.

The Director of Strategy and Corporate Services made reference to increased and unfunded regulatory, legislative and digital requirements from Welsh Government.

It was reiterated that the many years of austerity, coupled with the series of economic shocks in recent years and the prospect of further significant reductions to the Council’s funding base, will have very negative overall consequences for the services and functions the Council operate, the number of people it will be able to employ and rates of council tax, fees and charges and members of Council were urged to lobby UK and Welsh Government to start funding Local Government appropriately.

RESOLVED:       That the potential for there to be no increase to the Revenue Support Grant in 2025-26 and the serious implications this will have for services, jobs, fees and charges and council tax levels be noted.