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What will Welsh councils' budgets be? Welsh councils' budgets announced
(about 4 hours later)
Councils are largely unprepared for the scale of cuts coming their way, claims the body which represents them. Councils are being told their budgets for next year, with large cuts expected after the Welsh government announced a 5.81% reduction in total funding for local authorities.
The warning from the Welsh Local Government Association (WLGA) comes before individual council budgets are revealed by ministers on Wednesday. Local government minister Lesley Griffiths has released a statement.
Last week ministers announced local government funding in Wales would be cut by 5.81% in real terms next year. Ceredigion, Denbighshire and Powys face the largest percentage cuts at 4.6%, with Newport the lowest at 1.2%.
One council has already announced plans to shut more than half its libraries and close day centres. The Welsh Local Government Association (WLGA) warned that most councils were unprepared for the scale of cuts.
On Monday Rhondda Cynon Taf council was the latest to announce plans for deep cuts, saying it needed to save £56m over the next four years. One council is shutting more than half its libraries and close day centres.
Its cost-saving proposals also included children starting full-time school a year later. The government's draft budget last week prioritised the health service, with £570m extra for the NHS.
Last week the Welsh government announced its draft budget with the Welsh NHS receiving £570m of extra funding over three years.
The decision left less money available for local authorities.
Total local government spending in Wales will fall from £4.648bn this year to £4.466bn next year, a cut in cash terms of 3.91%, or 5.81% in real terms, after allowing for inflation.Total local government spending in Wales will fall from £4.648bn this year to £4.466bn next year, a cut in cash terms of 3.91%, or 5.81% in real terms, after allowing for inflation.
Their budgets will be around 9% lower in real terms between now and 2015-16.Their budgets will be around 9% lower in real terms between now and 2015-16.
In a report for the assembly's finance committee, the WLGA tells assembly members: "While local government is aware of the deteriorating situation regarding the Welsh government budget, it is probably unprepared for the scale of reductions that is likely to be visited on local finances for 2014-15." The WLGA is due to meet the assembly's finance committee on Thursday to discuss its report on the looming cuts. It has expressed fears councils will not have enough time before next April to plan.
The association said most medium-term plans councils had published were based on more optimistic indications they had from Welsh minsters last year. BBC Wales' business correspondent Brian Meechan writes:
The document warned that "seasoned finance practitioners" at councils were worried that they had less than six months to plan the steeper cuts in time for the new financial year in April. Councils have a number of options on the table as they face the squeeze.
"The extent to which sensible service and workforce planning can be achieved in such a short period has to be questioned," the WLGA said. Staff costs make up the bulk of most spending on public services. A Wales Audit Office report said the public sector would need to "identify novel ways of reducing their staffing bills". That could mean flexible working, with reduced hours or moving from full-time to part-time work.
It added that local councils in England and Scotland had been given more time to get their financial houses in order. It could also mean councils outsourcing some services, for example benefits, computing and technology, and facilities management, to private companies. This can involve the whole scale transfer of staff to the private sector but doesn't necessitate that.
The WLGA will discuss its report with assembly members on the assembly finance committee on Thursday. Private companies have not proved a popular choice in Wales where local authorities have seemed reluctant to use them as a solution to their financial woes. It's also unpopular with trade unions.
Before that, Local Government Minister Lesley Griffiths will reveal on Wednesday each local authority's individual budget. But in England, it's a route that many councils have gone down.
Go bust Mouchel is one company that's profited from this approach. In partnership with Balfour Beatty Infrastructure Services, it maintains highways, road markings, public lighting and street signs for Westminster Council.
Finance Minister Jane Hutt has said the Welsh government was "supporting and cushioning" local government over the last three years in anticipation of the cuts. Meanwhile, Capita runs Service Birmingham, a joint venture with the council that provides IT services. The company says the partnership has led to improved services, reduced costs and created a more efficient, motivated workforce.
Meanwhile, the Welsh Conservatives have criticised Cardiff council for recruiting five assistant directors with salaries of £80,000 a year days after a senior cabinet member gave a warning about the state of its finances. But there are those who believe that public services shouldn't be about creating profit for private companies and they're sceptical of the claims of improved efficiency.
Last week senior Cardiff councillor Russell Goodway, cabinet member for finance, said the authority would struggle to cope with cuts. The issues around profit and public services are what's led to a growth in Wales in what's come to be known as the "third sector"- it's neither public nor private.
He said the council was finding it hard to absorb £20m in cuts this year, let alone another £50m in 2014-15. While charities are a part of this, it goes beyond them to describe other organisations that are run as businesses with any profits being reinvested into the business or in other social activities.
He also warned that two councils in Wales could go bust as a result of the cuts next year. Many of those third sector organisations are coming together in Cardiff today for the Social Enterprise Wales Conference and councils will almost certainly be looking at how much bigger a role they can play in future provision of services.
A spokesman for Cardiff council said the latest recruitment campaign was part of a restructuring exercise of senior management which was announced by the local authority last year. Some of the bigger examples of these are housing associations.
The growth in these over the last decade or so came from some authorities transferring the ownership of their housing stock to not-for-profit housing associations including Valleys to Coast which took over Bridgend's properties.
Neath Port Talbot council's leisure facilities meanwhile are run by the not-for-profit Celtic Leisure. It was set up in 2003, long before the financial crash and the cutbacks.
It's also happened on a smaller scale when local communities have come together to keep facilities going when they were threatened with closure, Harlech Swimming Pool and the Swansea Tennis Centre being two successful examples.
Of course, councils could save by working more closely together as the Welsh government has asked them to do.
Their track record though is far from convincing.
In 2012, Conwy and Denbighshire councils scrapped plans to merge highways departments.
The 22 councils are also supposed to be working together in 4 regional consortia to improve schools which the Education Minister, Huw Lewis, told Good Morning Wales earlier has "not been functioning very well".
If councils can't make savings by co-operation, attention may turn to whether there needs to be a reduction in their number as has happened with Local Health Boards.
Supporters of reorganisation say it will lead to savings as departments and senior roles are merged.
Those against argue that it would be a fraction of cuts that are required and would result in years of problems as councils are distracted from the task of delivering services within tightening budgets while dealing with dramatic changes to their organisations.
BBC Wales' arts correspondent Huw Thomas writes:
The amount of money that councils spend on the arts and culture is a relatively small proportion of the overall pot, but these services are often funded without any statutory obligation by the local authorities.
The situation means there's never any certainty that the funding will continue if the financial climate deteriorates, and the prospect of a significantly tougher 2014/15 local government settlement has already prompted councils to review the services that they fund.
Cardiff council has proposed completely cutting the annual grants it gives to some arts organisations in order to save more than £220,000 - which includes stopping a grant worth £161,001 for Sherman Cymru.
Flintshire council is reviewing the annual amount it gives to Clwyd Theatr Cymru, which received £1m from the local authority in 2012/13.
Other local authorities are also reviewing the non-statutory services they fund, but some councils are also seeking to protect the cultural services that they consider to be a key part of their strategies for attracting tourism and investment.
Swansea is currently bidding to be named UK City of Culture 2017, and its joint bid with Carmarthenshire and Neath Port Talbot could mean those authorities are reluctant to significantly reduce their spending on the arts as the judges examine what the area has to offer.
BBC Wales' economics correspondent Sarah Dickins writes:
Councils have known for months that they will have many millions less to run public services such as social care, school dinners, leisure centres and roads than they have had this year or, for that matter, the year before.
On Wednesday, each council is hearing exactly how much it will be given from the Welsh government - and that cash accounts for 80% of council income.
Across Wales local authorities know that when they hear the amount they will get, it will no longer be about tightening belts or pay freezes but about coping with deep cuts in funding.
They may have to axe some services that we take for granted or get a private company or a voluntary group to take it over.
One thing is certain, big changes are on the way.
From April, Welsh councils will receive £4.6bn from the Welsh government which is £175m less than last year.
They get roughly the same proportion, with allowances if they have for instance a higher proportion of older people or school pupils, more roads or if they represent sparsely populated areas.
On top of that 40% of council money is ring-fenced for schools and around 25% is protected for social services.
That leaves 35% for everything else - rubbish collections, parks and libraries, the long-term debts - and it is here that cuts will fall.