Friday, April 11, 2025
Councils face big bill from Labour's Barnett gaffe
That means that whereas public bodies in England will receive the full additional amount they need to pay in NI contributons, here in Wales we will just get 5.9% of the extra cost to the Treasury.
It has been estimated that this could create a £65m shortfall, money that will have to come from health, social services or education budgets. Now, according to Wales-on-line, a figure has been put on the cost to local councils.
The website says that the leader of the Welsh Local Government Association believes that Councils in Wales could be left up to £20m short due to the UK Government's decision:
The Welsh Government has already said it thought that Welsh public sector organisations face a £253m due to the changes. Mr Drakeford said the chancellor's decision was "wrong" and went against an advisory document prepared between the two governments.
This major change mid-year and after budgets had been set was frustrating, Andrew Morgan, the leader of Rhondda Cynon Taf council and the Welsh Local Government Association said.
He said it is now up to Welsh Government to decide how to distribute the money the UK Government does give to each public sector organisation. The NHS takes up about half of Welsh Government funding, and councils around a quarter. Cllr Morgan said councils expect only 85% of their National Insurance costs will be met - leaving them 15% short. However, if the Welsh Government fully funded Wales' health boards, the amount left would be less, which would likely mean councils would face an effective 45% shortfall.
He said the working assumption in now that councils could be £20-25m short. Cllr Morgan said that because the Welsh Government received extra money from the UK Government in the budget, councils were better off overall but the communication of the decision had been poor.
"On the one hand I do understand we have the Barnett formula in Wales but it's a well-known fact that we've had a significant amount of cuts to public services over the last decade, but because they have been quite so bad as in England, Wales we do have a slightly bigger public sector workforce and more services are in-house, whereas in England an awful lot have been outsourced.
"Where they've done the calculation formula based on England, that gives us money, but we've always known if they did it that way we would be short, and therefore we're really disappointed they have done it that way. We've encouraged them not to and would have hoped all the way along in the private discussions they were having in the background with the Welsh Fovernment, they would have understood the impact it would have had on Wales.
"It is going to be challenging, but the scale of it does depend. If we end up having 20-25% of that £65m we could have a £20m cost pressure. That would vary depending on the size of the authority. A council the size of RCT would end up with £1.5-£2m shortfall, that's the kind of figure we're looking at.
"Would I like to say it's manageable? No I wouldn't like to say it is," he said. Cllr Morgan said authorities can absorb that, potentially, via in-spend overspends. "But it doesn't come without pain because there are no easy wins now it's often that you're not filling a post. When you're not filling the post of a litter picker, or someone who fills in potholes, then it's the things people see and notice," he said.
"That's the kind of difficult choices, but it all depends very much what does the Welsh Government decides to do, whether they can find some funding from reserves, if that's possible, we're not sure. But the sooner we get clarity, the better, because otherwise local government will have to make in your savings".
This decision is a major gaffe by the UK government and will come back to haunt them in next year's Senedd elections.
It has been estimated that this could create a £65m shortfall, money that will have to come from health, social services or education budgets. Now, according to Wales-on-line, a figure has been put on the cost to local councils.
The website says that the leader of the Welsh Local Government Association believes that Councils in Wales could be left up to £20m short due to the UK Government's decision:
The Welsh Government has already said it thought that Welsh public sector organisations face a £253m due to the changes. Mr Drakeford said the chancellor's decision was "wrong" and went against an advisory document prepared between the two governments.
This major change mid-year and after budgets had been set was frustrating, Andrew Morgan, the leader of Rhondda Cynon Taf council and the Welsh Local Government Association said.
He said it is now up to Welsh Government to decide how to distribute the money the UK Government does give to each public sector organisation. The NHS takes up about half of Welsh Government funding, and councils around a quarter. Cllr Morgan said councils expect only 85% of their National Insurance costs will be met - leaving them 15% short. However, if the Welsh Government fully funded Wales' health boards, the amount left would be less, which would likely mean councils would face an effective 45% shortfall.
He said the working assumption in now that councils could be £20-25m short. Cllr Morgan said that because the Welsh Government received extra money from the UK Government in the budget, councils were better off overall but the communication of the decision had been poor.
"On the one hand I do understand we have the Barnett formula in Wales but it's a well-known fact that we've had a significant amount of cuts to public services over the last decade, but because they have been quite so bad as in England, Wales we do have a slightly bigger public sector workforce and more services are in-house, whereas in England an awful lot have been outsourced.
"Where they've done the calculation formula based on England, that gives us money, but we've always known if they did it that way we would be short, and therefore we're really disappointed they have done it that way. We've encouraged them not to and would have hoped all the way along in the private discussions they were having in the background with the Welsh Fovernment, they would have understood the impact it would have had on Wales.
"It is going to be challenging, but the scale of it does depend. If we end up having 20-25% of that £65m we could have a £20m cost pressure. That would vary depending on the size of the authority. A council the size of RCT would end up with £1.5-£2m shortfall, that's the kind of figure we're looking at.
"Would I like to say it's manageable? No I wouldn't like to say it is," he said. Cllr Morgan said authorities can absorb that, potentially, via in-spend overspends. "But it doesn't come without pain because there are no easy wins now it's often that you're not filling a post. When you're not filling the post of a litter picker, or someone who fills in potholes, then it's the things people see and notice," he said.
"That's the kind of difficult choices, but it all depends very much what does the Welsh Government decides to do, whether they can find some funding from reserves, if that's possible, we're not sure. But the sooner we get clarity, the better, because otherwise local government will have to make in your savings".
This decision is a major gaffe by the UK government and will come back to haunt them in next year's Senedd elections.
