Dire Warning for Future Council Finances

Ceredigion Councillors have been given a dire warning about the prospects for local government finances in the next few years when the repayment of debts caused by the government bailout of banks will hit the public sector harder than anything in living memory.

A report by Council Officers on a presentation at the recent Welsh Local Government Association Conference quoted the economist Will Hutton when he said,
“There is a problem hanging over British politics so big and so ugly that no party wants to acknowledge it, far less discuss it: how far do we cut spending and how high do we raise taxes?”

The Institute of Fiscal Studies has estimated that public services will lose an estimated £45 billion from 2011-14. Individual Councils could lose £60 million. Councillors were told, “We’re not living in the real world if we claim that all these problems can be solved by greater efficiency. 80% of Local Authority funding is in education and social care. Just cutting the other 20% will not provide the answers”.

Torfaen Council’s Chief Executive has said, “There simply will not be enough money for local authorities to keep doing what they have been doing up until now”. It's thought that 2000 jobs could be lost in the public sector in Wales. The particular problem for Ceredigion is that the formulas for allocating finances are population-centric.

The presentation was watched keenly by councillors of all persuasions. Although Ceredigion Council is currently run by a coalition of Independents and Lib Dems, the serious financial shortfall will have to be managed by whoever is running Ceredigion from 2011. The next Council elections are due in 2012. Plaid Cymru, who are the largest group on the Council and have only two councillors less than the ruling coalition, are strongly fancied to take over then after building up their councillor base for many years.

In looking for ways to tackle the crisis, Rhodri Morgan, Leader of the National Assembly, has (quite rightly in my view) ruled out local government re-organisation, saying that this would be a distraction. Instead, the emphasis is on Councils finding efficiencies of scale by working together.