More cuts to public services are on the way with your council tax increased year-on-year

Cabinet will consider a draft Budget Strategy proposed by officers following Welsh Government’s provisional Local Government settlement, and Members could agree for it to be the focus of the next phase of consultation.

The provisional Local Government settlement on December 11 indicated that Rhondda Cynon Taf will receive a 4.8% funding increase next year. A report to Cabinet on Wednesday, January 22, sets out a strategy that takes account of this funding position and also outlines the feedback received in phase one of Council’s Budget consultation, held in autumn, for Cabinet’s consideration.

In September 2024, the three-year Medium Term Financial Plan provided the context for work being progressed towards setting next year’s budget – set against the backdrop of significant financial pressures across Local Government. Officers modelled a range of settlement levels that resulted in a projected funding gap of £35.7 million for the 2025/26 financial year, rising to £92 million over the next three years.

In November 2024, officers provided an update on the Council’s early work to identify and deliver a number of budget reduction measures, totalling £10.28 million. This approach continues to position the Council well in responding the financial challenges, and has been a key component of our robust budget setting arrangements over recent years.

An update on the implications of the local government settlement was then provided to Cabinet on December 16. This included updated base budget requirements to reflect escalating cost pressures within Adult and Children’s Social Services, establishing a core budget for increasing resilience to weather events going forward, increased employee costs and the implications of changes to National Insurance Contributions, and replenishing reserves that were used to help residents following Storm Bert.

These factors, when set against the more favourable Local Government settlement, resulted in a remaining budget gap of £6.8 million. This is the position upon which the draft Budget strategy is based.

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Key elements of the draft Budget strategy

Funding schools has always been a priority, even when the Council has faced huge financial challenges. The Medium Term Financial Plan modelled an uplift based on schools’ pay and non-pay related inflationary requirements being funded – with schools themselves needing to absorb any other further pressures. However, the draft Budget strategy now proposes to cover all budget pressures, fully-funding our schools with an overall increase in funding for next year of £14m (7%).

The continuation of senior officers’ work in relation to efficiency savings, over and above those reported in November, has contributed to an extra £5.75 million of budget reduction measures being identified. This has been achieved through general efficiency measures, re-basing of the capital charges and interest budget, and service restructurings.

The strategy proposes that all Fees and Charges are subject to a standard 5% increase, recognising the large rise in the Council’s cost base which has affected the level of subsidy the Council is providing. There are a number of specific exceptions to the standard increase, highlighted in a separate agenda item to Wednesday’s meeting.

The Council always takes a responsible approach to setting council tax levels, balancing the need to protect key services and residents’ ability to pay. Every council in Wales will again need to raise council tax next year, and the draft strategy proposes a 4.5% rise. This is again likely to be one of the lowest increases in Wales.

On Wednesday, Cabinet will determine how they would wish to balance the remaining budget gap in light of the above strategy proposals. Following this, the Council will consult residents on the draft Budget strategy in a second phase of this year’s Budget consultation process. This would be held from Thursday, January 23, to Friday, February 7.

https://rctcbc.moderngov.co.uk/documents/g50005062/Public%20reports%20pack%2022nd-Jan-2025%2010.30%20Cabinet.pdf?T=10&LLL=0

Councillor Andrew Morgan OBE, Leader of Rhondda Cynon Taf Council, said: “The Council has again taken a responsible approach to setting its Budget for the next year, through an established method of financial modelling and identifying savings early in the process. For example, more than £10m of budget reduction measures have been factored in since November. Audit Wales’ recent review of our arrangements concluded that our strategic approach is appropriate to support financial sustainability and address budget challenges going forward.

“The draft Budget strategy that will be considered by Cabinet is based on a more positive position following Welsh Government’s provisional settlement, albeit we have continued to see our cost base and budget requirement continue to increase. While the medium term outlook remains challenging, the proposed 2025/26 Budget protects our key services as much as possible and contains many positive aspects – fully-funding our schools with an extra £14m allocated to them.

“The strategy also considers that an additional £5.75m in budget reduction measures has been identified, on top of what was reported in November. With much of this being via general efficiencies, it’s another incredible effort to deliver savings of this kind that will have minimal impact on the delivery of our key frontline services. It follows £13m of efficiencies in our current year budget, and £16m the year before – with such savings becoming increasingly difficult to find each year.

“The strategy for Fees and Charges would ensure they remain competitive in comparison to neighbouring authorities, while the proposal for Council Tax level would avoid an excessive increase and would again be one of the lowest rises in Wales – with every council needing to raise council tax levels next year.

“The provisional Local Government settlement in December took important steps to protect key services that we rely upon, albeit Welsh Government recognises that 14 years of constrained funding cannot be turned around in one year. Overall, this is a positive position to be reporting on following years of austerity and the continuing Cost of Living challenges – during which the Council has had to deal with its largest-ever budget gaps in the last two years. If agreed on Wednesday, the draft Budget strategy could be consulted upon in phase two of our consultation, with a timeline agreed to set a balanced budget for 2025/26 in March this year.”

Phase one of the budget consultation was held from October 31 to December 12, 2024, focusing on efficiency savings and investment priorities. A summary of the feedback received is presented in a Full Consultation Report, available as an Appendix to Wednesday’s Cabinet report. More than 700 people took part in the various engagement activities over the six-week period.

According to the most recent available data, the value of the Rhondda Cynon Taf council pension fund as of March 31, 2024, was £4,716,575,000 four billion seven hundred sixteen million five hundred seventy-five thousand is this correct?

https://www.rctcbc.gov.uk/EN/Council/Performancebudgetsandspending/RelatedDocuments/StatementofAccounts/202223/RhonddaCynonTafPensionFundAccounts202223.pdf

Key points about the pension fund:

  • The fund’s investments are diversified across various asset classes, including equities, pooled funds, and property investments
  • The Rhondda Cynon Taf Pension Fund is part of the national Local Government Pension Scheme (LGPS) and is an open, defined-benefit pension fund
  • The fund’s recent triennial valuation (2022) showed it had moved from a deficit to a surplus, with a funding level of 105.1%, up from 98.4% in 2019

The pension fund is managed by the Rhondda Cynon Taf Pension Fund Committee, chaired by Councillor Mark Norris, who oversees the fund’s governance and long-term strategy

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