Welsh Government’s draft spending plans nearly 2% lower than Flintshire council had hoped for

Welsh Government have issued its provisional funding settlements for councils today, with Flintshire receiving a 3.8 per cent increase, nearly 2 per cent less than the local authority had hoped for.

Earlier this month, Flintshire Cabinet member for finance Glyn Banks, said: “Anything less than an uplift of 5.7 per cent would mean that we cannot meet our current minimum spending requirement and also address a fast-deteriorating schools deficits position across our secondary schools.

“Only an uplift in base council funding could enable us, in turn, to uplift the amount we invest in our local schools funding formula.

Overall Wales has seen an 3.8% uplift in funding, slightly lower the 4% figure the Welsh Local Government Association had also been hoping for.

The annual settlement grant allocates money on an individual council basis, with the total grant divided among councils on the basis of a complex formula that seeks to ‘take into account the relative needs and available resources of different councils’, and other factors such as population changes, with more details in this PDF.

Julie James MS, Minister for Housing and Local Government said today, “Adjusting for transfers, the core revenue funding for local government in 2021-22 will increase by 3.8% on a like-for-like basis compared to the current year. In 2021-22, local authorities will receive £4.65 billion from the Welsh Government in core revenue funding and non-domestic rates to spend on delivering key services.”

“In addition to this, I am publishing information on revenue and capital grants planned for 2021-22.  These amount to nearly £1 billion for revenue and over £720 million for capital.  The Government is providing these indicative grant values and distributions now so that local authorities are able to plan their budgets efficiently. This information will be further updated for the final settlement.”

“As set out in yesterday’s draft budget the Welsh Government’s funding priorities continue to be health and local government services.  While I know local government has been facing significant pressures, particularly arising from the COVID-19 pandemic, I hope that this increase, building as it does on a significantly improved settlement in 2020-21, enables Authorities to continue to support and deliver critical and valued local services.  In setting the overall Settlement at this level the Government has responded to the negative impact of the pandemic on Non Domestic Rate (NDR) collection.  The baseline Settlement increase of £176m reflects a larger increase in the Revenue Support Grant (RSG) to compensate for the fall in NDR.  It also accounts for the impact of freezing the NDR multiplier.  After adjusting for transfers into the Settlement, this equates to an increase of £172 million in Settlement funding, compared with 2020-21.”

The table published this morning by Welsh Government is below:

The Minister added, “The Minister for Finance and Trefnydd was clear in the draft budget that one of the hard choices we have faced in setting our spending plans for next year is our approach to public sector pay.  The reality is that we did not receive any additional funding through the Barnett formula to provide for public sector wide pay awards next year given the UK Government’s decision to pause public sector pay rises, with the exception of the NHS and those on the lowest wages.  The implications of pay awards in 2021-22 will therefore need to be accommodated within Authorities’ budget planning in the light of this Settlement.  Our decisions in the budget, target as much support as we can to health and local government to support pressure in frontline services focusing on schools and social services.”

“Whilst we did not receive any additional funding from the UK Government for public sector pay, in determining the distribution of funding across authorities for the Settlement, we have recognised the decisions made on the 2020/21 teachers’ pay deal and the commitment made by local government to fund this deal by directing funding into the schools part of the formula.  We are also continuing to provide funding for our proposals for new eligibility criteria for free school meals, given the continued rollout of Universal Credit by the UK Government.”

There had been calls for a ‘floor’ to the funding, however that has been ruled out, “I am not minded to provide for a funding floor for this year given the increased settlement for 2020-21 and the proposed allocations I am announcing today for 2021-22. I have accordingly allocated all the funding available up front.”

Welsh Government said the funding to councils to help with the efforts in dealing with the pandemic are aside from this bread and butter funding, “A wide range of services of course have been significantly impacted by the pandemic.  As the Finance Minister’s statement on the budget made clear, we recognise the need to continue to provide funding to support Local Government’s response to the pandemic.  This will be considered separately and does not form part of this Settlement.”

Hope at possible increases once the draft becomes final early next year is hinted at as the Minister wrapped up her comments, “This Settlement provides Local Authorities with a stable platform for planning their budgets for the forthcoming financial year.  I fully appreciate the pressures local government is facing and am committed to protecting local government, particularly at this difficult and challenging time.

“This is as good a Settlement as the Government can offer and one which should help to alleviate some of the pressures Authorities are anticipating.  While I can’t guarantee that there will be no changes between the provisional and final settlements, due to the financial uncertainty that we currently face, I do not intend making any significant changes to the methodology or the data underpinning the distribution of this Settlement.”

This announcement commences the formal seven-week consultation on the provisional local government settlement.  This will end on 9 February 2021.