05 November 2004
Welsh local authorities have been given a one-off minimum funding guarantee of 3.5% for 2005/06. But, despite the disruption of the council tax revaluation and funding formula changes, they have been warned that tax rises should not exceed 5%.
The councils immediately expressed concern over the budget allocations and warned that there would be no repeat of 'last year's record low levels of council tax'.
Monmouthshire, Blaenau Gwent and Ceredigion councils were the winners in this year's settlement with increases between 6.1% and 7.1%. Five out of Wales's 22 authorities, including Gwynedd and Conwy, will receive the minimum funding of 3.5%, to help buffer the effects of the formula changes. The average rise is 4.8%.
Finance, Local Government and Public Services Minister Sue Essex conceded that this year's settlement came amid a 'certain degree of turbulence'. The Welsh Assembly has introduced new indicators for social services and has begun to use the 2001 census data on population rather than the 1991 version, which will have some redistributive effects.
On top of the formula funding, councils will receive £11m in transitional relief to help smooth council tax re-banding, with up to a third of the principality's 1.3 million homes moving up at least one band.
'The majority of council taxpayers in Wales should see very little change in their council tax,' Essex pledged.
But the Welsh Local Government Association said the settlement was a 'tough one'. 'Some councils may be facing very hard choices between significant cuts in local services or unacceptable increases to council tax levels,' said Alex Aldridge, WLGA leader.
'The Assembly has chosen to make the health service a priority this year. But this means that there simply will not be enough for local government.'
The WLGA did welcome the Local Authority Business Growth Scheme, a Treasury-sponsored initiative that allows councils to keep a percentage of business rates. This should give Welsh authorities an extra £13m for 2005/06.
The Assembly will also begin work on introducing three-year finance settlements and has set a 1% efficiency target for the next five years. There have also been changes to specific grants, with cash earmarked for Private Finance Initiative projects transferred from the revenue support grant pot to a separate grant.