WAO warns Welsh councils are ‘cracking’ under pressure

27 Jan 14
Councils in Wales are beginning to crack under spending pressures and many need to quickly improve their plans to make efficiency savings amid increasing cuts, the auditor general for Wales has warned

By Richard Johnstone | 28 January 2014

Councils in Wales are beginning to crack under spending pressures and many need to quickly improve their plans to make efficiency savings amid increasing cuts, the auditor general for Wales has warned.

Huw Vaughan Thomas

In a report examining how councils have dealt with the pressures of austerity, the Wales Audit Office warned there had been too much of a focus on meeting short-term saving targets.

The Meeting the financial challenges facing local government in Wales report found that council funding had been cut by 4% in real terms between 2010/11 and 2013/14.

Although spending has been protected compared to England – where funding for a similar range of services was reduced by 9.8% over the same period – the WAO concluded cuts are going to quicken in the next two years. Real-terms reductions of 5% are expected in 2014/15 and 3% in 2015/16.

Most councils are aware of the level of efficiency savings they need to make, the report stated, but are less clear about how they will manage with fewer resources.

Many do not have sufficiently realistic plans to help deliver savings, and councils have not routinely based their strategies on sound and appropriate financial information. In addition, authorities have not robustly assessed the potential impact of proposed savings on service reductions.

The report comes after last week’s report by the Commission on Public Service Governance and Delivery, which called for a series of mergers to reduce the number of councils in Wales from 22 to between 10 and 12 to boost public sector efficiency. 

Auditor General Huw Vaughan Thomas said Welsh local government faced ‘sharp reductions’ in funding.

This – coupled with pressures from a growing and ageing population that would increase demand for services – would create a real challenge for authorities, and ‘cracks are beginning to show’, he added.

‘All of this spells trouble for local authorities if they do not have robust, longer-term, strategies in place which are linked to medium-term financial plans. 

‘Too many councils are falling short and running out of time. I urge them to follow the recommendations, and practical advice and tools, contained in my report.’

Vaughan Thomas made six recommendations for improvement, including the development of clear strategies, based on longer-term financial plans, in which councils state what they want to achieve and how they intend to achieve it.

They should also explore opportunities to work across the public sector to reduce costs and deliver improved outcomes.

Arrangements for evaluating the impact of spending decisions on citizens must also be improved, the report stated. 

Responding to the report, a spokesman for the Welsh Local Government Association said local government in Wales had already managed significant cuts to its budget effectively.  

‘A poor economic climate and continued UK austerity measures mean that the financial challenges faced by local councils in Wales are huge,’ he added. 

‘It is certainly no surprise that some “cracks” are beginning to show, as local councils are having to “balance the books” while also attempting to protect the wide range of public services that they have traditionally offered to their local communities.

‘Better financial planning will only really be made possible when local councils are provided with greater financial flexibility and consistency by Welsh Government. Even now, local authorities in Wales are still waiting on the finalisation of millions of pounds in specific grant allocations from ministers – only two months from the start of the financial year.’

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