A 4.7% increase in council tax is being proposed for Merthyr Tydfil residents next year as part of the council’s budget proposals. A report to go before cabinet and then full council for approval on Wednesday, March 8, says that for a Band D property that would be £1,828.34 for 2023/2024 which is an increase of £82.07 or £1.58 per week.
The report said that as 84% of the properties within the county borough are valued at Bands A to C, a significant proportion of council tax payers will pay less than £1,828.34. If approved, the 4.7% council tax increase would generate extra income of £959,000 for the council.
It also mentions the council tax reduction scheme for 2023/24 which council has approved and provides support with council tax payments for those residents eligible to apply. The increases range from an extra £1.05 per week at the lowest Band A to £3.68 per week at the highest Band I.
There was an initial budget deficit of £5.462m which was reduced to £2.195m. This is after taking into account the £4.062m impact of the Welsh Government settlement, £4.547m for the pay award, £2.344m for energy costs, £4.288m for new demands, the Real Living Wage and inflation, £1.789m from employee cost reductions, £1.304m for capital financing costs, £475,000 of extra money through the Welsh Government homelessness prevention grant, £3.924m from budget savings and cuts and £5.5m from the use of reserves.
The background
The report said that the budget savings and cuts are made up of £1.6m of operational savings, £900,000 of strategic savings and a contribution from schools of £1.5 million. On reserves, the report said that the use of a proportion of non-general reserves is needed in 2023/24 to both protect services from even further budget reductions and protect residents from excessive council tax increases.
It said that under the current economic circumstances, a “one-off” budget contribution of £5.5 million is considered necessary for 2023/24 but unsustainable over the medium term so no use of reserves is proposed for 2024/25 onwards and there is no proposal to use general reserves. On energy, it said that total additional energy costs across the council’s estate are currently projected at an increase of 230% for gas and 137% for electricity.
Although energy markets are being closely monitored to decide whether the projected increases can be further reduced, 98% of electricity and 88% of gas has already been bought. On the real living wage, the report said that the new real living wage of £10.90 per hour needs to be implemented by May 14 this year at the latest and it applies to care workers within the independent sector since Merthyr Tydfil is currently paying all employees above the real living wage.
New demands result from service financial pressures such as demographic growth, legislative changes, new initiatives, loss of income and changes to grants terms and conditions. On employee cost reductions, it said the valuation of the Rhondda Cynon Taf Pension Fund in November 2022 has resulted in a reduction in Merthyr Tydfil’s employer contribution rate from the current year’s and budgeted future years’ rate of 25.3% to the actual rate for the next three years of 21.8% leading to savings of £1.298 million for 2023/24.
Other measures
The council has also saved £49,000 as a result of confirmed inter agency fees for adoption placements together with a review of trend data relating to direct payments and £13,000 from education as a result of a reduced contribution to the Central South Consortium and these add up to £62,000. The council has consulted on plans to charge a council tax premium on long term empty properties from April 2023 and second homes from April 2024 and the report said that the outcome of the consultation was significantly in favour of charging council tax premiums for these types of property and a 100% premium will charged for both.
For 2023/24 this would bring in additional income of £374,000 assuming a 30% reduction in chargeable properties within the scope of the council tax premium regulations. The projected income takes into account £40,000 towards a post to carry out the administration of the scheme including inspection, collection and recovery.
The report said that the council’s continuing transformation programme will generate additional in-year savings throughout the 2023/24 financial year and address the projected budget savings needed over the medium term. It will cover all services with the focus for 2023/24 on current ongoing reviews within the corporate part of the council, social services and neighbourhood services and savings of £798,000 are needed for next year.
On the fire and rescue services pensions, the report said central grant funding for 2023/24 has now stopped and instead extra money has been transferred into the revenue support grant to compensate. The net effect to councils is neutral since the Fire and Rescue Service will increase its levy and the amount totals £115,466, the report said.
The report added that the final settlement provides extra grant money of £2,000 because of some minor settlement formula changes. As a result of £62,000 of extra adjustments, £959,000 from the council tax increase, £374,000 from the proposed council tax premium, £798,000 from the transformation programme, £115,000 towards the increased fire service levy and £117,000 in the increased revenue support grant, the budget gap is closed.
The final settlement from Welsh Government on February 28 confirmed a funding increase of 7% for Merthyr Tydfil Council next year. The proposed budget requirement for 2023/24 for the council is £152.654m, up by 6.54% on last year.
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