Council tax in Cardiff will likely increase by 1.9 per cent as part of Cardiff council’s budget to “tackle the cost of living crisis".
The tax hike would take effect from April, if approved by a majority of councillors in a crucial vote on March 3 on next year’s proposed budget.
The budget also sees millions of extra funding for schools, social services and youth centres, and more than £400 million over the next five years on building new council housing.
Details of which services will see extra funding and where millions of investment will be made across the city were revealed as budget proposals go to the cabinet on February 24.
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Council leader Huw Thomas said: “After almost two years of combatting the virus, there now seems to be a clear way forward, a path to a more normal life. With that in mind we’re looking to the future, preparing our city for better times ahead.
“While we may have turned the corner on the pandemic, we’re now facing a cost of living crisis. Every day I meet people who are struggling to make ends meet, and rising food, fuel, clothing and energy bills are seeing people left to struggle, dependent on key public services and handouts.
“Our budget consultation with residents made clear they want us to safeguard services which look after the city’s most vulnerable young people and adults; and that the great work and huge improvements we have overseen in our schools carries on. People recognise that folk around them need help, and they want their council to be there to help them.
“This council has been at the forefront of getting Cardiff back up and running as we’ve come through the pandemic. We want to carry on with this work, creating and bringing much-needed jobs, improving educational attainment so our young people have better chances in life, building new council homes so people can have affordable rents.
“It’s about protecting those most in need. Our plans to reinvigorate the city as a greener and a fairer Cardiff are taking root, and we’re doing all of this while safeguarding our public services, which have played a vital role supporting our residents through everything Covid threw at us these past two years.”
Extra spending in next year’s budget would include £9.3 million for schools, £23.9 million for social services, £2.4 million on youth services and young people, and new funding for the council’s One Planet climate action plan. Two thirds of the council’s day-to-day spending goes on running schools and social services. Meanwhile long-term investment is also planned.
Over the next five years, planned investment includes: £419 million on social housing; £205 million on new school buildings; £50 million on existing schools; £38 million on roads; £77 million on transport infrastructure like the Western Transport Interchange and cycling lanes; £24 million on addressing flooding and coastal erosion; and £13 million on green energy schemes.
Economic development is a key area of investment, with £35 million going towards regeneration projects in the International Sports Village, Cardiff Market, and the Atlantic Wharf redevelopment.
An increase in council tax of 1.9 per cent would mean an extra 48p a week for a Band D household. This is less than inflation, currently about 5.5 per cent; less than last year’s increase of 3.5 per cent; and less than this year’s forecasted increase of four per cent. The increase would raise about £3.1 million extra income for the council to spend on services.
The budget proposals must first be approved by the council’s decision-making cabinet, on February 24. Then the budget will be debated during a full council meeting on March 3, when councillors are expected to vote to sign off the proposals. This is also when opposition parties tend to present alternative proposals, what they would do differently if in power.
About 73 per cent of the council’s budget comes from Welsh Government grants, with the rest coming from council tax. This year, councils received a much higher than normal or expected settlement from the Welsh Government, with Cardiff receiving an increase of 10.7 per cent from last year, meaning an extra £52.6 million in cash terms.
However, part of the reason the settlement was so high, is because the Welsh Government is also scrapping its hardship fund of emergency cash for councils to respond to the pandemic. From April councils will be expected to cover any extra costs or lost income due to Covid themselves, unless a particularly nasty new variant emerges prompting lockdowns.
Cardiff council has put aside a pot of £10 million this year for any Covid costs like spending on tests and personal protective equipment (PPE), or lost income from places like parking or tourist attractions seeing lower attendance due to social distancing restrictions. Over the past two years Covid has cost the council £120 million, mostly covered by the hardship fund.
Other reasons for the bumper settlement include the Welsh Government’s new policy of paying care workers the real living wage, currently £9.90 an hour; and Westminster’s decision to hike national insurance fees to cover the NHS backlog, which affects the council as a large employer. The settlement in 2023 is expected to be smaller, at 3.5 per cent.
Councillor Chris Weaver, cabinet member for finance, said: “Despite what seems like a significant uplift, we still have to remain prudent. Covid is likely to continue affecting our budget across the next financial year at least. Social care, PPE, testing and the potential impact of any new variant means we need to consider all the options to create a budget that safeguards services while giving Cardiff every chance to recover and grow.
“Of course this doesn’t mean we won’t have to make savings either. We will continue to streamline our processes and next year we will make £7.7 million in savings, which comes on top of the almost quarter of a billion pounds we have saved over the past 12 years. This demonstrates our continued sensitivity to the threat of the pandemic and our commitment to offering residents best value for money.
“We remain mindful of the risks posed to the council’s finances from further restrictions, and we’ll continue to manage the business on a prudent basis, setting a strong foundation to invest in frontline services to aid the quick recovery of the city and supporting the vulnerable.”
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