A Welsh council has warned it faces cuts to its services next year due a £33m funding gap. Newport City Council has warned of unprecedented financial challenges in 2023 as it faces soaring energy costs, higher demand for care services and more children in schools which have left it with a £33m black hole in its budget.
Speaking ahead of its Cabinet meeting in December which will consider how to allocate funding for vital council services for its 2023/2024 Budget, council leader Jane Mudd warned it was "unlikely that any service will be delivered as they are currently".
“There is absolutely no doubt that the coming year is going to be challenging," she said. "Our main aim in setting next year’s budget will be to ensure that the core of our most fundamental services are maintained for residents, but it is unlikely that any service will be delivered as they are currently. We will always aim to support those that need an extra helping hand, but all council services will most likely require some adjustment."
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More than three-quarters of the council’s budget is funded by a grant from the Welsh Government with money raised through council tax only accounting for less than one quarter of the council’s budget. Cllr Mudd said the council was facing huge pressures which included gas being 300% more expensive and electricity seeing 150% increases, which affected services like schools and streetlights. The council was criticised in January after it advertised for seven members of staff each with salaries of up to £85,000 a year. It faced further scrutiny in August after it created a presiding officer to chair full meetings of the council at a reported cost of more than £1,200 per meeting, or £400 an hour.
The council said it was facing more demand for care with costs rising from £43.5m in 2019/20 to a forecast £58m this year, around 1,000 more pupils attending Newport schools in the last three years and more emergency placements for children needed due to the pandemic. Other councils have recently declared funding issues including Cardiff Council which has warned it must find £53m in savings and income generation next year instead of the £29m it was anticipating.
Cllr Mudd said inflation rates of around 10% were increasing the cost of services and supplies bought by the council and that there were "very few choices left" after years of trying to save money.
“It will be a very difficult balancing act – the cost of providing services is going up in the same way that everyone’s cost of living has risen. And at the same time, more people are accessing those services, increasing demand. So we will inevitably have a considerable gap between what money we have available to us and what we need and want to spend.
“Local government as a whole is facing the same challenges. And this comes not long after many years of austerity when we faced real-term budget cuts. Newport Council has already implemented over £90m of savings since 2011 – so there are very few choices left to us.
"To give context, this year’s budget for is £343m, so to have to plug a gap of around £33m next year is a huge proportion. Added to that, two thirds of the council’s budget is spent on schools, education and social care."
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