Merthyr Council prepares to set budget and council tax

MERTHYR Tydfil Council is facing a surplus of more than £500,000 as it prepares to set its budget and council tax.

A report set to go before a combined governance and audit and joint scrutiny committee meeting on Wednesday, 26 February shows a projected budget surplus for 2022/2023 of £503,000.

But a cumulative budget deficit of £7.62 million is forecast up to the financial year 2024/25.

No decision has yet been made on the council tax increase for 2022/23 but it is currently being budgeted at 3.55% which was the approved increase for the 2021/22 financial year.

The provisional budget requirement for 2022/23 in Merthyr is £143.89m based on the modelled 3.55% increase.

Every 1% increase or decrease to the budgeted council tax increase of 3.55% has a near £250,000 net impact on the revised budget surplus, the report said.

In the provisional Welsh Local Government Settlement announced in December, a funding increase of 9% (£9.1m) for Merthyr Tydfil for the 2022/23 financial year increases the authority’s spending power by £5.36m compared to a 4% increase and based on the council tax base.

The settlement includes money to cover pay awards, to meet the additional costs of introducing the real living wage for care workers, and to cover the increased cost arising from the UK Government’s announcement to increase national insurance contributions for employers.

The social care specific grant, which is outside of the revenue settlement, has
reduced from £50 million to £45 million reflecting the transfer into the
settlement of £5 million with Merthyr Tydfil’s share being £107,250.

The £503,000 budget surplus has been calculated after taking into account the £5.26m projected deficit with a 4% increase in funding, the £5.36m impact from the revenue settlement, £4.87m worth of additional demands, £4m of budgeted additional demands, £2.06m from the hardship fund, £1.43m from the efficiency proposals, the £1.43m pay award projected cost and £782,000 cost of the real living wage.

The £4.87m of additional budget demands include £1.19 million (over and above the £871,000 already included in the Medium Term Financial Plan) relating to the additional cost for homelessness provision in providing temporary accommodation for people presenting themselves as homeless.

The total cost for 2022/23 of £2.06 million has been included in 2021/22 and claimed from the Covid-19 Hardship Fund as per Welsh Government guidance but no Welsh Government financial support is available thereafter.

They also include:

• £675,000 for financing the Recovery, Transformation, and Improvement (RTI) Plan
• £873,000 for phase two of the council’s capacity exercise
• £360,000 in relation to the Additional Learning Needs Education Tribunal Act
• £21,000 in relation to Wales Probation Service
• £36,000 on the night closure of cemetery gates at Cefn Coed and Pant cemeteries
• £97,000 in relation to the senior management structure
• £155,000 on the school budget
• £250,000 relating to an extra six placements for pupils residing in Merthyr Tydfil attending out-of-county schools with accompanying transport and the loss of income from four placements residing outside Merthyr Tydfil no longer attending Greenfield School.
• £10,000 towards Welsh education
• £105,000 towards grounds maintenance relating to agency grass cutting staff and £28,000 towards a new groundsman post
• £88,000 on home to school transport relating to revisions to school contract costs resulting from increases in pupil numbers
• £78,000 on household waste recycling centres relating to the increase in operatives at both Aberfan and Dowlais
• £66,000 on children looked after residential placement services relating to additional costs per placement
• £39,000 on initial response services in relation to the creation of an additional supervisor post and £50,000 in relation to additional grant match funding commitments.
• £9,000 on Glynmill for additional repairs and maintenance costs
• £11,000 on land drainage relating to increasing costs as increasing adverse weather becomes the norm
• £75,000 on corporate property and estates relating to the  projected loss of
  revenue income resulting from the reduction in capital receipts from sale
  of assets
• £23,000 on transport relating to additional transport costs for Ysgol Y Graig school resulting from additional pupils requiring transport
• £53,000 on street cleansing relating to three agency staff and a vehicle for the summer.
• £477,000 in national insurance contributions relating to the Chancellor’s Autumn Budget 2021 announcement of a 1.25% increase.
• £131,000 on energy inflation
• £57,000 from the council tax reduction scheme related to revised projections based on current figures and future projections
• £15,000 from a review of the Medium Term Financial Plan relating to consolidation adjustments, revision of assumptions, correction of salary grades and inclusion of job evaluation outcomes

In the £1.43m of proposed efficiency cuts, no service budget cuts are proposed and no contribution to efficiencies is being requested from schools, the report said.

These efficiencies include £650,000 in commercial income relating to the purchase of St Tydfil’s Shopping Centre, £350,000 from the corporate vacancy factor which relates to the salary savings resulting from
the natural delay between a post becoming vacant and subsequently
being filled, £165,000 from employee severance costs and £107,000 from insurance contributions because of a projected decrease in insurance claims and projected increase in insurance premiums.

They include £10,000 on street lighting being brought in-house, £20,000 on building control through projected income following the approval of an additional building control officer, and £20,000 from agile working and releasing office space.

They also include £15,000 from advertising on highway roundabouts, £5,000 from fees for temporary traffic light applications, £2,000 of potential from a mobile unit or kiosk providing snacks and drinks to customers at Thomastown Park, and £50,000 from the Roads and Street Works Act as an inspector will be able to issue fines for non-compliance or defects.

Finally, they also include, £11,000 from CCTV provision relating to broadband and electrical costs savings resulting from the modernisation of the council’s CCTV and £30,000 from changing the council’s credit and debit card provider.