Posted: Sat 2nd Mar 2024

Merthyr Tydfil councillors warned council could “grind to a halt” without balanced budget /

A stark warning has been issued to councillors in Merthyr Tydfil on what happens if they don’t set a balanced budget with the potential for the council to “grind to a halt.”
An 8% council tax rise for Merthyr Tydfil residents is still being recommended despite councillors not supporting it previously and officers have warned of the implications of not approving a balanced budget which they said would have a “significant impact” on most residents, in particular vulnerable adults, and children.
At a special council meeting on Wednesday, February 28, the vote on the budget including the 8% rise was split 14-14 with two abstentions including from the mayor who did not use his casting vote so the proposals were not passed.
Now a report to another planned special council meeting on Wednesday, March 6, is again recommending councillors pass a budget with an 8% increase in council tax with warnings about what could happen if they don’t set a balanced budget by the deadline of March 11.
The report said that, in the absence of further savings proposals at this time, there was no opportunity to reconsider the council tax position and the proposal remained to increase council tax by 8%.
It said that it was proposed that an extra £500,000 of earmarked reserves was used. meaning that the total balance to be used from the budget reserve would be £2m and the remaining balance on the budget reserve would be £2.3m
It is the opinion of the director of finance that the proposed use of earmarked reserves is at maximum level without risking the financial sustainability of the council.
The report said that: “With no agreement on the budget, of which council tax forms a major part, no budgetary allocations exist and there can be no provision for services, staff or contractual commitments of the council.
“The council’s ability to perform its statutory responsibilities, will be in jeopardy and will in effect ‘grind to a halt’. This will have a significant impact on most residents, in particular vulnerable adults, and children.
“At its basic level, bills and staff wages will not be able to be paid, new contracts cannot be entered into and there will be breach of existing contracts.
“No local authority would be sustainable without council tax receipts, and not agreeing council tax would not allow us to set a balanced budget. In these circumstances, the Section 151 Officer has a legal responsibility to issue a Section 114 notice as the council’s ability to meet our obligations would be compromised.
“Members’ fiduciary duty includes a duty to council taxpayers to avoid unlawful action that would result in the loss of significant revenue to the council or a failure to deliver services with consequential litigation and adverse financial implications to the council.
“Failure to set a lawful budget by the statutory deadline could lead to personal liability for individual members for misfeasance in public office, negligence or breach of statutory duty.”
The 8% hike would mean a band D council tax bill would be £1,974.61 for 2024/25 which is an extra £146.27 or £2.81 per week.
But 84% of the properties within the county borough are valued at bands A to C so a significant proportion of council taxpayers will be liable to payments less than £1,974.61 adding that the council tax reduction scheme provides support with council tax payments for those residents eligible to apply.
The increases range from £1.88 per week at the lowest band A to £6.56 per week at the highest band I.
The council received a 3.4% (£4m) increase in the provisional Welsh Government settlement and an extra £500,000 in the final settlement and the council was then left with a budget gap of £12.52m which the report said was the highest deficit in recent years and highlighted the challenge faced by the council in addressing unprecedented additional, unavoidable external financial pressures.
At the special council meeting on February 28, 2024, a raft of savings and cuts were considered and approved by council along with an additional item to be added to the revenue budget for £71,000 of in-year savings to be found, with a proposal for this to be brought in April after councillors voted down a proposal to reduce Cyfarthfa Park security.
At a proposed council tax increase of 8%, the budget requirement for 2024/25 would be £160.89m. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

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