Y Pwyllgor Llywodraeth Leol a Thai

Local Government and Housing Committee

18/01/2024

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Adam Price Yn dirprwyo ar ran Luke Fletcher
Substitute for Luke Fletcher
Carolyn Thomas
Jayne Bryant
Joel James
John Griffiths Cadeirydd y Pwyllgor
Committee Chair
Sam Rowlands

Y rhai eraill a oedd yn bresennol

Others in Attendance

Andrea Street Dirprwy Gyfarwyddwr Safonau a Rheoleiddio Diogelwch Tai, Llywodraeth Cymru
Deputy Director, Housing Safety Regulations and Standards, Welsh Government
Charlie McCoubrey Cyngor Bwrdeistref Sirol Conwy
Conwy County Borough Council
Dyfrig Siencyn Arweinydd, Cyngor Gwynedd
Leader, Gwynedd Council
Emma Smith Pennaeth Polisi Cyllid Llywodraeth Leol, Llywodraeth Cymru
Head of Local Government Finance Policy, Welsh Government
Emma Williams Cyfarwyddwr Tai ac Adfywio, Llywodraeth Cymru
Director of Housing and Regeneration, Welsh Government
Jamie Powell Dirprwy Gyfarwyddwr Cyllid, Llywodraeth Cymru
Deputy Director of Finance, Welsh Government
Jane Gebbie Dirprwy Arweinydd, Cyngor Bwrdeistref Sirol Pen-y-bont ar Ogwr
Deputy Leader, Bridgend County Borough Council
Judith Cole Dirprwy Gyfarwyddwr Polisi Cyllid a Chynaliadwyedd
Deputy Director Local Government Finance Policy and Sustainability, Welsh Government
Julie James Y Gweinidog Newid Hinsawdd
Minister for Climate Change
Lis Burnett Arweinydd, Cyngor Bro Morgannwg
Leader, Vale of Glamorgan Council
Rebecca Evans Y Gweinidog Cyllid a Llywodraeth Leol
Minister for Finance and Local Government
Sarah Rhodes Dirprwy Gyfarwyddwr, Polisïau Tai, Llywodraeth Cymru
Deputy Director, Housing Policy, Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Angharad Era Dirprwy Glerc
Deputy Clerk
Catherine Hunt Clerc
Clerk
Jennie Bibbings Ymchwilydd
Researcher
Osian Bowyer Ymchwilydd
Researcher
Rachael Davies Ail Glerc
Second Clerk
Stephen Davies Cynghorydd Cyfreithiol
Legal Adviser

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:02.

The committee met in the Senedd and by video-conference.

The meeting began at 09:02.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Welcome, everyone, to this meeting of the Local Government and Housing Committee. We've received apologies from Luke Fletcher, and Adam Price MS is attending committee as a substitute. Thank you for that, Adam. The meeting is being held in a hybrid format. Aside from the adaptations relating to conducting proceedings in that way, all other Standing Order requirements remain in place. The public items of this meeting are being broadcast live on Senedd.tv and a Record of Proceedings will be published as usual. The meeting is bilingual and simultaneous translation is available. Are there any declarations of interest? No.

2. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru ar gyfer 2024-25 - sesiwn dystiolaeth 1: Cymdeithas Llywodraeth Leol Cymru
2. Scrutiny of the Welsh Government Draft Budget 2024-25 - evidence session 1: Welsh Local Government Association

Okay. We'll move on to item 2, then, which is our scrutiny session of the Welsh Government's draft budget for the forthcoming financial year, with the Welsh Local Government Association. And I'm very pleased to welcome, joining us here in person, Councillor Lis Burnett, leader of the Vale of Glamorgan Council, and Councillor Jane Gebbie, deputy leader of Bridgend County Borough Council. And joining us virtually, Councillor Charlie McCoubrey, Conwy County Borough Council, and Councillor Dyfrig Siencyn, leader of Gwynedd Council. So, thank you all very much for joining us here this morning.

Perhaps I might begin, then, with a few general questions and, really, to ask for an overview, an overview of the current financial situation facing local authorities in Wales. Some say that Welsh local authorities are in crisis. I think we've heard the leader of the WLGA describe the outlook for local government finances as 'bleak', and he's referred to difficult decisions having to be taken. So, we'd just be interested this morning in your brief overview, really, of the current situation. Who would like to begin?

Do you want me to start off?

Thank you, Chair. I think the general consensus, but I'll leave Charlie and Dyfrig to speak for themselves, has been that this is a situation like no other that we've faced. We can't walk away from the fact we've been dealing with austerity since 2010. So, service reshaping, efficiencies, if you want to call them that, have been happening since then. Our officers do tot-ups of the actual reduction in funding or cuts year on year, and I think we're running at over £70 million now, but that's not real terms—that's just the actual amount. This is a huge focus for me particularly today, because this afternoon I leave here now and I go to our cabinet meeting where I'm presenting our budget. We started off with £38 million cost pressures, and the only way that we've got down to a gap for today of £8 million is by taking things out of the budget. We cannot fund all of our education cost pressures.

So, while we can fund additional autism units for the desperate need that we're seeing, they won't cater for as many children as we would like them to. And we can look at those services, we can look at the things that we're having to do, whether that be reshaping services and in terms of increasing council tax. But I think that, just for us, I will be talking for probably about an hour and half today, and it will be one of the most depressing situations that I've faced in 16 years as a councillor. But I'll hand over to the others. 

09:05

Thank you very much, Chair, and thank you very much for having me here this morning. I've worked in local government and health for all of my adult life, and, even since I've been elected as a member, I have never seen the financial pressures in local government that I see now. And while I appreciate Welsh Government, the consequentials that you receive from Westminster—you know, we can have that debate—however, the pressures are so extreme now that we are—. We're managing to meet our statutory function, but that's by cutting cloth elsewhere, and when I consider that, since 2010, every public service in Wales has increased in their workforce, apart from local government, which has reduced by 40 per cent—. 

So, local government is a bedrock of our communities, and we go out there and we deliver your policies. And I agree with your policies—so, I'm not suggesting that I don't—but we can't fund them. The pressures that we see in education, in social services—. Our overspend in Bridgend this year just for social services alone is £12 million, and that is because of the increase in demand, and pressures on children and young people, an ageing population, an increase in care provision by 20 per cent for our more vulnerable population that are older. I've got problems with children's placements. I agree with the not-for-profit agenda, I really do—I worked in children's services; that was my bag—and what I would say is that a placement now for a child is in excess of £0.5 million a year. So, if I've got more children coming into care—. And my child protection figures are reducing, so that's a good position to be in, but the complexity and the need and the demand is increasing day on day, and it's the same with our elderly population. 

So, I suppose, for me, what I need to consider is: do I go out and deliver best practice, gold standard services? We do need to have a conversation with the public about the demand on our services. We cannot sustain them. With a 3 per cent increase in our aggregate settlement for Bridgend, that does not cover the cost of living, it doesn't cover any of the real living wage for social care workers, it doesn't cover the cost of all our staff, and the only place that we have to make reductions now—because we have no back-office functions to rationalise any more; everything is slower—is going to be reducing our workforce even more. And I am exceptionally worried about that scenario. 

Okay. Thank you very much, Jane. Would either Dyfrig or Charlie, joining us online, want to add anything to what we've heard?

09:10

Yes, thank you, Chair. I would concur completely with what my colleagues have said. I think, from a Conwy perspective, we are fairly uniquely exposed. We received, along with Dyfrig, the lowest settlement in Wales, of 2 per cent. We have an over-65 population that’s a third higher than the Welsh average. We all know there’s a crisis in social care, in funding that. But the numbers are stark. We received an additional £4 million, but pay pressures alone are £14 million, so we have to find another £10 million just to pay our teachers and our council staff. Inflation is about £12 million of pressure. Service pressure is an additional £5 million. We receive 15 per cent less per capita than our neighbours in Denbighshire and 10 per cent less than our neighbours in Gwynedd, year on year. That’s about £20 million.

When I joined the council in 2017 we had the lowest reserves in Wales. We’ve had above average council tax rises every year since then, which is incredibly difficult. It's very unpopular. Members don’t want to vote for it. But we’re still in a situation where we have still the lowest reserves in Wales, so our ability to cushion the blow is very, very minimal. Ultimately, I’m not at a stage yet where I’m convinced that I can get enough members actually to put their hand up to support the budget; we shall see. Again, really high rates of council tax—we had the highest in Wales last year. There was a severe backlash. My members were verbally abused by members of the public, and they took that really to heart, as you can imagine. So, asking them to do that again and make absolutely savage cuts to services that residents really value—it’s a very, very tough sell, and I’m not in a position where I can guarantee that I will be able to get a majority to do that. We’re a coalition—independent, Labour, Plaid. There’s no whipping with independent members. So, it’s going to be a very, very tough sell, essentially. Thanks, Chair.

Thank you very much, Charlie. Thank you for that, giving us a flavour of the situation in Conwy. Dyfrig, did you want to add anything to what we've heard?

Ie. Dwi ddim eisiau ailadrodd beth mae fy nghyfeillion wedi'i ddweud. Rydyn ni i gyd yn yr un sefyllfa. Dwi innau wedi bod yn gweinyddu mewn rhyw ffordd neu'i gilydd toriadau dros y blynyddoedd, hyd at, yn ein hachos ni, £60 miliwn dros y degawd diwethaf. Hon ydy'r flwyddyn anoddaf rydyn ni erioed wedi'i gweld. Ac un peth buaswn i'n licio dweud, fe gawson ni, y gymdeithas llywodraeth leol, gynhadledd i drafod ac i rannu profiadau ar y sefyllfa ariannol, ac fe glywon ni gan un o'r comisiynwyr o Birmingham, ac un sylw gwnaeth o a wnaeth fy nharo i—a dyma'r hyn dwi wedi mynd ag o o'r gynhadledd honno—ydy, os nad ydy'ch cyllidebau chi'n ateb yr angen, yna mae'n rhaid ichi ystyried beth yw'ch pwrpas chi. A dwi yn meddwl bod gennym ni sefyllfa yn y blynyddoedd i ddod—. Hwyrach y byddwn ni'n gallu dygymod am y tro, eleni neu flwyddyn nesaf, ond, am y blynyddoedd i ddod, dwi'n meddwl bod gennym ni sefyllfa lle byddwn ni'n gorfod ystyried pa wasanaethau rydyn ni'n eu darparu ai peidio. Bydd llywodraeth leol mewn lle gwahanol iawn, iawn. Ac rydyn ni'n mynd i ddechrau trafod hynny yn fuan iawn ar ôl inni osod ein cyllideb eleni.

Jest i ailadrodd, rydyn ni â bwlch ariannol o £15 miliwn. Rydyn ni'n cyfarch hynny trwy dorri £5 miliwn; rydyn ni'n defnyddio £2 miliwn o'r reserfau sydd gennym ni i oedi toriadau tan y flwyddyn nesaf, ond rydyn ni'n mynd i orfod darganfod y rheini flwyddyn nesaf; ac rydyn ni'n mynd i godi'r dreth o 9.7 y cant, os aeth o drwy'r aelodau, fel mae Charlie wedi'i ddweud. Felly, mae hwn yn greisis, a dwi yn credu, os nad oes yna unrhyw newid mewn ariannu gwasanaethau cyhoeddus, yna mi fydd yna lai o wasanaethau cyhoeddus, yn sicr, i'r dyfodol. Diolch.

Yes. I don't want to repeat anything that my colleagues have already said. We're all in the same situation. I have been administering in one way or the other cuts over the years, up to, in our case, £60 million over the past decade. This is the toughest year that we've ever seen. And one thing that I would like to say is that we had, as the Welsh Local Government Association, a conference to discuss and to share experiences on the financial situation, and we heard from one of the commissioners in Birmingham, and one comment that he made that struck me—and this is what I took away from that conference—is that, if your budgets don't meet the need, then you do have to consider what your purpose is. And I think that we have a situation in the years to come—. Perhaps we'll be able to cope for the time being, this year or next, but, for the coming years, I think we have a situation where we will have to consider what services we provide or not. Local government will be in a very different position. And we are going to have to start discussing that very soon after setting our budget this year.

So, just to repeat, we have a funding gap of £15 million. We are addressing that through cutting £5 million; we are using £2 million of the reserves that we hold to pause cuts til next year, but we are going to have to find a way to pay for those cuts next year; we are going to raise council tax by 9.7 per cent, if it goes through the members, as Charlie has mentioned. So, this is a crisis, and I do think that, if there is no change in the funding for public services, then there will be fewer public services being offered, certainly, in future. Thank you. 

Thank you very much. In terms of that WLGA conference and the commissioner from Birmingham, I did want to come on, really, and just ask you all whether you think that any local authorities in Wales might be at risk of bankruptcy, as it's termed, via a section 114 notice, and whether there's any scenario planning under way for such situations, as far as you are aware? Would any—? Yes, Lis. 

09:15

I think that a lot of local authorities are actually mindful of that situation. At the moment, while people are discussing how they can avoid it, we're very fortunate that we work—. I think you've seen today that we are all political persuasions and, as local authority leaders, we work very closely together. We sit on the same committees, we meet frequently. I think we'll all be in the room on Friday. So, we do support each other, we do share information and the Welsh Local Government Association are also very supportive. The seminar you mentioned was actually organised the day after the autumn statement by WLGA to help local authority leaders to understand the context of that. And having Max Caller there, while interesting, was also a real reality check in terms of—. I think we all took different bits away from that, but one thing that I took away from it was when he said, 'You might be talking statutory versus non-statutory services.' And people say, you know, libraries are statutory—he said, 'A library can be a book in a room.' So, we have to—. I can see Dyfrig there; it obviously resonated with you as well. I can talk about what we did with our libraries back in 2015 in that situation, but those sorts of things you really have to talk about. But we are in frequent contact with each other. We try to be supportive. And also, I think, Welsh Government is particularly helpful in this way. We all work closely together, and we have access to Ministers, we have access, we can raise issues, we can talk to them, they will attend meetings et cetera. So, it's not as if there's a huge disconnect, as there might appear to be in other areas of the country. 

Okay, Lis. Thank you very much. Would any other witnesses like to add anything to what Lis has said on these matters? 

Yes, please, Chair. 

My portfolio in Bridgend is social services and health. One of the biggest outcomes from Welsh Government is that we need to be innovative and we need improvements, the innovations, but it's the early intervention and prevention. I think my warning—and it sounds very stark, but—is that's not a statutory provision. So, early intervention and prevention is the best way that we can manage challenges in health and social care, but, if we haven't got the funding, that's one of the first things that would go, and that would cost us more in the long run. But if we're in a position of a section 114 notice, which is a frightening position to be in, then we have to prioritise safeguarding over anything else. So, we would only intervene when things got to the point where we couldn't safeguard someone unless we intervened. So, the early intervention and prevention agenda I completely agree with. It's the best and the right thing to do for our residents, but we won't be able to compete with statutory, and it's always, 'What is statutory versus non-statutory?' That's the argument here from members across all chambers, but early intervention and prevention is pre-statutory and we need to consider that fact. 

And you asked specifically about councils in Wales. I am aware of the rumblings already about the possibility of certain councils issuing section 114 notices. And I think that's a frightening position for us to be in here in Wales. We haven't been in that position in Wales previously. When we look across the borders and we see the situation of other authorities, I don't want to be in that position. And you look at the outcomes from that—they're significant and they're detrimental to the residents that we support. Thank you, Chair. 

Thank you very much, Jane. Okay. Again, would either Charlie or Dyfrig like to add anything to those comments? 

Thank you, Chair. As I referenced before, I inherited a council with the lowest reserves in Wales. In our general reserves, we have just a little bit over £4 million. To put that in context, storm Babet cost this authority £1.3 million. We've recently had a—[Inaudible.]—children that are looked after, who've come to our attention; that'll be £1 million a year. So, the margins are very thin. There's a very, very difficult path that we'll avoid a section 114 this year, if I can get the majority of members to put their hands up for a really, really unpalatable budget. But any use of those reserves will leave us completely and utterly exposed and I don't see a pathway next year. I feel very much like the captain of the Titanic when they were docked at port and setting off, realising that they were heading towards an iceberg, and it's very difficult at this stage to see how we change that.

The distinction between statutory and non-statutory is incredibly difficult. I think in the Chartered Institute of Public Finance and Accountancy report, there are over 2,000 statutory duties, but they're very ill defined. People are being asked to pay more in council tax for fewer and fewer services, and not surprisingly they're very, very unhappy about it. So, that pressure on local members just grows and grows and grows. We focus 80 per cent of our service budget on schools and social care, but the sort of core services that people value, such as bin collections—we're on four-weekly cycles, and we're looking to cut nappy collections to put that to four weeks. And it's just stuff that is deeply, deeply unpalatable: fewer grants coming; less pothole fixing; fewer public toilets—we're absolutely slashing those; huge increases in car park charging, which will impact on our tourism, which is our major industry.

So, I don't mind making difficult choices, but we're actually being asked to make bad choices, choices that will have an impact in the long term. Councillor Gebbie talked about the preventative stuff. I'm a dentist by profession and prevention is everything. We, essentially, support the NHS, we keep people healthy, we look after their mental health, we're keeping fit in our parks and our leisure centres. For our social care, we deliver just shy of 0.5 million hours of domiciliary care a year and that's all going to be cut down, which will just put more pressure on the NHS, so ultimately it'll cost the public purse more. So, that is incredibly frustrating. Difficult choices are one thing, but bad choices—it is really, really difficult. Thank you.

09:20

Just on what you were saying then, and Jane as well, we've had debates recently on money going into the NHS—whether all the money should go into the NHS or whether it should go on health and also preventative services. You're saying that the difference of actually investing in preventative services is really important, rather than it all just going into the NHS and health. Also, regarding 114 notices, basically you're borrowing from Peter to pay Paul this year and we're looking at the fact that the settlement next year might not be any better. At the moment, that could mean that, next year, unless there's a significant change, if you're borrowing from Peter to pay Paul, using your reserves, it is likely that councils in Wales could be going bankrupt and facing 114 notices, even though it sounds awful. It really, really is last resort. So, just to really get that feeling from you. You can speak honestly here. I'm hearing things on the ground. I feel your pain, so I just want you to be open about it.

I'll take you back to local authority leaders, treasurers, finance cabinet members all sitting in a room the day after the autumn statement, when there was no extra money for public services and there was no extra money for health, and the atmosphere was horrendous. People walked out of that room at the end of the day, even though there'd been collective support, and we all knew the scale of the task in front of us. And, you know, we can't get away from the fact that, yet again, even though it's only 1 per cent, Welsh Government passed on more money to the public sector than they received. Jane talked about social care. We had an overspend of £8 million this year in social services, for which we had to use reserves. If we had not used that to provide care packages, then there would've been increased health costs. Yet, we have to, legally, deliver a balanced budget.

Only this morning, I saw press comments that, having delivered a housing revenue plan, I've been classified as immoral, for a 6.7 per cent increase to want to build council houses for people, and this will continue. But these are the struggles. I know Charlie's situation is absolutely horrendous, and I hope that we all provide as much support as we can, but the situation that a few of our local authority leaders are in is completely untenable, and if you think, there are 22 people that are going to take the brunt of this right across Wales shortly, and we literally are on our own. 

09:25

Okay, Lis. I think we'd better move on at this stage, because time is limited and we've got quite a lot of other matters to discuss, but, obviously, they're all relevant to the general financial situation. Sam. Sam Rowlands.

Thank you, Chair, and thank you for taking the time to be with us this morning. It's really appreciated. Just looking back to 2022, when you would have received a multi-year settlement from Welsh Government, I'm just interested to know how helpful that was or wasn't—clearly, circumstances have changed significantly between 2022 and where we are today—and just whether that allowed you to plan any better or differently to usual because of having that multi-year settlement, or was it, in hindsight, a bit of a waste of time?

Who'd like to answer on this? Obviously, we've got Dyfrig and Charlie online as well as—. Jane, is it, or—? No.

I'm quite happy—

Dyfrig had his hand up.

And Dyfrig has his hand up as well.

Diolch. Dŷn ni wedi bod yn galw am setliad sawl blwyddyn ers tro, ac yn falch iawn o'i gael o, ac, wrth gwrs, mae o'n ein helpu ni i gynllunio ymlaen. Mae hynna'n llwyr resymegol. Yn anffodus, yn yr hinsawdd bresennol, mae'n ein helpu ni i i ddarogan y twll tywyll du dŷn ni wedi ei wynebu, ac fel oeddwn i'n ei ddweud gynnau, hyd yn oed os ydyn ni'n gallu dygymod eleni, mae'r dyfodol yn llawer iawn mwy tywyll. Fel dwi'n ei ddweud, mae o'n golygu bydd yna newid sylweddol yn y ddarpariaeth rydyn ni'r cynghorau yn gallu ei rhoi.

Gyda llaw, ar adran 114, fy agwedd i, a dwi'n siŵr agwedd pob un arweinydd arall, ydy: mae o'n ddyletswydd arnom ni fel aelodau etholedig i wneud y penderfyniadau yma, ac, yn wir, ni sydd yn gwybod orau beth sydd orau i'n hetholwyr ni, yn hytrach na rhyw gomisiynydd o rywle arall fydd ddim ond yn edrych ar y peth mewn gwaed oer, os liciwch chi. Ond wrth gwrs ei fod o'n help ond dydy o ddim yn help os ydy'r sefyllfa yn gwaethygu. Diolch.

Thank you. We've been calling for a multi-year settlement for a long time, and we're very pleased to have that, and, of course, it helps us with forward planning. That is perfectly reasonable. But, unfortunately, in the current climate, it helps us to predict the big black hole that we're facing, and as I was saying earlier, even if we can cope with the situation this year, the future is a lot bleaker. As I said, it does mean that there will be significant change in the provision that we as councils can provide.

In terms of section 114, my attitude, and I'm sure that of every single other leader, is that it's our duty as elected members to make these decisions, and, indeed, we are the ones who know best what's best for our electors, rather than some commissioner from somewhere else who would look at it in cold blood, as it were. It is a help, but it doesn't help if the situation gets worse. Thank you.

I wasn't sure whether Councillor Jane wanted to add anything to that, but—

Only very briefly, and that is: of course, multi-year settlements assist, because I think they give us better planning, but the challenges that we face are so significant—no-one ever foresaw the challenges that we face now. I think the one thing I would say is in relation to projects and pilots that we start, but then we haven't got the funding to carry them on, because we can't afford to out of our revenue budget, but they're making a significant difference. So, then, how do we plan for that? That was just my contribution. Thank you, Sam.

Thank you. And then you've touched on it already, but I'm not sure whether there's anything further you wanted to add in relation to the types of things that you're having to consider to try and bridge the budgetary gap, especially when you're trying to fund education and social care, whether it be cuts or schemes that you can no longer continue to undertake, or just the ideas that you're having to consider to be able to bridge that budgetary gap. Perhaps you might give us a flavour of what that is at the moment.

Okay. Again, who would like to begin with a response on that?

I'm conscious that we've talked a lot from this end first. I don't know—

So, there are lots of things we can reduce the frequency of that will be unpopular, such as grass cutting, the collection of public bins. They bring actually a very small amount of savings. But reduction of library hours, just all these small things. Our schools are really significant. We will have to put £8 million pounds into schools to meet wages, pensions, unfunded pay rises, but their pressures are really extreme. We’re modelling somewhere between 5, 6, 7, 8 per cent reduction in what schools have requested; it equates to about £3.9 million. That is incredibly difficult.

I was at a school governors’ meeting last night in my local high school where they’re short of £600,000. The headteacher resigned, essentially. She said she’d just had enough. She’s a remarkable teacher. She’s turned that school around, with the highest free-school-meal rating in Conwy, but her comment was, ‘I just can’t see how we can run this school safely.’ So, you can imagine being there as a leader and a parent; that’s incredibly difficult to hear. She was in tears, very emotional, saying, ‘I don’t want to leave, but I just don’t see how we can carry on like this.’ Very, very difficult situation to be in. We're roundly condemned for all the cuts that we make. [Inaudible.]—people are being asked to pay more and getting less in return. We try and explain the good stuff we do, but people don’t see that; they’re just seeing a cost-of-living crisis, their bills going up year after year, and we carry the can for that. And I always—you know, I have the finance portfolio, I always take full responsibility for the budget, but that’s really, really difficult. So, thanks, Chair.

09:30

Unwaith eto, y gwir amdani, mae popeth yn llai, onid ydy? Dŷn ni wedi torri cyllidebau ysgolion dros y ddwy flynedd ddiwethaf—am y tro cyntaf, a dweud y gwir. Dŷn ni yn y gorffennol wedi gwneud pob ymgais i amddiffyn y gwasanaethau yna sydd yn rhoi gofal i bobl—gofal plant, gofal oedolion—ac addysg, ond allwn ni ddim osgoi bellach gwneud toriadau yn y meysydd craidd pwysig yna. Ac yn y gorffennol, hefyd, wrth inni wneud hynny, wrth inni amddiffyn rhai o’r prif wasanaethau yma, sy’n cyfrif, wrth gwrs, am y rhan fwyaf o’n cyllideb ni, mae’r toriadau ‘hawdd’ yn y swyddfeydd cefn wedi digwydd—ym meysydd cynllunio, trwyddedu—ac rydyn ni wedi gweld effaith hynny, a dweud y gwir. A dyna yw’r peryg, wrth gwrs, fod y pethau yna sy’n faterion cudd, bron, megis cynllunio, megis trwyddedu, yn cael mwy o doriad na dim byd arall, ond—a dwi ddim eisiau ailadrodd fy hyn—does yna ddim byd sydd yn mynd i osgoi rhyw fath o doriad neu’i gilydd. Diolch.

Again, the truth is, everything is less, isn't it? We have had to cut school budgets over the past two years—for the first time, really. In the past, we’ve made every effort to protect those services that give care to people—children and adult care—education, adult care, but we can’t now avoid cuts in those important areas. And in the past, as well, as we have done so, as we protected those services, which account, of course, for most of our budget, these 'easy' cuts, back-office cuts, have happened—in licensing and planning—and we have seen the impact of that. And that’s the risk, of course, that these things that are hidden issues, almost, such as planning, such as licensing, have more cuts than anything else, but—and I don’t want to repeat myself—there’s nothing that is going to avoid any kind of cut. Thank you.

Diolch yn fawr, Dyfrig. Okay, Sam, shall we—? We’ve got limited time, we’d better move on to Carolyn. Carolyn.

I just want to ask you about—. I’m a North Wales regional Member—so is Sam—and there’s pressure on about the funding formula, and also I’d like to ask about the funding floor as well. I know that’s helped Gwynedd and Conwy a little, but I just want to know your views on it and also the funding formula. Unfortunately, it brings infighting in a way, doesn’t it? You know, fighting over the crumbs, but is it that the pie itself isn’t big enough? If we look at the funding formula, are there other elements there that would help you? So, if the weightings change, is there anything practical you can give me regarding it, so I can ask those questions to the Minister later? Do we need to look at elements such as older people rather than younger people? Anything you would like to raise on that.

Interestingly, this is a conversation that’s happened quite a bit recently, and whether or not there were different pressures in north Wales to south Wales, in rural areas to urban areas, and I think that virtually every area that you look at has its own pressures. In some it’s greater issues of sparsity, and I know that Dyfrig and I are both rural spokespeople for WLGA, and looking at some of the issues on that, but similarly looking at some of the urban areas. And funding formulae are never perfect, and I could take up the rest of it talking about the vagaries of the funding formula, but I think the one thing that we all agree on is that we need to use the floor more regularly, because there are situations where, for some disparate reason, a local authority is adrift of everybody else in terms of funding, and so that needs to be part of the process to make sure that they are not at a level below which they can sustainably deliver services.

09:35

Thanks very much, Lis. Does anybody want to add anything to that? I can see Dyfrig. 

Mae hwn yn rhyw sgwarnog, braidd, sydd yn codi ei ben bob tro rydyn ni mewn trafferthion ariannol. Y gwir amdani yw bod angen cynyddu'r pot, nid ystyried sut rydyn ni'n ei ddosbarthu. Ni oedd â'r setliad isaf eleni. Heb y llawr, mi fyddem ni ar 1.7 y cant o gynnydd, rwy’n credu, a’r rheswm am hynna, yn glir, oedd bod ein poblogaeth ni wedi gostwng, ac mi oeddem ni'n ymwybodol y byddem ni'n gorfod dioddef toriad o ran y fformiwla.

Mae’r is-grŵp cyllid yn ystyried y fformiwla bob blwyddyn ac mae yna addasiadau’n cael eu gwneud. Mae'n drafodaeth rydyn ni'n ei chael yn gyson o fewn Cymdeithas Lywodraeth Leol Cymru: a ddylem ni fod yn edrych ar y fformiwla yn llwyr? Mae yna ddadl dros wneud hynny, ond, wrth gwrs, beth dydyn ni ddim yn gwybod yw beth fydd canlyniadau adolygiad o'r fath yna. Mi fydd rhai pobl yn ennill a rhai pobl yn colli, am amryw o resymau, ac mae yna risg. Dyna yw'r cafeat yn fan hyn, onid e? Os ydych chi'n mynd i adolygu'r fformiwla, dydy pawb ddim yn mynd i fod yn hapus.

Ond mae yna adolygiad yn digwydd yn flynyddol, ac os oes yna achos i edrych ar bethau, mae yna le i arweinwyr godi'r mater drwy'r is-grŵp cyllid. Y penderfyniad rydyn ni wedi'i wneud yn ddiweddar fel aelodau o'r gymdeithas lywodraeth leol ydy ein bod ni ddim yn gwneud adolygiad llawn o’r fformiwla, ond ein bod ni yn cadw llygad mwy manwl ar yr adolygiadau blynyddol sydd yn digwydd gyda fo. Diolch.

This is a bit of a red herring that is raised often when we are in financial difficulties. The truth is that we need to increase the pot, not consider how we distribute that pot. We had the lowest settlement this year. Without the funding floor, we would be at a 1.7 per cent increase, I believe, and the reason for that, clearly, was that our population had decreased, and we were aware that we would have to suffer a cut in terms of the formula.

The finance sub-group considers the formula every year and adaptations are made. It's a discussion that we have relatively frequently within the WLGA: should we be looking at the formula in its entirety? There is an argument for doing that, but, of course, what we don't know is what the results of such a review would be. Indeed, some people would benefit and some people would lose out for various reasons, and there is a risk. That's the caveat there, isn't it? If you are going to review the formula, everyone will not be content with the results.

But there are annual reviews, and if there is a case to look at things again, there is scope for leaders to raise the issues through the finance sub-group. The decision that we've made recently as members of the WLGA is that we won't undertake a full review of the formula, but that we keep a closer eye on these annual reviews that take place as a matter of course. Thank you.

Thanks, Chair. It's a favourite topic of mine, this one. I completely concur that the pie isn't big enough. There's never a perfect formula, but you have to look at the answer it produces. I live on the border with Denbighshire now, but I lived in Denbighshire for 10 years. I worked in the West End of Rhyl, the worst ward in the whole of Wales, for 25 years, at an NHS dental practice, and I can see nothing—in WIMD data, in our geography, topography—. We share a public services board, so I understand their pressures really well. No-one has been able to explain to me why it costs 15 per cent more per head in Denbighshire to deliver services than it does in Conwy. I ask all the time. We're a rural county, we have a coastal strip with 80 per cent of the population, we have a valley there. There are some areas of deprivation—slightly more in Denbighshire than in Conwy—but there are also a lot of more wealthy areas in Denbighshire than in Conwy. It balances out incredibly quickly. I think this formula—. Well, 30 per cent of it is out of date—all of that which refers to over-65s, some of that goes back to 1991; a lot of it is based on the 2001 census. We've seen really big increases in our elderly population year on year. So, for one thing, I would like it to be up to date. Whether it's fair or not, if that was up to date, at least that reflects the situation on the ground.

The floor will help us a little bit, but I would look at the Scottish model, where the floor is actually much more generous in terms of spreading that around. The Scottish funding formula has about 200 lines in it, which are mostly needs based; the Welsh one has 70. I think it's a very crude way of distributing money. The funding band between 60 and 85 is at £11; for 85, it jumps to £1,900, but 47 per cent of people we provide services for here are under 85. Again, no-one can explain to me that the needs of an 84-year-old are the same as a 60-year-old—it just makes no sense. So, there's a frustration about the actual formula itself—whether it was fit for purpose back in the day, compared with the situation that we're facing now. There's frustration about the data that goes into that funding formula and, fundamentally, I would just like somebody to explain to me why it costs 15 per cent more to deliver services over the border in Denbighshire than it does in Conwy.

We've lost about 400 residents in the last census, but over the last two years, that's cost us £3.5 million in the formula. So, our ability to save that with 400 fewer people is impossible. So, yes, I am frustrated with the formula. I would like it brought up to date, and then I think we need to look at the Scottish model and I think there needs to be more equity in how local authorities are dealt with. But I do absolutely recognise it's the size of the pie more than anything. 

09:40

I'll just ask about workforce pressures, if that's okay. I'll roll them all into one, if that's okay. You mentioned earlier that you've lost maybe 40 per cent of the workforce over the last 10 years, with restructuring, reorganisation. We've heard that we could be facing a lot of redundancies as well. Is that something that you would agree with? And the implications for trying to deliver services with the workforce.  

Thank you very much for the question. I do agree with the statement. I think what I would say is that the majority of every council's budget is their workforce. It's not buildings, it's not vehicles; it is our workforce. There's a disparity as well, because we can't retain and recruit staff across the board, everywhere, because they get such a significant increase in pay elsewhere, even our social care staff. We've got social care staff leaving in droves because they want to go and work in a supermarket because they get paid more and they don't really have to work as many unsociable hours as previously. 

I think one of the other things that I would say is that the SCAPE budget from fire and rescue has now gone into local authorities, so we have to pay that. That's the fire and rescue pensions arrangements. And if our pay pressures aren't funded by the Welsh Government, our council tax does not cover our workforce pressures at all. It'll cover the cost of running the civic elements and doing all the bits of bins and road surfacing if you actually equate it, but the majority of our spend is on workforce in social care and education, and we are looking to reduce everywhere.

I think one of the biggest factors for me is the significant impact it's going to have on additional learning needs and fewer available staff to support those learners in education. That's going to be really significant. In Bridgend, we're looking at a 5 per cent reduction in education. We've got no option. Bridgend has never, in all the years of austerity—. Last year was the first time that we ever reduced their budget, but we're looking at 5 per cent this year because we can't sustain it. So, that will have an impact on workforce, not anything else. 

I think the only thing that it's worth being mindful of—and I think we're probably fairly ballpark—is that 75 per cent of our budget goes on social care and education. So if, as you should, we protect social care and education, we protect our most vulnerable, any efficiencies that you want to make come out of the rest, come out of 25 per cent of your budget. And that is waste, recycling, roads—well, anything except—

Yes, and even stuff like supported bus services. And I know, again, in rural areas councils spend an awful lot of money supporting their bus services. All the others take a huge hit. So, 50 per cent of our budget—almost 50 per cent—is delegated straight to schools, and so we're supporting schools to grapple with those costs. But most of their costs are staff related. We're trying to minimise that. We're trying to look at service reviews, we're trying to look at using people in different ways and minimising our redundancies. But there is no doubt that, as service reviews go through, there will be job losses. 

Jane, you mentioned the fire service levy, and both Sam and I have been asking if it could be shown separately on the bill. Would that be helpful for you in getting the council tax through?

Oh, yes, most definitely, just like our police precept is.

We've discussed education a fair bit, and it's absolutely right that we should do so. That brings us on nicely to Jayne Bryant's questions. 

Diolch, Cadeirydd, and good morning, everybody. As John has said, we've touched on education and it's been incredibly stark to hear what you've had to say on that already, but I just wanted to touch on a couple more points around that. Firstly, councils are reporting that 25 per cent of in-year school budgetary pressures are related to pay. Perhaps you could explain a bit more around that and what accounted for the remaining 75 per cent.

09:45

We still haven't had confirmation that pensions arrangements for teachers are going to be part of our budget; so, we don't know if the Welsh Government are going to fund that. If they don't, there is going to be another £3.5 million, I want to say off the top of my head, in Bridgend, that I and other members of the council will need to look to reduce services by. That is significant; it is enormous pressure. We need some clarity around it urgently; all our treasurers do. Because at the minute, we're running on the basis that we're not getting it, we're not being funded for it; that's an additional cost pressure for us as a local authority. I think that's the biggest one I would pull out straight away.

Say, for example, we've got a 3.1 per cent increase but our pay increases are above that—as, you know, rightly they should be—it means that, in effect, that is a real-terms cut in terms of budget. I would also add, in terms of education and schools, the complexity of need that is being experienced in our schools since the COVID pandemic. We're seeing increases in needs right across the spectrum—whether that be social care, but also education. And that's why I said we have cost pressures of additional facilities and resources that we can only part fund.

Thank you. Again, you've mentioned and warned us about the budgetary impact on education, and, in your paper, about education standards. The paper talks about

'the devastating effect of cuts on educational standards—in particular the pastoral/wrap around work that schools undertake.'

Perhaps you can say a bit more about the long-term risks in the reduction of school budgets and teacher numbers.

I'm chair of governors at a school and one of the things that I can see is the numbers of children that are now coming into—. I don't want to say onto social services' books, but we know that without early intervention and prevention, there's going to be significant pressures later on down the line. But I can't afford the staff now to support them.

The number of schools that are projecting deficit budgets—. The Association of Directors of Education in Wales are already forecasting that the number of schools with irretrievable budget deficits is going to increase. We work with our schools closely, we have a finance team that go out and support them, but there are a number of schools in our local authority where we can't see where they will recover their deficit.

I don't think you can underestimate the damage COVID has done to our young people. I think the effects will be long lasting; you can see that in attendance figures. The work that schools have to do to get those young people back engaged is expensive and it's difficult to do, but we are seeing an increase in need at all levels, so we really should be putting more money into schools, not less. But teacher numbers are absolutely critical, aren't they? Again, I talked about having to make bad decisions; these are some of the bad decisions that I'll have to get our members to support in order to get the budget through.

Yes, it's very worrying. Perhaps you can outline the risks associated with schools taking out loans and falling into deficit. What level of liability do local authorities take if schools can't service those loans?

It's a huge concern. We have 60 schools in Conwy; some are in a much worse financial situation than others at the moment. If we give money to schools, it's given across the board; we can't sort of target it, you can't get it moved around very carefully. We've brought in a system to make accessing loans easier, but it still doesn't actually solve the finance of it; there's still a loan to be repaid. And if you've got falling, low numbers, as we do in Conwy—we lose about 600 young people a year, and we get about 600 older people move in; it's a very popular retirement area—we lose those pupil numbers. So, if you go from a class of 28 or 25, there's no saving there, but for every older person who needs a domiciliary care package it could be £40,000. So, again, I won't bang on about the funding formula, but we have increasing pressures for our elderly population, which impacts on our ability to look after our younger generation. Our capital programme costs of building new schools, school rationalisation, that all costs money. We don't have money to do that. And like Dyfrig, in rural areas, we've seen substantial drops in numbers in rural schools, but actually doing something about is incredibly difficult, and you have to spend money to consolidate that. You have a massive increase in costs in home to school transport. So, these are all really difficult things that we have to face.

I'm really proud of our schools. We've got the best Estyn profile than we've ever had; it's one of the best in Wales. And to get to that position, and then see it sort of slipping away, because you can't fund it, is painful. Thank you.

09:50

Just around what Jane mentioned around children's care services, really, and those children who are in care really are at the sharp end, and some of that is expensive. It's a smaller number of people, so people don't realise and aren't affected by it, perhaps, but it is so important. And in your paper as well you talk about the unprecedented levels of emergency placements for residential placements, and the pressures on that. I just wonder if you can say a little bit more about your concerns, particularly around children who are in care at the moment, whether that's in placements, or the children that you as a corporate parent are looking after.

In terms of a corporate parent, I would always prefer our children to be in foster care. They have better outcomes living in a family unit. It's more sustainable as well. We are seeing increased numbers of children coming in and needing placements. At a minimum, that's normally £0.5 million a year for each child. If we can keep them at early intervention and prevention—. And that's all the stuff that we will cut, because we can't do it; I will need to focus on that sharp end. The impact for those young people, their life chances, the opportunities that are going to come forward for them are so significantly limited, that's detrimental to Wales. And if we don't look after those young people, where does that leave us?

And what would you like us to do? You've already heard—and I'm sure all of committee are aware—about the number of councils that are operating without registration in children's placements at the minute. That costs us more money because we have to risk-assess it and ensure that there's appropriate staffing, and that we're looking after them properly, because, above all, we need to safeguard those young people. The amount of children in schools that need that early intervention and prevention, we've been putting more and more funding into that, because it's an outcome of COVID. We've seen attendance figures dropping. We've seen more increased complexity of need from these young people. And when you consider some of these children have never had any sort of social interaction pre COVID, they were coming into school in nappies, which is not normal; they wouldn't come into school; they would not be able to sit down at a table and eat with a knife and fork—it's that limited. And that sounds very extreme, but the behaviours, because they've got no social skills—it sounds very basic—they don't share. How many times do you tell your children at home to share? Well, they haven't got all those skills. The interactions are so limited. I am so desperately worried, it's keeping me awake at night now, because we will have to stop those services. And without a significant increase in funding to local authorities—. 

And I think the other thing around this I would say to committee is, as local authority leaders, we have an expectation that we settle balanced budgets. We have no option. That's a legal obligation for us as a council. And I was infuriated—. I'm also chair of a regional partnership board, so I was infuriated before Christmas, when the local authority were telling me that we needed to cut, this, this, this and this, and it was all going to impact on beds and services to children, and all their funding overspend was cleared by Welsh Government, because they don't have to set a balanced budget.

So, there's something around the equity, and we keep talking about a national care service for Wales. I'm a great believer in that; I think that would be the right thing to do. But one of the biggest concerns that I have is the disparity of pay between health and social care because it is so significantly different. The 'Agenda for Change' in health really helped our health board in Wales stay at a level that is really good, but in local government we're dropping below that level. It's an £8,000 difference for a social worker in a health board than it is in local government. I'm not sure why any social worker would want to stay with local government when they can earn such significantly different money in the health board, and we're all seeing the cost-of-living increases in our pay packets, while paying our bills, and what we can spend in the local economy, and you can see that all around. Thank you very much.

09:55

Yes, I agree with all that. We're very proud of the family centres we set up through all areas of Conwy, but they're not statutory. We know they work incredibly well, that really early intervention. In terms of keeping me awake at night, as I mentioned, we have—[Inaudible.]—which is going to cost us an additional £1.5 million. To put that in context, if we shut all our leisure centres in Conwy tomorrow, that would be about £1.8 million, so these are just phenomenal sums, and I'm incredibly proud of the work our officers do. My wife is a child protection social worker, and I know how committed they all are, and we absolutely want to keep these people safe—everybody safe, sorry. But, yes, the figures are just eye-watering, and we're just expected to resolve that and find the money somewhere else, but it is proportionately incredibly difficult. 

We clearly support the removal of profit, but we are seeing an element of profiteering at the moment where they're making hay while the sun shines and just charging ridiculous prices. I've seen my wife on a Friday night desperately ringing around all of England, Wales, Scotland, trying to find placements for children, and just getting—. They know she has no choice but to find a place for that child. So, I think, when we remove the element of that in the long term, that will be great. We're working really hard to increase our in-house provision, but these take time and take more resources.

Okay. Thank you, Charlie. Thank you, Jayne. Joel—Joel James.

Thank you, Chair, and thanks ever so much for coming in this morning. Actually, I wanted to talk about social care, which is what we've just been discussing about now. Specifically, I wanted to talk about the social care workforce grant. Obviously, there's a reduction in funding there of £11 million, I think, and I just wanted to get some idea of the impact that's going to have on the sector, if that's okay, and, sorry, the potential consequences moving forward. Thank you.

So, we agree with the real living wage for every social care worker. I don't think we understand, unless you actually need that care, I don't think we understand the vulnerability of those people that we're delivering care to, but we have to pay the real living wage for commissioned provision as well, and with 3 per cent, as an example for Bridgend, that does not cover my social care workforce. I have an ageing population; 20 per cent—in Bridgend—is the increased need in the last year alone for my ageing population, for packages of care. I will need to limit what I am doing in those packages of care. I will need to ensure that my officers limit their time there. I'm sure all members of this committee are aware of the 15-minute campaign many years ago by trade unions. A lot of these people sit at home every day on their own. They can't go to the toilet without assistance; they can't get dressed without assistance; they can't make a cup of tea without assistance; they can't take their medication without assistance. And there's been a long-running battle—I say this politely—between local government and health boards. When we were flush with money as local government—

When was that? [Laughter.]

Twenty years ago, I'm talking—see, social worker. We never worried about the continuing healthcare provision, in who was paying for what. If somebody needed that additional little bit of help taking their medication, local authority would pick it up. We have significant debates with the health board now about who's picking up what of each package of care. I don't want to limit that care. The isolation for that older population increases the more we leave them on their own. There's also something to be said around the complexity of need. We all know that we've got an ageing population, which means that they will need care for longer. There's also complexity around cognitive impairment, so dementia, Alzheimer's; we know that we've got an increase in that health condition in our population. So, the impacts are going to be significant, but I need to ensure that I protect those most in need, rather than somebody that needs a prompt. And as a local authority and health board, we're being really innovative around the way we manage some of those challenges: rather than sending somebody out to give somebody a prompt to take their medication, we'll make a telephone call. But we can't observe them taking that, then, but it is the right thing to do. I would prefer that member of staff to be in someone's home getting somebody out of bed, if that's what they need, or feeding them, if it's just a prompt—. But these are the decisions that we're having to make now. And I think the thing that I would say is, the longer that we can keep people in homes, independent, looking after themselves, with our support, the better it is for our health boards—always.

There is something wrong with the six models of care. Medical competency doesn't necessarily mean you can discharge on that day, because they haven't been through a social work assessment. So, you hear about delays in hospital; sometimes that's not always about timeliness or about the staff that are there that aren't doing—. Actually, that's about—if you're going to do an appropriate assessment for a person in care, you need to give them the appropriate time to do that effectively. So, a med-fit person—there are lots of different phrases that you'll hear around that—that doesn't mean that they've had an assessment for a package of care at that point. And you wouldn't be able to do it until they are medically fit for discharge. Thank you very much.

10:00

Mae hwn yn enghraifft, i ddweud y gwir, y toriadau grant, o wendid y system grantiau sydd yn dod o Lywodraeth Cymru. Pan dŷn ni'n cael setliad, dŷn ni'n gwybod ein bod ni'n cael 3.1 y cant. Ond yn rhywle yn gudd yn y system, dŷn ni'n gweld toriad o 20 y cant yn y social care workforce grant. Felly, mae angen edrych ar y system grantiau yma, ac maen nhw'n flynyddol, a dŷn ni ddim yn gwybod os ydyn nhw'n parhau o flwyddyn i flwyddyn. Felly, dwi yn credu bod hwnna yn enwedig, yn sicr yn y drefn ariannu—dŷn ni'n orddibynnol ar grantiau gan y Llywodraeth am faterion arbennig, felly.

Mae'n ddiddorol clywed profiad Charlie am weithwyr rheng flaen. Pan mae yna doriad yn y cyllid—yn naturiol mae'r rhan fwyaf o'n cyllid ni yn mynd ar gyflogau, a dŷn ni'n clywed yn gyson gan ein gweithwyr cymdeithasol ni am y pwysau cynyddol sydd arnyn nhw. Maen nhw'n cael eu gwasgu o ddau gyfeiriad. Maen nhw'n cael eu gwasgu yn y galw sydd am eu gwasanaethau nhw—galw sydd yn angenrheidiol, a dweud y gwir, y stwff sylfaenol yma rydyn ni angen ei roi i'n pobl fregus ni. Ond ar y llaw arall, dyn ni'n cael toriad mewn cyllideb, a dŷn ni methu—ac mae hynny'n arwain yn syth at dorri nifer y gweithwyr cymdeithasol, ac felly yn cynyddu'r pwysau ar y staff sydd dan bwysau beth bynnag.

Felly, mae o'n gylch creulon iawn ac yn rhoi pwysau sylweddol ar ein gwasanaethau cymdeithasol ni, dwi'n credu. Ac fel sydd wedi cael ei gyfeirio ato'n barod, mae'r gwahaniaethau yma rhwng cyflogau iechyd a ninnau. Gyda llaw, hefo mater gofal iechyd, mae bwrdd iechyd Betsi Cadwaladr wedi comisiynu gwaith i weld sut fedran nhw roi mwy o bwysau ar gynghorau—symud oddi wrth iechyd i gynghorau, sydd yn bryderus iawn, felly, a dŷn ni ddim mewn sefyllfa i wneud hynny. Felly, dwi'n meddwl bod yna le i edrych, a dweud y gwir, a ydy'r gwasanaethau iechyd yn cyflawni eu dyletswyddau, fel y dylen nhw, o safbwynt gofal. Diolch.

This is an example, the grant cuts, of the weakness of the grant system that comes from Welsh Government. When we have a settlement, we know that we get 3.1 per cent. But somewhere hidden in the system, we see a cut of 20 per cent in the social care workforce grant. So, we need to look at this grant system, and they are annual, and we don't know if they're continuing from one year to the next. So, I do think that that's a particular weakness, certainly in the funding regime—we are overly dependent on grants from the Government on specific issues.

It's interesting to hear the experience of Charlie about front-line workers. When there are cuts in funding—naturally, most of our funding goes on wages, and we regularly hear from our social workers about the increasing pressures on them. They face pressures from two different directions. They face pressures in terms of the demand for their services—the demand that is vital, really, that fundamental stuff that we need to provide to our vulnerable people. But on the other hand, we have budgetary cuts, and we can't—and that then leads immediately to cutting the number of social workers, and therefore increasing those pressures on staff that are already under pressure.

So, it's a cruel cycle and it puts pressure on our social services, I think. And as has already been referred to, there are differences between wages in health and us. And by the way, in terms of healthcare, Betsi Cadwaladr has commissioned work to look at how they can put more pressure on councils by shifting care from health to councils, which is very concerning, and we're not in a situation to do so. So, I do think there is scope to look at whether the health service is achieving its duties, as it should, in terms of care. Thank you.

10:05

Diolch yn fawr, Dyfrig. Okay. Thank you very much. We'll move on to Adam Price, then. Adam Price, please. 

Hoffwn i droi at gwestiynau yn ymwneud â chostau cyfalaf a benthyg, gan ddechrau gyda chwestiwn yn gofyn a oes yna oblygiadau posibl o ran gorfod gohirio rhaglenni cyfalaf, oherwydd y pwysau ariannol, a fyddai, yn y pen draw, hefyd yn codi costau, oherwydd mae gohirio yn golygu efallai costau llog ychwanegol neu chwyddiant ychwanegol ar gyfer y projectau o dan sylw.

I'd like to turn to questions related to capital costs and borrowing, beginning with a question asking whether there are potential implications in terms of having to postpone capital programmes, as a result of financial pressures, that would, ultimately, also increase the costs, because delay or postponement could mean additional interest or additional inflationary costs for the projects concerned.

Diolch. Capital is one of those really interesting things, because we often talk purely about revenue, and I think that we can all talk about the increased costs of our capital programmes. Again, in the last couple of years, whether that be high levels of inflation, COVID or whatever, we've been seeing tenders double the level that we were seeing, and I think we've been really grateful for some of the support we've had in terms of house building. In the Vale, for example, every single secondary school except one has been either remodelled or rebuilt, and we've got one left to do. And therein lies the rub, in that we know that part of the cost of that we will have to borrow for, and that borrowing will deliver a revenue implication for us going forward, and that's actually another serious choice that we need to make. For me, not building the last one is not a choice; I'm going to do it. We'll find a way. But they are very serious conversations that you have with your finance team in terms of, 'Well, this is the implication of trying to deliver that.'

House building similarly. The pressures in terms of homelessness are massive in many, if not all, of our local authorities. Our strategy going forward is to build our way out of it, and whether that be modular units—we're putting 90 onto a site in Llantwit Major currently—or we've got houses being built in places around the Vale, but predominantly in the Barry area. And as I mentioned earlier, because we retain our own housing, our housing revenue account has to deal with the revenue implications of borrowing. It has to deal with the costs of maintenance and retrofitting, et cetera, and that all has to balance as well. So, for us, that meant a 6.7 per cent increase, still 30 per cent below private rental costs, but it meant a 6.7 per cent increase, and that is not an easy decision to take.

So, when we talk about the implications, going back again—going back to 2010—we've had to prioritise capital all the way. It ends up being, 'Is it a health and safety risk?', and then look at other programmes on top. So, we're just having to prioritise more. There will come a time when it stops, because there will come a time when we won't be able to afford to develop things; we'll have to focus on revenue costs.

Yes, I completely agree with all of that. To give you some context, pre COVID, our homelessness spend was around £380,000; it'll be £6 million this year. So, our ability to build is absolutely essential. We talked before about staffing numbers: we've lost about 50 per cent of numbers in our planning office over the last 10 years; project managers have gone. So, we're pulling staff from one task to another task, and that gets more difficult. We've seen our highest rates of sickness and the No. 1 reason is stress. So, you're asking people to do more with less, and that massively impedes our ability to do stuff.

My happiest time as a councillor was during COVID, because we concentrated on our job. We administered about £70 million to £80 million of grants, we took the homeless off the streets and we rehabilitated them. We can do some amazing stuff when we're given the resources, and I think all authorities proved that. But the lack of money to actually drive change is really serious. 

10:10

Yn achos y chwe chyngor yn Lloegr sydd wedi datgan statws o fethdaliad o dan adran 114—Birmingham, Croydon, Thurrock ac yn y blaen—mae eu lefelau nhw o fenthyg wedi bod yn ffactor pwysig yn eu hachosion nhw i gyd, a dweud y gwir. Mae lefelau benthyg y pen yng Nghymru, o ran preswylwyr, yn amrywio yn eang. Dwi'n credu mai Pen-y-bont ydy'r isaf yng Nghymru, gyda £665 y pen, ac Abertawe, dwi'n credu, ydy'r uchaf, gyda £2,917 y pen. Ydych chi'n meddwl—ac rwy'n siarad yn gyffredinol nawr—fod yr un ffactor, hynny yw, pwysau o ran gorfod gwasanaethu benthyciadau, yn medru bod yn ffactor o ran y pwysau ariannol a all arwain at gyngor yn datgan ei hunan yn fethdalwr o dan adran 114 yng Nghymru, fel sydd wedi digwydd yn Lloegr?

In the case of the six councils in England that have declared status approaching bankruptcy under section 114—Birmingham, Croydon, Thurrock and so on—their borrowing levels have been an important factor in all of their cases, truth be told. Borrowing levels per capita in Wales, in terms of residents, varies widely. I believe that Bridgend is the lowest in Wales, with £665 per capita, and Swansea, I believe, is the highest, with £2,917 per head of population. Do you believe—speaking in general terms now—that the same factor, namely, pressure in terms of having to service loans, can be a factor in terms of the financial pressures that can lead to a council declaring bankruptcy under section 114 in Wales, as has happened in England?

I think that there are a myriad reasons why local authorities could be declaring a section 114. And a lot depends on why you borrow. A lot depends on the use of that. I think that, in England—. I mean, as I said, when Max Caller came to talk to us, it was a lot of stuff about speculative borrowing and projects, et cetera. But, in England, there’s been quite a move towards commercial ventures by local authorities. We’ve actually done a commercial venture: we turned our catering into a social enterprise, and it’s doing very well, thank you very much. So, you have to think about why you are borrowing. For us, we will borrow in terms of invest to save, so that if we have planned something, like housing, we’ll borrow because we know that we can cover the revenue costs for that borrowing. Ultimately, it will save us costs. And so—surely others will come in here—in conversations with other local authority leaders, that is the prudent approach that we tend to take in Wales, and I think that you’ll find that the difficulties that we’re facing are the long-term and insidious impact of a lack of funding.

Dwi'n meddwl bod y sefyllfa yn Lloegr yn bur wahanol i'r sefyllfa yng Nghymru, yn gyntaf. Dwi'n meddwl bod Lloegr, dros y blynyddoedd, wedi troi at fentrau masnachol gan ddefnyddio hawliau benthyg, mae'n debyg, ac mae hynny wedi—beth yw'r gair—wedi eu brathu nhw erbyn hyn, ac wedi troi allan i fod yn fethiant yn sawl achos. Dydy llywodraeth leol yng Nghymru ddim wedi mynd i'r cyfeiriad yna. Dwi ddim yn meddwl bod gennym ni'r pwerau tan yn ddiweddar i fynd i'r cyfeiriad yna. Os ydy awdurdod lleol yn benthyg, ac mae yna resymau da iawn dros fenthyg yn aml, wel, rydyn ni'n gorfod ystyried yn ein cyllidebau refeniw beth yw'r ad-daliadau hynny, ac fel mae Lis wedi cyfeirio ato fo, yn aml iawn rydyn ni'n benthyg er mwyn buddsoddi ymlaen llaw er mwyn gwneud yr arbedion fydd yn caniatáu i ni ad-dalu'r benthyciadau yna. Felly, dwi yn meddwl bod y sefyllfa yn bur wahanol yng Nghymru, a dwi ddim yn ymwybodol bod benthyciadau yn rhan o'n problem sylfaenol ni. Fel rydyn ni wedi dweud, mae'r broblem yn dod o'r diffyg cyllid yn gyffredinol. 

I think that the situation in England is very different to the situation in Wales, firstly. I think that England, over the years, has turned to commercial initiatives using borrowing rights, and it seems that that has—what's the word—come back to bite them now, and proven to be a failure in several cases. Local government in Wales hasn't gone in that direction. I don't think that we had the powers until quite recently to go in that direction. If a local authority does borrow, and there are very often good reasons for borrowing, well, we have to consider in our revenue budgets what those repayments will be, and as Lis has referred to, often we are borrowing in order to invest, in order to make the savings that will allow us to repay those loans. So, I do think that the situation is quite different in Wales, and I am not aware that borrowing is part of our fundamental problem. As we've said, the problems arise from the lack of funding in general.

Yn Lloegr, maen nhw'n ymgynghori ar hyn o bryd—yn ddadleuol o ran rhai o ran yr amseru, neu yn ansensitif—ar fwy o ryddid i ddefnyddio cyfalaf a benthyg at ddibenion refeniw. Roeddech chi'n cyfeirio yn fanna at y defnydd o fenthyg tuag at brojectau buddsoddi er mwyn cynilo, ond mae'r awgrymiadau yn Lloegr yn ymwneud, os ydw i'n iawn, â'r posibilrwydd o ddefnyddio derbyniadau cyfalaf, er enghraifft, er mwyn dibenion refeniw cyffredinol, neu ragor o ryddid o ran projectau refeniw sydd yn ceisio gwella effeithlonrwydd, neu, hynny yw, drawsnewid gwasanaethau ac yn y blaen. A oes yna unrhyw angen i edrych ar ragor o ryddid yng Nghymru, o ran defnyddio pwerau cyfalaf tuag at gefnogi gwasanaethau refeniw?

In England, they are currently consulting—controversially in terms of the timing, perhaps, or insensitively—on greater freedom to use capital and borrowing powers for revenue purposes. You referred there to the use of borrowing for investment projects in order to make savings, but the proposals in England relate, if I'm right in saying so, to the possibility of using capital receipts, for example, for the purposes of general revenue, or additional freedom in terms of revenue projects that seek to improve the efficiency of, or to transform, services and so on. Is there a need for us to look at additional freedoms in Wales, in terms of using capital powers to support revenue services?

10:15

Os caf i ymateb, yn fy anwybodaeth proffesiynol, felly—mae'n swnio fel cwestiwn digon technegol ei natur—rydw i o hyd yn gefnogol o roi cymaint o rym ag sy'n bosib i awdurdodau lleol i wneud eu penderfyniadau eu hunain. Ond, ar y llaw arall, mi fuaswn i'n amheus iawn o rai o'r cynlluniau sydd yn digwydd yn Lloegr ar hyn o bryd; dydw i ddim yn siŵr iawn a oes gennym ni bethau i'w dysgu gan y drefn sydd yn Lloegr. Diolch.

If I could just respond, in my ignorance, professionally, that is—it sounds like a technical question in nature—I am always supportive of giving as much power as possible to local authorities to make their own decisions. But, on the other hand, I would be very suspicious of some of the schemes that are going on in England at the moment; I don't know whether we have anything to learn from the regime that is in force in England. Thank you.

Okay, well, I'm afraid we'll have to leave it there, I'm sorry. Diolch yn fawr. Diolch yn fawr, Dyfrig; diolch yn fawr, Charlie, Lis and Jane. Thank you all very much for coming in to give evidence to committee this morning. There are a few other matters that we'll write to you about that we haven't been able to reach during this morning's session, but thank you very much. You will be sent a transcript to check for factual accuracy in the usual way. Diolch yn fawr.

3. Cynnig o dan Reol Sefydlog 17.42(ix) i benderfynu gwahardd y cyhoedd o'r cyfarfod ar gyfer eitem 4, 8 a 9
3. Motion under Standing Order 17.42(ix) to resolve to exclude the public from item 4, 8 and 9 of the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o'r cyfarfod ar gyfer eitem 4, 8 a 9 yn unol â Rheol Sefydlog 17.42(ix).

Motion:

that the committee resolves to exclude the public from item 4, 8 and 9 of the meeting in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

Item 3 on our agenda is a motion under Standing Order 17.42 to resolve to exclude the public from items 4, 8 and 9 of this meeting to enable us to consider evidence received under items 2, 5 and 6. Are committee members content to move into private session? Thank you very much; we will do so.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 10:17.

Motion agreed.

The public part of the meeting ended at 10:17.

10:30

Ailymgynullodd y pwyllgor yn gyhoeddus am 10:33.

The committee reconvened in public at 10:33.

5. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru ar gyfer 2024-25 - sesiwn dystiolaeth 2: Y Gweinidog Cyllid a Llywodraeth Leol
5. Scrutiny of the Welsh Government Draft Budget 2024-25 - evidence session 2: Minister for Finance and Local Government

Okay. We've reached item 5 on our agenda today, then, scrutiny of the Welsh Government's draft budget for the forthcoming financial year, and our second evidence session with the Minister for Finance and Local Government, Rebecca Evans, and the Minister's officials. Minister, would you like to introduce your officials, or have them introduce themselves, for the record, please? 

Yes. I'll ask themselves to introduce themselves, Chair.  

I'm Emma Smith, head of local government funding policy. 

I'm Judith Cole. I look after the local government funding policy division and some other stuff as well. [Laughter.]

Okay. Thank you very much. Okay. As I'm sure you know, Minister, we've just had a scrutiny session with the Welsh Local Government Association. And I must say, we've heard a very bleak story, really—the reality of what local government faces in looking at, well, the current budget and, obviously, the budget for the next financial year. And some of that seems in danger of putting the Well-being of Future Generations (Wales) Act 2015 into reverse, really, I think, because it's going to be very difficult to take a more long-term view, a more preventative view, given the short-term funding pressures and the need to narrow down spending and concentrate spending on the absolute core that's required of local authorities. So, with that sort of budget context, Minister, I wonder if you could tell committee how you believe that the local government settlement reflects Welsh Government's priorities for local authorities in Wales, as set out in the programme for government.

10:35

Great. Thank you, Chair. I'd just like to, really, begin by reflecting on the fact that I absolutely understand the pressures that local government are under at the moment. We have a really good working relationship with local government and many opportunities throughout the year, but particularly around the budget-setting time, to hear from local government on the particular pressures that they're under, and I know that officials work very closely with officers in local government and with the Welsh Local Government Association too. So, just to reflect that we don't underestimate, in any way, the difficult choices facing local government; also, to the question, really, to reflect that local government is an absolutely key partner in terms of delivering the programme for government. You can see that, I think, through the way in which we've prioritised local government through the entire period of this programme for government time so far. So, we had a 4.3 per cent increase in the first year, 3.8 per cent in the second, 9.4 per cent in the third and 7.9 per cent in the fourth, and, in this period now, 3.1 per cent, which is what we'd promised and we have been able to deliver it. At the time, particularly the last couple of years, those settlements were described as being exceptionally good by local government, but, of course, inflation has eroded the value of that and has made for some really difficult choices. But you've seen the work that we've done overall with the budget this year to refocus spending and to reshape the budget towards front-line core public services, including the NHS, and also keeping that commitment to local government. So, I think we've done the best that we possibly can for local government, but, of course, there will still be difficult choices, because, when the budget isn't rising in line with inflation, it's inevitable, I think, that those tough choices will arise. 

Yes. Okay. Thank you, Minister. There is still far too much inequality in Wales, Minister, as I'm sure you would recognise. I wonder if you could tell committee how the unhypothecated budget allocations, such as the revenue support grant, are assessed in terms of their expected impact on inequalities.

I think that the unhypothecated element is really important and, of course, it then gives local authorities the flexibility that they need to address the particular service areas. Of course, social services, education and housing take up the largest share of that.

In terms of understanding the impacts of the choices that individual councils make, that really is a matter for those councils in terms of undertaking the impact assessments and so on, but we do know, of course, that those areas that I've described—social services, education and housing—are the ones that, by their very nature, support the most vulnerable people and I think that, in itself, demonstrates that local government funding is progressive in that sense.

Okay. We know, I think, that council tax is likely to rise quite substantially, and I guess that's inevitable in the current circumstances. I wonder what you would say, Minister, about the likely increases in council tax and the general anticipated impact of the settlement in terms of those most vulnerable, those suffering social and economic disadvantage, and how you will measure those outcomes.

So, of course, the RSG forms only part of the funding available to local authorities. We also have our range of specific grants, which I haven't mentioned yet, as well, which are also really important in terms of supporting service delivery. But raising council tax is a really important local decision, and, as far as possible, Welsh Government will leave that decision to be taken locally by elected members, because it is an important part of local democracy. But we know that that means that really, really tough decisions will need to be taken by councils. But then we have to remember that the councils are raising that money to invest in those services that all of us benefit from, for example, waste collection, but then also services that support the most vulnerable people—social services, education and housing, for example. So, they'll be balancing all of that alongside the impacts that council tax will have on households. It's worth reflecting as well, that, even with the difficult settlements that we've had lately, council tax still remains, on average, lower in Wales than in England. I think that speaks to the relative priority that we've given to local government in recent years in terms of our settlements.

And then also just to mention the council tax reduction scheme, of course, because that is there to support households across Wales. I think it's around 280,000 households now that receive support through the council tax reduction scheme. So, many households across Wales will be paying no council tax at all. I think that there is still a large number of people who are eligible for council tax reduction support but don't claim it, and perhaps that is because some of the changes to universal credit, for example, which mean that the entitlement isn't always automatically applied. So, we are working with local government to find ways to make that entitlement more easily passed on to the individual, but, again, it's a job for all of us, I think, in terms of highlighting the available support locally.

And then just to mention, of course, the work that we're doing overall on making council tax fairer, which, again, will be an important tool, although, of course, it doesn't come into effect for this next financial year.

10:40

It would be useful, I think, Minister, if you could perhaps provide a note to committee on that work with local government to ensure that those entitled to help with their council tax bills receive it, because that's quite urgent, actually, in the current circumstances, isn't it, that households that really need that help get it as quickly as possible.

I should say that this is an important part of the work that the Minister for Social Justice is leading in terms of the benefits charter. I think I'm right in saying that there'll be a launch event for that in the next week—it might even be next Monday—working alongside local government to make sure that people are getting everything that they're entitled to, but, more importantly, even, or as importantly, doing so in a way that is simple for the individual and that doesn't mean that people are falling through gaps because they aren't aware of the support.

No. Just in terms of the very worrying situation that we all face and local authorities face in terms of the budget pressures, Minister, and those socioeconomic issues, how will you keep a weather eye, as it were, with local authority colleagues, on the effects of budget decisions, those very, very difficult decisions, on people who are really struggling? Will there be any new mechanism or any new approach that you will employ, given the current circumstances?

I might ask officials to reflect on some of the mechanisms that we have within Welsh Government at official level in terms of that kind of information sharing, but, certainly, for my part, I spend a lot of time doing individual meetings and individual visits to councils, and, invariably, they involve an opportunity just to sit down with the leader and the chief executive and to talk about the pressures locally and the tough decisions that they're taking. Those are always instructive meetings, because they're able to give real colour, if you like, to the decisions that are being made: the positive things the council are doing to support people, but also the areas where they are concerned about the impacts on households and individuals. So, that's always a really good use of time, as are the more formal meetings that we have with all of local government. So, we've got the partnership council, for example, we've got meetings with representatives who attend the finance sub-group. That's always really important in terms, again, of understanding the impacts. And those meetings are never just about the numbers; they're about the people behind the numbers.

Did you want to say a bit more about the mechanisms that we have?

So, I guess there's the official-level equivalent mechanism—so, I talk to the Society of Welsh Treasurers, colleagues talk to chief executives—but those go wider than just the local government directorate, because colleagues who work on community issues will be in touch with their contacts there. There's also a more structured kind of reporting—so, there's the annual well-being indicators report—and all of those things get fed together every year when we get to budget round, and they get fed up through established mechanisms like the partnership council and the equivalent. It's not just local government; so, there's also the third sector partnership meeting, which will be feeding through implications on the ground as well from a slightly different angle.

Okay. So, all of that, you're confident, Minister, will put you in a sufficiently informed position to understand the impact on the ground of the current financial pressures and how that translates into help and support for people who are struggling socially and economically.

10:45

Yes, I’m confident we’ve got the right opportunities in place, especially because I think one of the benefits that we have—we’re a small country—is it is possible to have those individual relationships with all 22 leaders; it’s possible for officials to have relationships with officers in each of the 22 authorities, and again, of course, we’ve got that kind of open and frank relationship as well. So, that is all in our favour, I think.

Okay. Minister, could you tell the committee what assessment you’ve undertaken in terms of the potential impact of this settlement on the Welsh language, particularly in relation to local authority requirements to meet the Welsh language standards and the duty to promote the Welsh language in their areas?

Yes, so local authorities will have already in place embedded systems whereby they comply with the Welsh language standards and the work that they do in terms of promoting the Welsh language locally. Of course, the overall settlement is unhypothecated, and it will be for local authorities to decide how they deploy funding to support those things locally, based on the finances available to them. Also, it's just worth reflecting as well that local authorities have been complying with the standards since 2015, so they’re well experienced now in that regard, and there’s nothing new that will be coming in in the next financial year that they will need to incorporate or adapt in that sense.

I should also mention the work of the Welsh Language Commissioner, who is working very closely with local authorities. Last year, the commissioner’s office worked with authorities to look at systems that they could improve. They looked particularly at telephone systems, for example; the websites of local authorities; and then also did some work with staff to raise awareness amongst staff of policies relating to the Welsh language, and what that meant for their working practices as well. I know that the commissioner’s currently reviewing the way that she regulates the standards, and has already written to all bodies, saying that she’ll be looking to work more closely with them to co-regulate those things in future years, and to ensure that good Welsh language services are available to people.

And then, finally, there is specific funding available from within the Welsh language and education MEG for Welsh in education, which of course is an important part of our work towards 'Cymraeg 2050'.

Okay. Minister, we’ve heard from various sources, including Welsh local government, that we’re in fairly unprecedented times, really, in terms of budget pressure. I think Welsh Government’s on record as saying that its budget is worth £1.3 billion less in real terms since the 2021 UK Government spending review. I just wonder how you would characterise the situation that local government will face during the next financial year compared to what we’ve seen since 2010, because, obviously, there have been quite a lot of financial pressures during the years of austerity and that extended period, with cumulative impact, really. So, how would you characterise what local authorities face in the next financial year, given what we’ve seen up to now, and the current and emerging situation?

I think there are some differences between the situation that we’re facing now and in the next year, as compared to the situation that we experienced through austerity. And that’s because, during austerity, we saw sometimes local government budgets shrinking. We’re not in that situation at the moment, because we are seeing growing budgets, but what we are seeing now, which we didn’t see during austerity, is the impact of inflation running at the rates it has been. So, that is, I think, a key difference.

Another key difference is public sector pay. Of course, that’s a major source of pressure on local government, as well as the NHS and Welsh Government more generally. But, of course, during austerity, we saw periods where there were public sector pay caps, and we don’t see that now, and again that, I think, is having an impact. Of course, we’ve got recovery from the pandemic, which is a new phenomenon for this period, as is leaving the European Union as well. So, I think that the situations are different, the things driving the situations are different, but the tough choices will be similar in many ways, I think.

10:50

Okay, thank you for that, Minister. We'll move on now to other committee members and, firstly, Sam Rowlands.

Thanks, Chair. Good morning, Minister, thank you for taking the time to be with us this morning. I'd be grateful if perhaps you could briefly outline how you see the resilience of councils in Wales at the moment from a financial perspective.

I think the situation is mixed in terms of resilience. So, when we consider the important role that reserves can play in terms of resilience, you see a different picture of reserves across local authorities in Wales—some have significant reserves, others have very little available to deploy. So, I think that that is important in terms of resilience.

I suppose that the underlying question is about comparing perhaps the situation to that across the border, where we have seen a number of councils issuing section 114 notices. So, I think we are in a different place in terms of that kind of longer term support that we've provided to local authorities here in Wales. And we're in constant discussion with local authorities about their particular levels of ability to be resilient.

The role of Audit Wales, I think, is really important as well here in Wales. We've got that single point of audit right across local authorities, which is very helpful to us. We don’t have the huge backlog that they’re seeing in England in terms of audit as well. So, again, that, I think, gives us an important level of assurance about local authorities. But that’s not to say that there aren’t real pressures and strains in the sector as well. I might just pause to see if Judith or Emma want to reflect on any discussions they’ve had with counterparts.

So, I attend the south Wales Society of Welsh Treasurers painfully regularly and as you would expect, this comes up, particularly during the budget, but it comes up during the year as well. We can have discussions with local authority colleagues on a very Chatham House basis about whether they are recognising some of the technicalities that they can take advantage of to balance the books.

But, at the end of the day, an individual local authority balancing its budget and the decisions it has to make are very much for that section 151 officer, and its elected members as well. So, while we can offer advice, and we do—we have offered support through the WLGA programme, there’s been mentoring offered to some officers, and we can offer advice on the technicalities—at the end of the day, though, they have to make those very difficult decisions themselves, and that includes deciding on the level of risk they want to take on their reserves, on their borrowing, and on how they manage service change. So, some of them are very up for service transformation and are quite proud to say that they can do it, and others, I think, still have some opportunities to take to join with others, perhaps, to make some changes that might help them. It’s easier when you’ve got a longer running time for planning. The budget timetable is the budget timetable and that’s not driven by us, and it makes those decisions happen in quite a short period of time.

They do have medium-term financial plans and some of them work very much on the basis that says, ‘We can see the trajectory and we’ll make plans for the longer term.’ Others have more difficult circumstances, from choices they’ve made in the past or from choices they’re making now. And sometimes, it is easier for a larger council, I think, to make those choices because they have more capacity to do that. If you’re a smaller council, you’re trying to make those changes against the day-to-day management of the pressures you’re facing as well. I think I’ve probably waffled enough.

So, with all that in mind, does it concern you at all, Minister, the levels of resilience in councils?

I think that we should all be mindful and we should be concerned about resilience in councils, because I think it's something that we should all be paying close attention to. I do worry about the funding that we're able to provide local government with. But at the end of the day, we're only able to provide the level of funding that we're able to provide, and it's taken an awful lot—you've seen the kinds of tough choices we've made across Government, the kinds of cuts we've had to make in every single part of Government to be able to keep our promise to local government on the 3.1 per cent this year, and to provide health as well with an uplift in line with what it's saying that it needs, even though it will need to make some choices to reduce the deficits, and so on.

So, of course, I would love to be in a position where we gave local authorities a greater settlement and greater certainty for the future, but we're not in that position at all, which is why it's really important that we have those constant conversations, understanding the choices that they have to make. But then also considering what we can do to support. So, issuing a section 114 notice doesn't open up a separate pot of money—there is no pot of money—so it doesn't solve any problems in that sense. What we should be looking to do is make sure that local authorities take advantage of the improvement funding that we have available and to take advantage of the other ways in which Welsh Government can support, for example, through the work that we've been doing through the Centre for Digital Public Services and our support for the chief digital officer for local government. So, trying to support service transformation in a way that gives citizens a better service, but then also reduces costs for local government is important as well.

But, overall, I think that there is a level of concern just because we don't have the funding that local government tell us that they need to be able to provide that. But also, overall, our budget just isn't meeting the needs across a whole range of areas.

10:55

And we heard from the WLGA witnesses this morning that they feel as though decision making has moved from being just difficult decisions to make to now becoming bad decisions to make, which of course will have a longer term impact on pressures in the future. So, I don't know whether you're able to respond to that point in particular, but also perhaps outline how you think the current settlement gives some certainty for the medium and longer term. So, rather than just that decisions, as explained to us today, are bad decisions that have an impact on the longer term sustainability of services, whether your settlement is able to mitigate some of that risk.

So, I know local government won't want to take bad decisions, but they might have to take very unpalatable decisions. So, you've heard local government talking about potential losses of or reductions in service, and potential job losses in some areas. I know that they'll be doing everything that they can to avoid redundancies, and—

Sorry, just to explain the point they were making. They were talking about bad decisions, where they're having to, probably, remove preventative services, which will in the long run be much worse for your budgets, as finance Minister, but also of course for the outcomes for the residents that we all represent. So, that's the point they're making. It's not just difficult, or that it's going to be tough to make a decision because it's going to upset some people, it actually is bad because it's going to impact people's lives.

I think there will be choices that local government won't want to take, just like there have been choices that we haven't wanted to take. Across Government, there are areas where we can always do more, particularly in that preventative space. I was listening to the Future Generations Commissioner for Wales giving evidence almost word for word as you've described, really, to the Finance Committee this morning, about concerns about where we can divert money from. I know that there would be things that local government would want to do more in the preventative space that they're just not going to be able to do because they are so busy responding to the existing need that is right there before them now, in terms of the pressures on social care, and so on. But I think, until we get the funding that we need to be able to meet all of those service pressures, then there will be these really tough trade-offs, unfortunately. 

Okay. I just want to ask some questions regarding the funding floor and the formula as well, regarding the resilience of local authorities. This morning, we heard from one particular local authority that having the funding floor has helped them, but their resilience is so bad that they borrow from Peter to pay Paul, their reserves are so low that they can't borrow from them anymore, and they're really worried about next year's budget and the resilience of that local authority. If you could have put a bit more in the funding floor—I think £1.3 million went into it—to increase it to 2 per cent, you could maybe help more local authorities, because it's that resilience now. They've cut everything over the last—. Since 2010, they've cut everything that they can and have been reorganising, restructuring, and they're looking now at delivering basic statutory services and don't know where else to go. So, it's that resilience of those, really—particularly small local authorities, perhaps—being able to deliver those services. So, could you maybe increase the funding floor?

And then, also, the formula: it was mentioned that some of the criteria is out of date; and then, the needs of a four-year-old are different to those needs of somebody that's 60 plus. The population of older people has grown so much as well and their needs have increased very much. So, perhaps, do we need to look at the weighting on that, look at what data you're using? I think they're saying the data goes back to the 2001 census; so, we've had the new census come through, 2021, so, how long will it be before that feeds in? They also mentioned, in Scotland, there's—. I think more goes into it—200 more. I know Judith spoke with us previously about it, so I'm looking at her as well about the funding formula. So, 200 criteria go into it in Scotland, whereas we have 70 in Wales, but they say it's more needs based. So, really, just your view on that, please.

11:00

I'll start with the funding floor and then perhaps ask Judith about some of the detail in terms of the funding formula. Normally, when you think about a funding floor, it's to provide a floor below which no authority will fall, rather than a minimum increase, if you like. So, it's quite rare for us to be even thinking about providing a floor when budgets are increasing, but, of course, the exceptional circumstances this year have led us to think that. When we ran the numbers and saw that there were a couple of authorities under 2 per cent, that did seem that it was going to be far too challenging for those authorities, and that made the decision, really, to increase the funding by £1.3 million.

We did look at other options, and ultimately we have to consider what's affordable to the Welsh Government. If we were to increase it to 2.5 per cent, that would have cost £5.7 million. So, this £1.3 million came from the work that we did to reduce budgets across all main expenditure groups. Colleagues went to the bone on so many different things that to go back out to colleagues again saying, 'Look, we need another £4 million or so, please find that from your budgets' was just, I think, going to be going too far, just because there's almost nowhere else left to go. So, it was affordability that really drove some of that decision.

Of course, if local government wanted to redistribute from within the settlement to increase the floor for authorities, then we'd be open to having that discussion, but I haven't had any representations to that point. And I understand why, because it's a tough settlement for authorities across Wales in any case. But perhaps I'll ask Judith on those points about the funding formula itself.

Thank you. Some of this is sometimes about misunderstanding. There is some data in the formula that is 2001, but, actually, the stuff that drives most of it is updated annually. And in particular, population is updated annually. It's updated annually by cohort, so we do actually take account of the fact there are different numbers in different age groups. We are using the 2021 census data in the formula this year, and including, therefore, the change in the number of older people.

I absolutely agree that the needs of a four-year-old may not be the same as the needs of a 74-year-old. Partly, that's why the formula provides an unhypothecated total, so a local authority can choose to devote its resources how it needs to, reflecting its local needs. The formula is derived from measures of what the local authorities have spent. So, in a sense, it is the fact that people spend more on older people and social services that drives that. It is not that we have gone, 'We have plucked a figure out of the air and this is how much we think a four-year-old will cost in services'; it is the other way around. It is that the effect of what local authorities spend has defined the way in which the formula works. We take into account the numbers of four-year-olds, five-year-olds, six-year-olds, et cetera, in the education bit of the distribution, and we take into account different age groups then in the social services bits of the distribution, and those figures are updated annually.

There are some bits of data that we have not yet updated from the 1991 census, and those include, for example, pensioners with a limiting illness in a household. Pensioners living alone, I think, is one of them as well. Those will be updated as the data becomes available to us from the census, and as we do the work to really crunch the numbers. But it isn't instant, and we take it through the distribution sub-group and then through the finance sub-group so that both officers and leaders understand the implications of that, because it has winners and losers every time.

11:05

The numbers of data items in Scotland?

Yes. In Scotland, there are 200 data items, so the question is whether that's a fairer basis. 

We did an exercise a few years ago to see what difference the different indicators—. We ranked the indicators by the difference they made to the formula, and at the time, a good few years ago now, actually, I was suggesting that we should cut off the number of indicators, because when you get to the last 10 per cent of indicators, they distribute very small amounts of money, so having lots more indicators wouldn't necessarily make big differences to the way the formula operates and the distribution. The bulk of it is distributed by client measures, and those things are the ones like the numbers of school kids, numbers of people claiming, numbers of people in different age bands. Road lengths is also another client measure. So, I don't think increasing the number of indicators would necessarily help. We're already dealing with 4,000 data items, so it's not a small number of indicators that we take into account. We also have the problem, technically—

I think they thought that they were more needs based as well, the criteria.

In Scotland? We are due to have a talk with Scottish officials quite soon, and we'll take the opportunity to have a discussion there. I don't want to get into, 'Well, ours is better than England's or Scotland's', but we are definitely better than England's in terms of taking account of needs, because that's the way our process works, but we'll see if there's any lessons to be learnt from Scotland.

I'll just come back on the funding floor. I know there's been an increase from Government, and normally you don't give a big increase at all, but give a funding floor if there's an uplift, but I think it's because of the impact of all the inflationary pressures, isn't it, and an increase in costs for delivering services such as social care. Another point raised was, between the NHS budget and the local authority budgets, because they're all looking at their budgets, this argument or fighting of who's going to fund services like social care. Local government feel like they're picking up the costs now that health might have done previously. Plus also the disparity in pay between what health boards pay social care workers and what local authorities can pay social care workers has come up as an issue raised this morning.

These are issues that are raised by local government leaders, actually, in some of the meetings I attend with them as well. I know that, especially in times of constrained budgets, there is a danger of tensions starting to emerge between two very important parts of the public service. Because when you look at delayed transfers of care, for example, that is an area where, if we're not careful, we might see local government and health pointing fingers at each other, when, actually, the answer will be in working together. So, that is something of concern. And again, I'm just mindful of the issues around pay. You've described the differences in pay, potentially, between health and local government, but then also there are some challenges within local government in pay as well. Somebody might be working in one particular sector and then notice a job that might only just be a couple of miles away from them paying more in the same sector. So, there are issues, I think, that need to be discussed in that space as well. But, yes, those points, I think, are all really important, and it just speaks to doing everything that we can to make sure that local government and health are working in tandem as best they can, really. 

One local authority leader, over the last decade or so, has seen a 40 per cent reduction in staff, when they've reorganised and restructured, but they're really concerned about loss of posts, especially in education, potential redundancies and the impact on that. I know, previously—they didn't mention it today—one talked about needing to make hundreds of redundancies as well. So, really, your views on that, on them actually being able to deliver. I think, today, maybe, they've got lots of vacancies as well; and retention is an issue, so they're probably deleting posts, so not actually being able to carry on delivering services due to workforce spending pressures.

11:10

Those are the kinds of pressures that local government raise with us all the time. I suppose I started to explore that in the answer to Sam Rowlands earlier, when talking about some of those tough choices that local government will be making. They've described similar scenarios to us as well. I know they'll be working hard to avoid redundancies, where they can, and try and find natural attrition ways and so on, to try and address some of the challenges. But, ultimately, I think it does speak to the real pressure and the challenge that we have right across the public service, in the sense that 50 per cent of the Welsh Government's budget is exposed to pay. When you look at the NHS budget, a very large proportion of that is pay, and it won't be any different in local government as well. We have a situation where pay awards are outstripping the increases in budgets, so, inevitably, there's a huge tension there.

You can look to all sorts of creative ways to try and meet those pay awards, whilst avoiding impacts on services and those tough decisions around redundancies and so on. I know local government will be trying to work with the unions and have those discussions too. It's a really tough message, but, ultimately, if you're going to pay people more but you don't have any more money to do it, then, inevitably, you have to pay fewer people—that's the only way in which you can meet those pay awards. I know that they'll be trying to find a way to do that in a way that protects as many jobs as possible, and that's been one of the principles behind our budget decisions as well. It's been about protecting core front-line public services, it's been about supporting those who are hardest hit by the cost-of-living crisis, but then also trying to protect jobs as far as possible.

Is there any specific evidence and data you've used to understand what services are most valued by citizens? You said in your evidence that you understand the scale of financial challenge and negative impacts for some areas, but is there any particular evidence and data you've used for that, or is it just conversations with leaders?

We do gather a really wide range of data from the public in Wales in terms of what their priorities are and what their views are on services. We've got the national survey, we've got the family survey and so on. If it's okay with the committee, I'll send a note that sets out the range of sources of evidence that we go to, particularly in terms of those surveys. I know that we also pay for some of the UK-wide surveys to be boosted for Wales. So, when we've got particular interests in an area, we'll get extra data for Wales there, which helps us with our decision making. But I'll perhaps ask the chief statistician to write a note for the committee.

I'd just like to continue one of the aspects that we've touched upon, namely continuing healthcare, and whether a particular case is a matter of continuing healthcare or not, and the relative importance of that, obviously, between the health boards' budgets and expenditure and their financial pressures and those within local government. Because we did hear earlier that, in Betsi Cadwaladr health board, there was an understanding that work is going on that might seek to shift some of that financial burden to local authorities rather than the health board. And you did say, Minister, that you are aware that there are tensions around those areas. So, would you then be working with relevant colleagues to make sure that, as we go forward, local authorities are protected from inappropriate pressures being shifted to them that really ought to be met by the health service?

I know that the Minister for Health and Social Services meets regularly, alongside the Deputy Minister for Social Services, with local government colleagues, particularly those who hold the social services portfolio. So, perhaps I'll seek an update from her for committee about those discussions, because I haven't been directly involved specifically in those discussions, certainly not recently, although I have met with local government and the Minister just before Christmas or just after Christmas to discuss pressures more widely in social services.

11:15

Just a quick question further to that point on the way in which health boards set their budgets. I'm interested—. And alongside, obviously, local authorities as well. As a finance Minister, how do you view that moral position, I guess, where a local authority has a legal duty to set a balanced budget, whereas a health board can easily run into debt and, hopefully, get bailed out by you as finance Minister, or by the Welsh Government? It was an issue raised by leaders this morning that that just seems like such an opposite sort of way of handling budgets in what are essentially two sets of public bodies. How do you view that? Do you think that's acceptable?

I think they're two different parts of the public service, but they're both funded in two different ways. So, it probably is appropriate to the extent that they do have different systems around it. Local government is able to raise money locally in a way that health boards aren't able to do; local government has significant borrowing powers, and they're able to invest in a number of ways. So, they are, I think, different, so you wouldn't expect the same systems to be available for both. But I'm keen to hear what committee makes of that in terms of any recommendations that you might have for us.

Okay. It's always good to have an invitation from the Minister to the committee. [Laughter.] Okay. And Joel. Joel James. 

Thank you, Chair, and it's good to see that we've got an audience now just watching us debate local government finance—the exciting world of local government finance. 

I hope they find it very interesting, Joel. I'm sure they will. 

Indeed. And I wanted to talk about transformation and legislation. Obviously, in your programme for government, you've mentioned strengthening the autonomy and effectiveness of local government to make them more successful in delivering services. I wanted to touch upon and get an idea of your rationale behind that 12 per cent cut to the transformation and legislation BEL, and the impact that's going to have on the Welsh Government's work programme, but also an understanding of the impact—obviously, should it be passed—of the Local Government Finance (Wales) Bill, what sort of impact that might have, and if there were any negative impacts, how you plan to mitigate them, I suppose. Thank you.

So, the finance and local government MEG wasn't immune from the exercise that I've asked other colleagues across Government to do in terms of identifying savings within the MEG. And actually, when you look at the protection we've given to the RSG, there's very little else that you can go at within the finance and local government MEG, because that's where the vast majority of the funding is available. So, we looked at every single budget line and explored what could be released. As you can see, the money that was released within this MEG is actually—. In a number of places, we're talking about hundreds of thousands of pounds rather than millions of pounds.

So, the £0.9 million or the £900,000 reduction to the MEG was offered as part of the exercise. Of it, £0.5 million relates to finance reform. So, as you say, that will reduce the funding available in terms of delivering the reform of council tax and non-domestic rates. Ultimately, it could delay some aspects of the implementation of that Bill, and potentially slow down some of the operational nature of the reforms. But, as yet, we haven't fully worked through what the impacts of that will be.

One hundred thousand pounds of related funding is allocated to support local democracy, and that will mean that some implementation work on aspects of the Local Government and Elections (Wales) Act 2021 might be delayed, and the remainder of the funding that was released was either allocated to some specific projects, which at the time of setting the budget hadn't particular actions attached to them, or where there was some flexibility to take forward some work more slowly.

But in terms of specifically what it means for implementation, we’re not at the point yet where we can make that judgment, partly because of where we are in terms of the Bill moving through the Senedd, and knowing what the ultimate look of the Bill will be.

11:20

Okay, thank you, Minister. With that in mind, could I have some idea of some of the rationale behind allocating an additional £8.4 million to the Valuation Office Agency, and £0.8 million to the Valuation Tribunal for Wales? Also, why now? Because they're only due to basically come into any real action in a couple of years' time, should the Bill pass, really. It's predicted in one of the cases, I think, that valuation tribunals—it will be 2028 before they'll need to do what they'll need to do, if that makes sense. So, why now? Is it to build that revised baseline, so that they can then action it when they need to, or to build that resilience? But then I suppose the difficulty is how you justify that when there are other things that need to be done, and especially when you mentioned there that the reduction in the transformation and legislation BEL means that a lot of this Act is going to be delayed even further.

Firstly, in terms of the VOA, the costs for next year are forecast to be £17 million, so that's the same as this financial year. So, it doesn't see an increase in the budget, but what you see in the budget documentation is that it has been consolidated into a single stable baseline, rather than in other parts of the budget. So, that in itself isn't an increase for the VOA.

Some of the longer term cost will be driven by what comes out of the consultation that is going on at the moment, in terms of the scale and the pace of reform for council tax in particular. But you’ll be aware that earlier on in this year—so, it was at the start of this financial year—the new ratings list came out for non-domestic rates. So, obviously, there was some work for the VOA to be doing in that particular year. And then the increase in the valuation tribunal budget line relates to an increase in a budget that has been flatlined since 2018-19, so it was a recognition of the pressures experienced in that area as well. Both of these will be really important in terms of delivering the council tax and NDR transformation programme, a lot of which actually requires a lot of work to be done upfront, before any of those changes are felt in terms of the bills on the council tax side for households.

Okay, Joel? Are you content? Okay. We'll move on to Jayne Bryant, then. Jayne.

Diolch, Cadeirydd. Good morning, Minister. I just wanted to perhaps touch upon a couple of questions around education and the impact of the budget for local authorities on education. We know that local authorities are receiving an average 3.1 per cent increase in the local government settlement, and obviously they have to adequately fund schools from their core budget, which we heard this morning from the WLGA was particularly challenging, and what we heard was incredibly sobering. They've obviously, out of that, got to fund the pay deal as well, and we heard this morning that councils are reporting that 25 per cent of in-year school budgetary pressures related to pay, and around £10 million of the £41 million in-year pressures are due to that teacher pay inflation, according to the WLGA. We heard yesterday the Minister for Education and Welsh Language telling the Children, Young People and Education Committee that the cost of the teachers' pay deal will be £80 million in 2024-25. How do you see—? Perhaps you could comment on the challenges faced within school budgets around that, particularly when we're looking at schools having challenges in implementing the reforms, and the importance of raising standards within schools.

Education, of course, forms the largest area of spend for local government. Council spend on education services makes up 37 per cent of their budget, so it's already a really key part of the budget. What we have tried to do, bearing in mind that there's no significant additional funding available—you know, only the 3.1 per cent—is to try and find ways for local government to spend the money that it has in a more flexible way, to perhaps either drive efficiencies or to drive greater value for money.

So, some work that I know the education Minister has been doing has been to look right across the whole range of grants provided to local government by the education department and to consolidate them down into just four funding streams, and I think that that has been warmly welcomed by local government as a potential tool to help them manage their budgets better and have greater flexibility to address those local priorities. It comes out of the work that we've been doing as part of the programme for government commitment to reduce the administrative burden on local authorities. When we asked them what their No. 1 burden was, they said almost unanimously, I think, 'Grants, and the administration, the monitoring and so on,' and just to find a more proportionate way to deal with some of this, so that's a result of that work.

In areas where we can't provide additional funding, we've at least tried to provide additional tools or flexibilities. I know that this is for the education Minister mostly, but he would want to say that the choices that he's made within his MEG have been very much focused towards school funding. So, the recruit, recover, raise standards funding, for example, that was due to be tapered off, but he's continuing with funding for that. Some of the other work that he's doing around free school meals, again, is important to support learning. That means, of course, that he's had to take really tough decisions elsewhere in the portfolio around further education funding and so on, so it just shows, I think, the level of priority that he's put on schools and the youngest learners.

11:25

Brilliant, thank you. Many authorities rightly assumed that the additional grants for the teachers' pay deal in 2022-23 and 2023-24 will be funded on a recurrent basis with the grants transferred into a funding baseline, and the WLGA paper said that a similar assumption has been made for anticipated changes in the employer rate for teachers' pensions. We heard this morning just around some of the concerns that they had—local authorities had—about clarity on whether that would happen or not. I'm just wondering about your comments on that, around teachers' pensions.

On the pensions issue, it's something that we're aware of and local government has raised with us. We're still waiting for clarity from the UK Government on this, but I have said that in relation to any consequential funding that comes for the pensions issue, we will pass that on to local government. I'll be writing this week, alongside the Deputy First Minister of Scotland, to the Chief Secretary to the Treasury on this point, asking for urgent clarity, but also the fact that in Wales it might cost us more to deliver the same. A Barnett share wouldn't be the appropriate way in which to deal with this; we need the actual amount that it's going to cost us. So, that's something that we're taking forward this week. I'll see whether Judith has any other points to make, but just to say also that we've got the meeting of the Finance: Interministerial Standing Committee next week in Edinburgh and, again, she and I will be making that point to the CST.

It's on scope, and we recognise that colleagues acting in local authorities are having to make the decisions about how much risk to take, in terms of the assurance we can give, until we get a stronger assurance out of the UK Government. On teachers' pay, I think what you'll have seen in recent years is that we have said to local authorities upfront that, actually, the settlement is expected to cover teachers' pay, but that whenever Ministers have been able to, they have identified in-year funds if there are funds available. But, as budgets have got tighter, we have been less and less able to make larger and larger contributions in that space.

But, actually, every year, we have tried to make sure that local authorities understand that they need to think about the effects of teachers' pay in planning their budgets, and then we maintain the ongoing dialogue as the year goes on, so that they can reflect that as things change. If we have extra money, it goes there; if we don't, they have enough time to plan on that basis. It's not a perfect answer, but it at least reflects the relationship that we maintain.

11:30

Absolutely. I think that's really helpful, Chair, isn't it, in getting a picture of that, especially from this morning, so thank you for that.

I'm just going to move on to some questions now around capital funding and borrowing. Perhaps you can just expand on the changes made to local government capital funding and whether that allocation of £180 million in general capital funding provides sufficient capital to proceed with projects as planned.

Well, we don't have an increase in our capital budget, so we haven't been able to provide increases to local government. In fact, our capital budget is 6 per cent lower in real terms next year than it is this year. So, there hasn't been anything to allocate. Of course, inflation means that local government is, just as we are and everyone else is, able to deliver less as a result. I suppose that that, really, just means that local government will have to do some important prioritisation work in terms of how they deploy their capital funding. And a flat budget, I know, will be challenging for them in that regard.

And on the issue of decarbonisation, we know that the Welsh Government allocated an additional £20 million in capital funding in 2023-24, and similarly in 2024-25, for decarbonisation. Perhaps you can expand on the settlement in terms of local government—how that helps local government to address those climate change priorities like decarbonisation.

The £20 million is additional to the unhypothecated funding that we've talked about. So, it does have that particular focus on decarbonisation, and the work of the decarbonisation panel, which advises local authorities in this space, is really important in helping to identify particular projects that might be suitable candidates for that. Again, that's something that we would want to be able to provide more money for, but, unfortunately, we can't. I think local authorities don't have to just decarbonise with that money; they can be decarbonising with the rest of their funding as well.

I think the work that Ystadau Cymru does is really important, because decarbonisation is one of their particular areas of focus. They have a thematic approach, one of which relates to decarbonisation. And then, also, in looking at creative ways of procurement, for example, we've seen that, by coming together to purchase electric vehicles, they can improve their fleets, they can improve their decarbonisation, but do so in a much more cost-effective way. Some of the authorities involved would never have been able to have done this without coming together. So, they've got that. And then, there are also some other specific capital grants that are available. So, capital grants through the sustainable communities for learning programme are important, but then, also, there are the interest-free loans provided through the Salix Wales funding programme—that's for public sector organisations. So, there is a range of other areas, and, again, it's an area where we would love to be able to do more, but, unfortunately, our budgets are not enabling us to do that.

Okay. Thank you very much. Minister, if we turn to Gypsy and Traveller sites and the capital grant, I wonder if you could tell us a little bit about the process in determining the allocation and whether you believe that that has produced a level of funding that is sufficient for the needs of local authorities and the Gypsy, Roma, Traveller community.

This particular grant is part of the Minister for Social Justice's portfolio, so she'll be able to provide you with a more detailed response to that, but the discussions that I would have with her come through the budget bilaterals that I have with each Minister—we have a series of those where we delve into the portfolios. And I know that the funding that is provided is expected to meet demand in 2024-25 within that portfolio, but I do know also that it's an area where we have struggled to spend the funding that we've allocated to it in the past. So, in this financial year, when we did the exercise that I informed the Senedd about in the statement on 16 October, funding that came from the social justice MEG was identified from within this particular budget line, because, again, it's been difficult to allocate the funding to projects, unfortunately.

11:35

Do you know what the final figure was for the budget line for this financial year, the current position?

For this financial year, I think that we expect it to be zero, because, to my knowledge, there were no suitable applications coming through for that fund, and that fund was then returned to the centre as part of that exercise. If I'm wrong on that, I'll inform the committee, but I think it will be zero.

In terms of allocations made and the use of those allocations, then, Minister, will you have a role in trying to ensure that the allocation for the next financial year is fully utilised? I guess you have meetings with Ministers in terms of demand-led budgets and the current situation throughout the year.

I do. I think my role would be more on the side of monitoring the spend and exploring alternative uses for the funding if it's not deployed, and it would be for the Minister for Social Justice, really, to be working with local government to encourage those projects to come forward.

I see. Obviously, we can take up those matters with your ministerial colleague. Minister, the Ukraine programme funding and the changes made, could you expand a little on those and the discussions that you had with local authorities in Wales as to whether the reduced allocation will be sufficient to meet needs?

Yes. This allocation was made well over a year ago, now. So, at last year's budget, which was set for this year, we allocated £40 million for this year and £20 million for next year. At that point, we had to base it on what was probably a worst-case scenario in terms of the pressures that might be arising. Actually, what we have seen is a reduction in the number of people coming from Ukraine and the success of the programme in terms of move-on. So, that's why we've been able to reduce this particular budget. What it does do, though, is it still allows us to have that kind of wraparound support for individuals who are arriving, it allows us to ensure that we work with local authorities to support the move-on work, so it doesn't reduce the support that we're able to provide. It also allows us to provide that increased level of support of £500 for the host families. So, we're still able to do the work that we did; it's just the numbers of people who we're supporting have decreased significantly.

I see. Okay, thank you for that, Minister. We'll turn to Adam Price, then, and some further questions. Adam.

I orffen, rwyf i'n cymryd, Cadeirydd, ie? Gan droi at gynaliadwyedd, ydych chi'n gallu—

Just to finish, Chair, yes? Turning to sustainability, can you—

Popeth yn iawn. So, y pwnc dan sylw yw cynaliadwyedd a sero net. Ydych chi'n derbyn y gall gostyngiad yn y llinell wariant yn y gyllideb ar gyfer Ystadau Cymru effeithio rhywfaint ar waith yn ymwneud â sero net?

All right. The subject is sustainability and net zero. Do you accept that a reduction in the BEL for Ystadau Cymru can have some kind of impact on work regarding net zero?