Welsh Government Uncertain on £109m Funding for Tax Increases
The Welsh Government is unclear on the £109m needed to address tax hikes affecting public services
Wales, Tax Hikes, Public Sector, Funding, Local Government
Cardiff: The Welsh Government is still trying to figure out how much cash it will get to cover a hefty £109 million cost from tax increases in the public sector. A committee meeting revealed that they’re in the dark about the funding details.
Jayne Bryant mentioned that the UK Government has promised some funding to help public-sector employers with the rising national insurance costs starting in April. But the local government secretary in Wales said they’re expecting to hear more about the funding in late spring.
Plaid Cymru’s Siân Gwenllian raised some serious concerns about how these tax hikes could hit local services hard. The Senedd’s local government committee was looking into the spending plans for 2025/26 when she brought it up.
Judith Cole, who’s in charge of council finance policy, pointed out that the Welsh Government thinks the tax hike will cost the public sector around £109 million. When asked how the funding would be split among councils, she said they might use the usual funding formula or base it on spending proportions like they do in England.
However, she also noted that they need to consider other factors since some councils provide more services through their own staff. Reg Kilpatrick, the director of local government, added that they’re really relying on negotiations between the finance cabinet secretary and the UK treasury.
Ms. Gwenllian warned that these tax hikes could also hurt the voluntary sector and outsourced services, putting even more strain on council budgets. She shared that she spoke with three councils, and one mentioned it would cost an extra £2 million for internal salaries and £2.5 million for commissioned work.
Another council said they’d face £5.4 million in internal costs and £2.8 million for outsourced work, while yet another estimated £8 million internal and £3 million for outsourced services. There’s a lot of work being commissioned beyond what local authorities handle, and there’s no word on any support for that.
During the evidence session on January 15, Ms. Bryant confirmed that the UK Government will use the Office for National Statistics definition of a public sector worker.