Part of the debate – in the Senedd at 3:40 pm on 7 February 2023.
I will be speaking in my capacity as Chair of the Local Government and Housing Committee. I would like to thank the Welsh Local Government Association, the Minister for Finance and Local Government and the Minister for Climate Change for attending the committee's evidence sessions.
As a committee, Llywydd, we acknowledged that setting a draft budget in the face of extreme economic pressures is a difficult challenge for the Welsh Government. We welcomed the increase in funding for all local authorities, and in particular that the overall increase is higher than the indicative figures provided last year. But despite this, of course, the increases are lower than the rate of inflation, and we are concerned that inflationary pressures mean local authorities will still be facing difficult decisions that could impact on service delivery.
Local government told us of an overspend of £200 million across Welsh authorities in the current financial year, which will have to be recovered from reserves, and that's despite the increase in funding provided at the start of the year. Relying on reserves to cover overspend is not sustainable, of course, and local authorities told us they are already fearful of the resources available for future years. We believe it is crucial that the Welsh Government and local government prepare now for sustained pressures on local authority budgets in order to mitigate further cuts to already-stretched services. We have therefore recommended that the Welsh Government outlines how it is working with local government to prepare for sustained pressure in future years.
We have a particular concern around the capital funding for local authorities. We welcome the increase in general capital funding, but are mindful again that inflationary pressures mean that authorities won't be able to do as much with that funding. Local authorities told us that, once more this year, highway maintenance is still a pressure for most councils. It is therefore disappointing that there is no specific highways capital funding in situ. Before finalising the budget for the next financial year, we would like the Welsh Government to look again at the overall allocations for the local transport fund and ensure there is sufficient capital funding for local authorities to adequately maintain the highway and roads network.
Another recurring concern relayed to us by local government was the continued challenge to recruit and retain staff to work in the social care sector. The chair of the Health and Social Care Committee will speak, I know, of their concerns on this issue. We support that committee's recommendation that the Welsh Government should commit to providing six-monthly updates on the work of the social care fair work forum.
Llywydd, we were concerned that the funding allocated to the Gypsy and Traveller sites capital grant is lower than in previous years, particularly as during our inquiry into the provision of sites we heard and saw that some local authority sites are in urgent need of maintenance or refurbishment. But, as a committee, we were even more concerned to learn that there has been no spend from the capital grant during this financial year and none is forecast to occur before the end of March. We believe this is a stark illustration of why we decided to undertake our work on the provision of sites for Gypsies, Roma and Travellers in the first place and shines a light on the extent of the problems in delivering sufficient and suitable accommodation for these communities. It does seem to be too low a priority for the Welsh Government and local authorities, and this has to change. We have made a joint recommendation with the Equality and Social Justice Committee and recommended the Welsh Government should urgently set out the reasons for the lack of progress on the use of the Gypsy and Traveller site capital grant and how it plans to work with local authorities to ensure take up of this important fund. It should also clarify what will happen to the underspend from last year's budget.
Homelessness and related support services is another area of concern for us in this draft budget. There is an unprecedented number of people currently in temporary accommodation in Wales, and this, of course, puts severe resourcing pressure on support services. An additional revenue funding of £10 million has been allocated for homelessness prevention, but we are concerned that this is not enough to deal with current challenges. The housing support grant allocation remains at £166.8 million in cash terms. This is a real-terms reduction. Services funded by this grant are critical to the prevention and alleviation of homelessness. We are therefore worried about the impact that this cut will have on these services at a time when we are relying on them more than ever. It's also worrying that front-line staff, who are working incredibly hard, are struggling to make ends meet.
We appreciate the challenge facing the Minister for Climate Change in setting the draft budget, but we recommend that the Welsh Government must make it a priority to provide additional funding for the housing support grant ahead of the final budget. It's a key area of preventative spend. We are also concerned with the number of people in temporary accommodation and the 22,000 long-term empty properties in Wales, and we believe that they must again be given more priority. And, of course, the 20,000 additional homes, Llywydd, even though these will not be all new builds, we are very concerned that it is going to be difficult to reach this target, given the cost of materials and issues with the supply chain and workforce.
Decarbonisation is the final area of the committee's concern, Llywydd. But we are very supportive of the Minister's decision not to roll back on housing standards as a cost-saving measure. We are facing a climate crisis, and that is the right decision. Diolch yn fawr.