5. Debate: The Local Government Settlement 2023-24

Part of the debate – in the Senedd at 4:53 pm on 7 March 2023.

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Photo of Mike Hedges Mike Hedges Labour 4:53, 7 March 2023

You know how important I believe local government is, and you've heard me talk for the best part of 12 years now about the importance of local government, the importance of supporting local government. I'm not going to say anything different to that today.

I welcome the Minister's intention of setting local government core revenue funding for 2023-24 at £5.5 billion. This means, after adjusting for transfers, overall core funding for local government in 2023-24 will increase by 7.9 per cent on a like-for-like basis compared to the current year. No authority will receive less than a 6.5 per cent increase. The indicative Wales-level core revenue funding for 2024-25 has also increased, as additional funding for the revenue support grant in 2023-24 is now put into the baseline.

This of course was an excellent settlement when we heard it, when it was first proposed, but we've had inflation, including increased costs of energy, which can be very eyewatering for schools, for example. The increased wage costs, including teachers, unless additionally supported by the Government, cause budget pressures on local authorities. As a result of spending decisions made in relation to education in England, Wales received a consequential of £117 million a year in the autumn statement. This is being provided in full to local government. I very much welcome that decision to provide all the available funding upfront.

Authorities will have to make prudent assumptions as part of their budget planning on this, as well as for other staff, but good job they've got, in many cases, fairly substantial reserves, if it becomes more expensive than they thought it was going to be. Discussions continue with the teaching unions over agreement on the 2022-23 academic year pay negotiations. This means that, depending upon the final agreement, some local authorities could face a shortfall in the money needed for education. Good job we've got those reserves, isn't it?

I will start by discussing the standard spending assessment. For each local authority, it'll discuss the additional external finance, finishing with the ability of local authorities to raise money from council tax fees and charges. The standard spending assessment, known as the SSA, is the mechanism for the distribution of resources to local authorities. The SSA is the Government's mechanism for allocating grants, based on a calculation of what each local authority needs to spend to deliver a standard level of service at a common rate of council tax. For the purpose of calculating individual SSA allocations, local government is broken down to 55 notional service areas.

It is very important to remember, however, that authorities' elements for the individual service areas are unhypothecated. Their notional figures serve as the building blocks for the total SSA. They do not represent spending targets for individual services, and are not meant to be prescriptive. But it does mean that if you're serving on a local authority or a Member here and you want to look at how a local authority is doing, you can see what their education SSA is, how much they're spending, and whether they're spending above or below that. If they're spending below that, you might want to ask why.

When I was involved in highway maintenance, we went from 52 per cent population and 48 per cent road length to 50 per cent for each. That moved £700,000 from large urban areas like Swansea and Cardiff to rural areas like Powys and Gwynedd. Small changes can have a substantial effect on the overall standard spending assessment. The increase in the standard spending assessment for 2022-23 varies between 5.6 per cent in Rhondda Cynon Taf and 7.1 per cent in Newport. The standard spending assessment per head for each council varies between £2,520 in Blaenau Gwent to £2,049 in Monmouth.

A separate method of distribution exists for each service element in order to distribute the total across the authorities. This method falls into two categories: a formula based on indicators of need, and distribution based on actual expenditure or estimates of expenditure. Formula based is the one that is best, and the one that people want to see being used more. I'm sure Welsh Government Ministers are fed up with me asking for this, but why cannot they publish their workings? Why can they not publish how they calculated each element of the standard spending assessment for each local authority? You'll always have people saying they've been underfunded, because all you end up with is a number at the end, and when you end up with a number at the end and you don't like that number, you say it's wrong. But why can you not publish those workings? You've got them, they're there; you couldn't be producing the standard spending assessments if you didn't have them. So, please, please publish them.

The aggregate external finance is calculated from the standard spending assessment and councils' nominal council tax receipts. These vary per capita between £2,049 in Blaenau Gwent and £1,300 in Monmouth. Again, these figures are published but the calculations, again, are not. Please publish them. Comparing Blaenau Gwent with Monmouth, Blaenau Gwent's properties are almost all in the lower two bands, whilst most properties in Monmouth are band E and above, meaning Monmouthshire has a greater capacity to raise money with the same percentage increase in council tax. So, what I'm trying to say is: can you publish the calculations, not just the end results?