Leader attacks 'unfair' financial settlement from Welsh Government

Conwy Council's Leader Charlie McCoubrey has written to Welsh Government citing his concerns about an 'outdated system' which has resulted in the county receiving one of the lowest financial settlements in Wales.

As a result, the public services available in the county in 2024/25 are expected to be negatively impacted.

Furthermore, he cites neighbouring counties in Denbighshire and Gwynedd which have received more positive settlements but cannot fathom why Conwy should be at a disadvantage.

Read Mr. McCoubrey's letter in full.

I am writing to formally respond to your consultation following the announcement in December 2023 of the Provisional Local Government Revenue and Capital Settlement for 2024-25.

Whilst we are grateful that Welsh Government have applied a floor to the settlement, the proposed 2% uplift for Conwy County Borough Council will have a further detrimental effect on the range and level of services that we are able to provide to all of our residents.  

A 2% increase in AEF for Conwy equates to an increase of just £4.1m towards pay and price inflation and increasing service demand expected in the forthcoming year. This is further eroded by the withdrawal of grant to fund Welsh Government’s decision to increase the Teachers September 2022 pay award by 1.5%, which is an additional burden of some £800,000 for Conwy.  

To put the remaining additional funding of £3.3m in context, the additional cost to the Council to ensure that Welsh Government’s commitment to pay all care workers in Wales the Real Living Wage (which increased by 10%) will cost the Council £5.3m in 2024/25 as we increase care fees to keep pace with the inflationary uplift.  Whilst we recognise that Welsh Government introduced some funding into the settlement when it originally made this commitment, it does not appear that any recognition has been given since to fund the ongoing pressures as a result of the annual wage growth.

In addition to the specific pressures already referenced the Council faces a range of other funding pressures in 2024/25 including pay awards for Teachers and local government staff, general inflation, higher cost of borrowing as well as significant demand led pressures in social care and homelessness, which total around £29m. After the settlement of £4m, we therefore face a resource shortfall of £25m. Despite Conwy having the highest increase in Council Tax in Wales in April 2023, we will once again have to consider a higher increase than we would otherwise want to impose on our residents who are still struggling with the cost of living crisis. However Council Tax cannot close a shortfall of £25m and we will therefore be forced to consider a range of unpalatable decisions on the level and quality of the services that we provide, which will impact negatively on our residents.

We remain firmly of the view that the funding formula used to determine the funding allocation is dated, fundamentally flawed and no longer fit for purpose.  It is creating inequality across Wales.  

Conwy’s population has the highest proportion (27%) of residents aged 65+ in Wales, yet the funding formula does not take into account the most recent available data in this measure.  

Furthermore, the costs within the formula allocated in respect of elderly residents have no correlation with the actual cost of providing services and care today.  Conwy is unique in that a high proportion of its social care services, including statutory services, are delivered by external providers with cost increases well above inflation and the 2% uplift.

We consider our County to be very similar to our neighbours in Denbighshire and Gwynedd, yet we continue to receive significantly lower per capita funding than both of those Councils. In the provisional settlement, Denbighshire received some £243 per capita more than Conwy, which would equate to a further £28m in funding for Conwy if supported at the same level. Whilst we recognise that there are some differences between us and that Denbighshire has some areas of high deprivation, we are equally of the view that we share many similarities to the extent that a difference of some £28m defies logic. 

In both the 2023/24 settlement and the 2024/25 provisional settlement, Conwy has suffered as a result of the redistribution following the update of population data following the last census. Despite us only having a minor decrease in our overall population, we have lost significantly as a result of the redistribution as a result of the relative change compared to others.  We believe that consideration should be given to providing a longer period of transitional protection/phasing to authorities subject to funding reductions due to population decreases to reflect that making the necessary adjustments to service provision takes longer than the current two year phased protection. Furthermore, in reality the cost of services remains much the same despite a reduction of around just 400 people in a population of some 114,000.

In the last decade, Conwy has made cuts of over £80m.  In excess of £10m additional recurring cuts will be required to balance our budget for 2024/25 and services are being decimated to enable us to set a balanced budget as we are legally required to do so.  I have set out below some further examples of the impact that these latest cuts will have on our Social Care and Education services, but do not underestimate the detrimental impact that over a decade of cuts have had on our ability to deliver effective, quality services to our residents.   

Social Care

The work in re-focussing grants is leading to a reduction in grants which fund preventative social care services. Conwy has seen a 20% reduction (£400k) reduction in the Social Care Workforce grant. Grant criteria are resulting in increased delivery requirements which require additional resources, compounding the existing financial difficulties local authorities are facing.
Grant allocations are not accounting for inflationary cost increases and grant funding is critical in the delivery of those preventative services which support delivery of our core services. Without these preventative services, Conwy is losing opportunities to work more cost effectively and will see increased costs and inefficiencies in the longer term.
There is a reliance on agency workers within the social care sector in Conwy due to difficulties in attracting and recruiting people. External providers face competition from other sectors paying similar salaries and so are having to offer salaries above the real living wage to attract and retain staff. This is placing upward pressure on the care fees that we are charged.
Education

The insufficient settlement is requiring Education to consider radical approaches to service delivery, including reducing school operating hours and reducing the GCSE and ‘A’ level subject choices. These approaches will have a significant adverse impact on the provision of a quality education for the county’s young people. A reduction in subject choices for GCSE and ‘A’ Level would likely occur in arts and cultural subjects, resulting in skills shortages in these areas for the wider economy.  A reduction in school operating hours would place pressure on parents to provide additional childcare arrangements and for working parents this would result in increased childcare costs.
Recruitment and retention of key staff is becoming ever more challenging and we are now experiencing resignations of head teachers who are citing that it is impossible for them to manage their school budgets given the limited resource available.  Short term grant funding also makes it difficult to attract and recruit staff into the service, with 1 year fixed term positions clearly not attractive when compared to a longer fixed term or permanent position elsewhere.
School transport and energy costs continue to increase significantly higher than the 2% increase in the settlement. Funding to reduce energy consumption within schools is sporadic, does not cover the whole school estate and takes time for energy and cost savings to be realised.
Your letter sought views specifically around the impact on the Welsh Language and it is evident that the settlement will significantly impede Conwy’s ability to effectively deliver its Welsh in Education Strategic Plan. Over the years Conwy has sought to protect its schools from the impact of insufficient funding, but the realities of the financial situation is that this is no longer possible. As a result schools are struggling to manage within their individual schools budgets and the range and depth of their offer is increasingly under pressure, including those relating to the Welsh Language. 

As a final observation, Welsh Government funding announcements and initiatives are often targeted at ‘Health and Social Care’ where it is evident that in reality, funding is disproportionately directed to and consumed by Health Bodies, with little regard for the significant related costs that Local Authorities continue to incur for care, as well as the vital work that we do to prevent further demand on health services through early intervention, as well as supporting the discharge of patients back into the community. It would therefore be pleasing to see more funding directed specifically to Local Authorities in recognition of the significant part Social Care plays in the overall equation.

Local Government used to be a career of choice and it saddens me that this is no longer the case.  It is becoming increasingly difficult to attract, retain and motivate staff to deliver high quality services in the current environment, particularly when local government pay lags behind other parts of the public sector. The increasing demands and lack of resources are destroying the sector and there is no option but to scale back valuable services or cease them completely.

Cllr. Charlie McCoubrey
Council Leader and Portfolio Holder for Finance & Finance Strategy
Conwy County Borough Council