A 5% INCREASE in council tax is now being considered for Merthyr Tydfil residents next year.
The latest council budget proposals for 2025/2026 say that no decision has yet been made but council tax is currently budgeted at 5% for next year with every 1% increase to the budgeted tax increase giving the council a net additional £300,000.
The council was previously looking at an £8.77m budget gap but this has been reduced to £5.27m when taking into account the impact of the revenue settlement (-£6.69m), pay pressures (+£1.1m), adjustments to the council tax base (+£95,000), additional service demands (+£3.31m), a review of assumptions (-£1.77m), 2024/25 savings not achieved (+£95,000) and contribution to general fund reserves (+£350,000).
The provisional Welsh Government settlement resulted in a funding increase of 5.1% for Merthyr Tydfil next year.
In January, cabinet member for education, Councillor Gareth Lewis, Labour, said that with the administration’s commitment to drive up standards of education and positive outcomes for young people in Merthyr Tydfil, no additional savings were required from schools during 2025/2026.
The council is faced with £3.31m in unavoidable additional demands resulting from service financial pressures such as demographic growth, legislative changes, new initiatives, loss of income and changes to grants terms and conditions.
Service efficiencies of £3.27m million for 2025/26 have been identified by managers which include the realignment of budgets by reviewing medium term financial plan assumptions, general operational savings, the receipt of additional grant income, increased income generation and efficiency initiatives.
A business case proposing to close household waste recycling centres (HRCs) by an extra one day per week had been developed but cabinet have decided that this business case will not be recommended to council for approval.
The corporate vacancy factor reflects the salary savings resulting from the natural delay between a post becoming vacant and subsequently being filled and the plan is for the budget for this to be kept at £1m for next year.
The council’s net spend for next year is set to be £172.48m which is made up of:
- Education: £68.59m
- Social services: £51.44m
- Economy and public protection: £10.34m
- Neighbourhood services: £12.87m
- Governance and resources: £9.46m
- Corporate authority: £25.31m
- Transformation programme: -£350,000
- Non-general fund allocations: -£935,000
- Discretionary non domestic rates relief: £44,000
- Collection fund surplus: -£850,000
- Corporate vacancy factor: -£1m
- Use of budget reserves: -£1.5m
- Contribution to general fund reserves: £350,000
- HMRC employers national insurance contributions: – £1.56m
- Pension strain: £247,000
The net income is set to be £172.33m including £133.14m from the settlement, £39.27m from council tax and the council tax base adjustment costing £95,000, leaving a remaining budget gap of £153,000.
The budget proposals include the use of £1.5m of earmarked reserves from an underspend in the 2023/24 revenue budget.
The report said that, under the current economic circumstances, this was considered a necessary “one-off” budget contribution for 2025/26 but unsustainable over the medium term.
The final local government settlement is due to be announced on February 25 with no significant changes expected.
The report said that work continued to decide the appropriate levels of council tax and use of earmarked reserves in order to set a balanced budget for 2025/26.
It also said work would continue throughout 2025/26 to identify savings and transformation opportunities as the council continued to strive for long-term financial sustainability.
The proposals will be discussed at a special combined governance and audit and joint scrutiny committee on Wednesday, February 19.
