TEMPORARY accommodation and additional business rates relief are two areas that are among more than £350,000 worth of budget cuts proposed in Merthyr Tydfil.
Budget reduction proposals for 2025/2026 of £354,000 have been put forward and include a cut of £184,000 in housing, £142,000 from non-general fund allocations, £18,000 from rent allowance and £10,000 from discretionary non domestic rates relief, otherwise known as business rates relief.
The approved revenue budget for 2025/26 of £172.513 million included the need to identify in-year savings of £354,000 through the council’s transformation programme.
The details of these are contained in a report going before the combined governance and audit and joint scrutiny committee on Monday, December 1.
The housing budget reflects funding for housing provision including temporary accommodation.
The rationale for the £184,000 budget reduction here is that during 2025/26 the temporary accommodation demand has seen a reduction and therefore the budget is proposed to be reduced by £184,000 which is currently deemed sustainable across the term of the medium term financial plan.
It says demand may increase over the short to medium term due to the Homelessness and Social Housing Allocations bill which is currently being scrutinised by Welsh Government committee.
The non-general fund allocations reflect the proportion of support services salary costs allocated to projects in the capital programme and to the individual schools budget.
The rationale given for reducing the budget by £142,000 says that for 2023/24 the budget was increased to £935,000.
This increase in allocation to non-revenue budgets results from the prevailing trends in relation to increased pay awards, with an average of 4% experienced for 2024/25 and 3.2% increase for 2025/26 financial years.
The outturn for 2023/24 was £1.145m and provisional outturn for 2024/25 is reported at £1.219m and so it is considered realistic to realign the budget by £142,000 for 2025/26, the report says.
Rent allowances relate to the housing benefit subsidy grant received from the Department for Work and Pensions (DWP) together with the recovery of claim overpayments.
The rationale for reducing this by £18,000 says that the DWP fund 40% of claim overpayments through the housing benefit subsidy grant.
It say recovery of claim overpayments is also carried out through the corporate sundry debtor process which results in the generation of a relatively small surplus with a £46,000 net budget surplus budgeted for 2025/26.
Because of surpluses of £72,000 for 2023/24 and £116,000 for 2024/25 it is considered realistic to realign the budget by £18,000
for 2025/26, the report says.
The Discretionary Non-Domestic Rate Relief relates to funding for additional discretionary rates relief for local businesses and other ratepayers to respond to specific local issues.
The rationale for the £10,000 reduction here says that for 2023/24 the budget was reduced to £44,000.
The actual award for 2022/23, 2023/24 and 2024/25 was £44,000, £29,000 and £31,000 respectively so it is proposed that the budget be reduced by £10,000.
There is an expectation that further significant savings will be delivered in subsequent financial years once further projects have been prioritised.
A council report in March 2025 indicated further budget reductions will be made through a wider transformation programme and that it is recognised that these savings will have a part year impact for 2025/26 and begin the budget process for 2026/27.
The report says that projects included in phase one of the transformation programme were selected based on the feedback from workshops and the potential to deliver visible benefits to residents and staff whilst also laying the groundwork for longer-term transformation.
It says that the projects “align closely with work being done to improve service delivery, and by focusing on these projects in the first instance will help build momentum and help shape a culture of continuous improvement across the council.”
The projects may change as the programme progresses based on priority, further scoping and the outcome of any changes to the council operating model.
No cash releasing savings are expected to be realised during the current financial year.
The report says the updated medium term financial plan reported to full council on November 12 indicates a projected budget deficit of £5.619 million for 2026/27.
It says: “It is crucial that the total required in-year savings of £354,000 for 2025/26 is identified during the financial year.
“This will enable the transformation programme to then focus solely on the savings requirement for 2026/27 onwards.”
