A plan is in the works for Welsh councils that are facing bankruptcy, with the possibility of a funding gap of £744 million by 2027/28 looming over them. Welsh local government minister Jayne Bryant revealed that council leaders have expressed the severity of the situation to her, prompting the need for a contingency plan in case any of the 22 councils in Wales find themselves on the brink of financial collapse.
During a session at Senedd’s local government committee, Bryant highlighted the challenges faced by councils in Wales. She stated, “We’re jointly developing, with local authorities, a protocol to apply in case of significant financial challenge.” Bryant acknowledged the strain on services, reductions in funding, and the pressure on elected members and officers.
Audit Wales reports on council finances have raised concerns about the financial sustainability of some councils, with the Conservatives’ Altaf Hussain cautioning about fundamental issues that could jeopardize their financial stability. Bryant assured that if necessary, she has the authority to intervene, emphasizing that it would not be a decision taken lightly.
Deputy director for local government finance Judith Cole outlined that if a council issues a section 114 notice, indicating bankruptcy, it could seek assistance from the Welsh Government. However, there is a sense of collective acknowledgment within the sector about the challenges being faced, with a focus on addressing issues before reaching a critical financial stage.
The protocol being developed aims to ensure transparency and foresight in dealing with financial crises, with an emphasis on early intervention to prevent drastic measures like bankruptcy. The Welsh Government maintains an open dialogue with councils regarding their finances throughout the year, seeking to address concerns and provide support where needed.
As the Welsh Government awaits the UK budget on October 30 and prepares to publish its draft budget on December 10, clarity on financial allocations to councils for the upcoming year is expected to emerge. Despite the financial challenges ahead, efforts are being made to safeguard essential services and ensure the financial resilience of Welsh councils in the face of uncertain economic conditions.