Minister announces £6bn funding settlement for Wales’ councils

As part of the local government settlement, published alongside the Welsh Government’s Budget for 2020-21, local authorities will receive nearly £4.5bn in core revenue funding and non-domestic rates to spend on delivering key services – an increase of £184m from 2019-20, on a like-for-like basis.

The non-hypothecated general capital funding for 2020-21 will be £198m (including £20m for public highways refurbishment grant) - an increase of £15m over that announced in the final Welsh budget last year.

The increase in capital budgets over last three years enables local government to invest in increasing the supply of housing, which will minimise the pressures on local authority budgets and on homelessness services. It will also allow councils to start to respond to the urgent need to decarbonise, in light of the climate emergency declared by the Welsh Government and many councils over the past year.

Overall, the settlement represents an increase of 4.3% on a like-for-like basis compared to the current year. No authority will receive increased funding lower than 3%, with the highest increase at 5.4%.

Specific allocations include:

£2.4m, on top of that provided through the 2019-20 settlement, for authorities to provide additional discretionary rates relief for local businesses and other ratepayers to respond to specific local issues;

• In line with the Government’s focus on countering the effects of poverty, Ministers are again providing £244m for the Council Tax Reduction Scheme. Last year, approximately 280,000 low-income households were supported by the Scheme, 220,000 of which paid no council tax at all. In 2018‑19, the average support provided to households was approximately £940 per year;
• Continuing funding for Ministers’ proposals for new eligibility criteria for free school meals, given the continued rollout of Universal Credit by the UK Government. This will continue to support local authorities in meeting the costs associated with the proposed threshold and transitional protection measures.

In addition to this, local government will receive nearly £1bn in revenue and nearly £450m in capital funding for specific Welsh Government grants in 2020-21.

The Welsh Government will continue to providing funding to support local government eliminate charging for child burials. 

Minister for Housing and Local Government, Julie James said:

Local Government provides essential services to everyone in Wales, including some of the most vulnerable in our communities. Strong local government is essential to the effective delivery of good quality, integrated public services to communities across Wales. 

Against the continuing constraints and lack of long term certainty for the Welsh Government budget from the UK Government, I am pleased to have been able to increase revenue funding, alongside increased non domestic rates revenue, to provide additional funding to local authorities of £184m in 2020-21, on a like-for-like basis.

This additional investment is in recognition of local government’s role as a critical partner for us, with others, in our national mission to improve education, provide the social care services our communities need, combat poverty, deliver a step change in social housing, and creating vibrant and sustainable local communities.

While local and democratically elected councils determine how they use these unhypothecated funds according to local priorities and needs, this increased funding reflects shared Welsh Government and local government priorities of investing in education and social care. 

The settlement recognises the increasing costs councils are facing in schools as a result of technical pension changes imposed by the UK Government and the Welsh Government’s decision to boost teachers’ pay. It also contributes to meeting rising costs of providing social care to people of all ages.