Rebecca Evans MS, Minister for Finance and Local Government
Following today’s announcement of the Welsh Government’s Final Budget, I am publishing details of the core funding allocations for local authorities for the forthcoming financial year through the Final Local Government Revenue and Capital Settlements for 2022-23 (the Settlement). I am also publishing Wales-level indicative core funding allocations for 2023-24 and 2024-25.
In preparing the final Settlement, I have given careful consideration to the responses I received to the consultation on the provisional settlement, which closed on 8 February. The responses did not identify any matters which required a change of approach for the final Settlement.
Adjusting for transfers, the core revenue funding for local government in 2022-23 will increase by 9.4% on a like-for-like basis compared to the current year. No authority will receive less than an 8.4% increase. In 2022-23, local authorities will receive £5.1bn from the Welsh Government in Revenue Support Grant (RSG) and non-domestic rates (NDR) to spend on delivering key services.
In addition to this, I am publishing information on revenue and capital grants planned for the following three years. For 2022-23, these amount to more than £1.1bn for revenue and over £700m for capital. We are providing these indicative grant values now so local authorities are able to plan their budgets efficiently.
The indicative Wales-level core revenue funding allocations for 2023-24 and 2024-25 are £5.3bn and £5.4bn respectively – equating to an uplift in the first year of £177m (3.5%) and, in the second year, of £128m (2.4%). These figures are indicative and dependent on both our current estimates of NDR income over the multi-year settlement period, and the funding provided to us by the UK Government through the 2021 Comprehensive Spending Review.
Indications are that specific revenue grant funding will continue to be above £1.1bn annually for the duration of this multi-year settlement, and capital grants will be in excess of £700m each year.
Other than a small increase of £96 thousand to the distributable RSG as a result of a technical adjustment, I allocated all available funding into the provisional settlement to give as much early certainty as I could to authorities. I have no further funding currently available.
As in recent years, our priorities continue to be health and local government services. This significantly increased Settlement will enable local authorities to continue to deliver the services their communities want and need as well as supporting national and local ambitions for the future, including our real living wage for social care commitment and responding to the climate and nature emergency contributing to our Net Zero Wales plan.
This is a good Settlement for local government, including Wales-level core funding allocations for 2023-24 and 2024-25. It provides local authorities with a stable platform on which to plan their budgets for the coming financial year and beyond. We have worked closely with local government and we appreciate the pressures local government is facing. We will continue to protect local government, particularly at this difficult and challenging time.
I am maintaining the approach taken in 2021-22 and am continuing to freeze the non-domestic rates multiplier for 2022-23. I have provided an additional £35m in RSG in 2022-23 to offset the reduced income and a further £1m for the following two years.
Attached to this statement is a summary table setting out the Settlement allocations (Aggregate External Finance (AEF)) by authority. The allocations are derived using the formula agreed with local government. As a result of the formula and related data, the table shows the range of the funding allocations, from an 8.4% increase over the 2021-22 settlement to an 11.2% increase. Given the significant increases, I am not proposing to include a floor this year and have allocated all the available funding in this Settlement.
General capital funding for local government for 2022-23 will be set at £150m. This will increase to £200m for the following two years, including £20m in each year to enable authorities to respond to our joint priority of decarbonisation.
The setting of budgets, and in turn council tax, is the responsibility of each local authority. They will need to take account of the full range of funding sources available to them, as well as the pressures they face, in setting their budgets for the coming year.
The motion for the Senedd to approve the Local Government Finance Report (No.1) for 2022-23 is scheduled for debate on 8 March 2022.