Welsh councils face £609m deficit over next three years

Local authorities have drawn up projections for future budgets

Local authorities are predicting a budget shortfall of £609m over the next three years as public finances are squeezed.

Figures obtained by BBC Wales show that authorities are planning for cuts of between 5% and 20% to their budgets.

Cuts for 2010/11 will be absorbed by the Welsh Assembly Government.

Steve Thomas, chief executive of the Welsh Local Government Association (WLGA), said the figures were "conservative predictions".

He described the level of cuts as "frightening" but warned they could get worse and last up to a decade.

Figures for Wales' 22 local authorities reveal that councils are planning for deep shortfalls between the budgets they will raise through council tax, the grants they receive from government and their expenditure on services.

According to the figures obtained by BBC Wales local authorities are projecting a budget shortfall of £203.8m in 2011/12 and £609.1m for the three years up to 2014.

The figures have been drawn up by councils on the expectation they will receive cuts of 3% to revenue and 10% to capital from central government.

Any increase to that will mean many more millions lost from their budgets.

The UK government will announce the details of its Comprehensive Spending Review on October 20, as it attempts to cut a national debt expected to reach £900bn in the next few years.

Local authorities will then learn the details of their grant and are expected to detail which services are to be protected or hit in the coming years.

The WLGA'S Steve Thomas said councils would seek to protect statutory services.

"Children's services are not going to be cut and the education agenda won't be cut," he added.

Dr Andrew Crawley, senior lecturer in economics at the University of West England, said cuts to councils were favoured by central government because they were "a quick way to bring down the deficit".

But he warned: "There will be a huge spillover effect on the local economy.

"In Wales where public sector employment is so high, and in areas like Swansea where it is over 30%, there will be a knock-on effect when jobs are lost."

Open door

Earlier this year Local Government Minister Carl Sargeant said his door would be open to local authorities facing problems.

A spokesperson for the minister said the assembly government had been "pushing the UK government hard to recognise the vital importance of protecting essential front line services and to minimise risks to the fragile economic recovery".

Wales' largest councils in terms of population - Cardiff, Swansea and Rhondda Cynon Taf - are planning for a total shortfall of £164.1m over the next three years, more than a quarter (26.9%) of the total deficit for Wales.

BBC Wales understands that the Vale of Glamorgan and Conwy's predictions are based on being able to increase council tax by up to 5% over the next three years.

A spokeswoman for the TaxPayers' Alliance, which opposes all increases to taxation, said councils should be focusing on spending cuts instead.

"We need to balance the country's books but by cutting spending and not by raising taxes," she said.

Caerphilly Council said it was introducing "radical and challenging solutions" to make money go further as it fears its shortfall could rise to £40m.

Deputy leader Colin Mann said: "We have already started work to re-model our workforce and will continue to reduce the number of people we employ...

"The main message I want to deliver is that although the next few years will be tough, we will do everything possible to limit disruption to key services and ensure our residents continue to receive good value."

Rodney Berman, leader of Cardiff council, said the authority was still drawing up its options and was waiting to find out "just how bad" the settlement would be.

According to the figures obtained by BBC Wales, Cardiff is projecting a shortfall of £56m over three years.

He said the authority would not be pushing for council tax rises above 5% a year.

"We cannot keep asking the public to shell out more and more on council tax. Any higher than 5% and we would be capped by the Welsh Assembly Government."

"We have to think about what people can afford to pay in council tax and what we can afford to deliver in terms of services."