Projected budget shortfall at Cardiff Council rises to almost £50m

Chris Weaver, cabinet member for finance, modernisation and performance at Cardiff Council, said: “We know we have some difficult decisions and choices to make over the coming months, but we are determined to try to reduce the budget deficit in ways that will have as little impact on the people of Cardiff as possible.

“This is, however, becoming increasingly difficult.”

The report noted several areas representing a “potential increased risk to the financial resilience” of the Housing Revenue Account (HRA), including any financial impacts of the Wales Housing Quality Standard 2023 and the effect of interest rates and inflation on housebuilding.

Uncertainty over future rent levels is also “a significant risk factor for the HRA as the council cannot control or effectively predict a key component of HRA planning and budgeting”.

Earlier this year, the Welsh government extended the five-year social housing rent policy, introduced in 2020-21, to 2025-26. It allows for a maximum 1% rent increase above the rate of September’s Consumer Price Index.

Budget-cutting measures include increasing fees for some services and reducing spending.

Efficiency savings and increased council tax – which funds around 26% of the budget – will likely not be enough to plug the gap, the council said, adding that every 1% increase in council tax generates around £1.9m.

“So far, we have managed to safeguard most of the services that our residents rely on and care about, but the budget gap we face next year and over the next four years, set against the money we expect to receive, means it’s very likely we will no longer be able to deliver some services,” added Mr Weaver.

“We will, of course, consult with residents throughout this process to understand what matters the most to them.”

The council’s latest budget projection report passed through the cabinet and full council last week. Next steps will be to put together a budget and corporate plan.

The Welsh government is currently in turmoil after first minister Vaughan Gething resigned last week. He had come under fire for donations to his leadership campaign and his handling of leaks from a government group chat, prompting a number of ministers – including housing minister Julie James – to resign over his leadership.

Housing associations and local authorities are also waiting to hear the outcome of a court case over whether tenants should be refunded rent because of the landlords’ failure to provide them with a physical confirmation of electrical safety certificates.