DIRE predictions for the state of Newport council’s finances were made in a report that suggested the authority could face a funding gap of £80 million in eight years’ time.
Analysis suggests that the gap between how much councils are funded and how much they need to spend could grow to as much as 29 per cent by 2020.
The report also suggests the council is facing a potential deficit of almost £6 million in next year’s budget.
A cabinet report on the medium term financial plan quotes a study by the Local Government Association which is said to show a funding gap for councils of £16.5 billion a year by 2020.
The Newport report states that a 29 per cent gap between funding and spending by 2020 is equivalent to around £80 million per year in the city, or as much as the current schools budget.
The model presumes that cash from business rates, from the government and from council tax will fall while spending continues to rise.
Efficiency and tactical savings which have addressed challenges in the current and previous budget would not provide the answers “with these sorts of projected funding levels,” the report read.
With inflation and other pressures the council could face a £5.7 million deficit – with £4.1 million made up from inflationary pressures.
However that does not include changes to grants distribution, other services pressures or costs of a capital programme when the current one ends in 2013/14.
The council is due to draw up a programme of savings between July and October 2012, and will agree it for consultation by December.
The report will be raised when Newport council’s cabinet meets on Monday.
Commission to test budget decisions
A NEW commission to be headed by a city academic is to test whether the future Newport council budget decisions will make people poorer or disadvantage communities.
If the council’s cabinet approves plans at Monday’s meeting, a new fairness commission will look at the nature and extent of inequality in the city, and recommend ways of tackling the problem.
The commission, thought to be the first of its kind in Wales, will monitor council decisions and policies to ensure Newport is a “fairer and more prosperous” city, a council spokeswoman said.
Professor Steve Smith, a professor of political philosophy and social policy at Newport University has been appointed chairman.
Establishing the commission had been a manifesto commitment for the Labour group, which won control of the council in May.
Council leader Bob Bright said: “A fairness commission will assist the council in its aim of narrowing the gap between the most disadvantaged and the most affluent areas of Newport.”
The commission will have a budget of £5,000 to cover expenses.