FUNDING for Welsh councils will fall short of the amount required to meet spending pressures over the next Senedd term if UK Government spending plans in England remain as they are.

According to analysis by Cardiff University’s Wales Governance Centre, this funding gap amounts to £178 million in 2022−23, and averages £132 million a year between 2023−24 and 2025−26.

The vast majority of the Welsh Government’s budget comes from the UK government’s block grant.

The block grant uses the ‘Barnett Formula’ to assess how much money the Welsh Government receives based on equivalent spending in England.

Alone, the projected shortfall is a substantial challenge for the next Welsh Government.

However, the budget for councils could be squeezed even further if the next government decides to direct funding towards addressing the growing costs of the pandemic, such as the cost of clearing the elective surgery backlog.

In this scenario, local authorities would face a potential funding gap of £607 million next year, and an average shortfall of £362 million per year over the following three years.

The report also finds that social services will account for 55 per cent of all local authority spending pressures in Wales by 2025−26.

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Cian Siôn, a researcher on the Wales Fiscal Analysis project, said: “Although more than a £1 billion has been provided to local authorities to aid their response to the pandemic during 2020−21, from next year, government spending is once again set to become more restrained.

“Even though the block grant is set to grow in real terms over the next five years, growing demand for services, including social care, and significant post-pandemic pressures combine to create a challenging outlook for the Welsh and local authority budgets.

“This challenge kicks in immediately with a substantial funding gap next year, based on current UK Government spending plans.”

Local authority spending fell by 9.4 per cent between 2009−10 and 2019−20 in Wales, the equivalent of £220 per person.

Council Tax now accounts for a significantly larger share of the total tax take in Wales (5.4 per cent) than in both England (4.3 per cent)) and Scotland (3.8 per cent)).

Commenting on what the projected shortfall may mean for Council Tax rates, Mr Siôn added: “Our analysis suggests that above-inflation increases to Council Tax here to stay.

“In our model, we assume a 4.5 per cent annual increase to Council Tax bills from 2022−23 to 2025−26, and even this is not sufficient to meet funding pressures in full.

“This strengthens the case for revisiting the way the local taxation system operates in Wales.

“A policy which pivots around inflation-busting Council Tax increases every year is an unsustainable way of funding local authorities in the long-term.”

Last week, the Wales Governance Centre revealed a £740 million funding gap for the Welsh NHS in 2022−23.

Funding shortfalls to local authorities and the NHS will be a headache for whichever party, or parties, form the next Welsh Government.

This article originally appeared on the Argus' sister site The National.