Local council budgets squeezed 'until at least 2020-21'

Money will be tight for local councils in Wales until at least the end of the decade, according to a think tank.

A study by the Institute for Fiscal Studies sets out the challenges Welsh councils face meeting rising demand at a time of spending cuts.

It comes as council leaders meet on Friday to discuss ways of saving money.

The biggest union for public sector workers said councils should boost wages by introducing a living wage for the lowest paid staff.

A Welsh Local Government Association (WLGA) conference in Cardiff on Friday is looking at how councils deal with shrinking budgets at a time when demand for services is increasing.

A study for the WLGA by the Institute for Fiscal Studies (IFS) says "the financial situation for unitary authorities looks difficult until at least 2020-21," although the state of the economy and government decisions will have a bearing on their spending power.

In what the IFS calls its "most pessimistic" scenario, councils' spending power will fall by 18%.

WLGA deputy leader Aaron Shotton said: "This timely report acts as a wake up call on the true severity of the current and long-term financial crisis in public spending in Wales.

"Such large cuts, in addition to those already made will be difficult to achieve without affecting the range and the quality of services currently provided to local residents.

"Such a bleak financial climate means that councils may be forced to cut, or scale back spending on a vast array of services that they have traditionally delivered."

Local government in Wales is planning to spend £6.35bn on services this year, which amounts to £2,062 per person.

The IFS report reveals where the axe has fallen in county halls.

Council spending on regulation and safety services will take the biggest hit between 2009-10 and 2012-13, down 24.6% per person.

Spending on social services has been relatively protected, falling by 3.8%, and education spending has been cut 7.3% per person.

The report says a Welsh government decision not to provide real-terms protection for the NHS has meant smaller cuts fall on local councils.

Local authorities could expect a bigger dose of pain if the Welsh government were to ring-fence NHS spending and maintain it in line with inflation, the IFS says.

Dominic MacAskill, head of local government for Unison in Wales, said councils should oppose public spending cuts imposed by the UK government and "challenge austerity Britain".

He said: "At the moment we've had public sector workers on a three-year pay freeze.

"Low paid-workers getting close to the minimum wage.

"You cannot provide public services on the cheap."

He called on the WLGA to introduce a "living wage" that would "give a fillip to the local economy".

Cardiff council says its commitment to introduce a living wage will mean the pay of more than 2,000 staff rises to £7.20 an hour, £1.12 above the minimum wage.