THIS year’s increase in council tax in the Vale of Glamorgan has been questioned as the council’s reserves have shot up by £13.5 million.
Council tax increased in April for residents living in the Vale by 3.9 per cent.
Vale of Glamorgan council previously said the tax hike was needed to cover a budget shortfall of £13,545,000.
But new figures reveal that the council’s reserves increased last year by roughly the same amount, £13,513,000, raising questions over whether the tax hike was actually needed.
The council’s cabinet considered the ‘closure of accounts’ on Monday, July 5. This looks at how much money the council spent and received over the last financial year, from April 2020 to March 2021.
The closure of accounts showed a net transfer to reserves of £12,206,000, a surplus of £4,052,000 for the housing revenue account, but a drawdown of £2,745,000 from capital reserves.
Plaid Cymru Councillor Ian Johnson said: “We all know that Covid-19 has created difficult circumstances, so it is quite astonishing to see Vale of Glamorgan council make a £13 million profit last year.
“Plaid Cymru has long criticised the large amount the Vale holds in reserves—which Audit Wales say is the highest percentage of usable reserves in Wales—while Labour constantly pushes sky-high council tax rises.
“When council tax was set in March, we were told that the council faced substantial losses. In the end, though, the final out-turn is more than £30m better than the figures presented to councillors.
“Labour have protected the council’s reserves whilst pushing the costs of Covid onto local residents. Those residents won’t forget that at next year’s local elections.”
Conservative Cllr George Carroll said: “The pandemic has caused unprecedented financial pressures for many residents, and this year’s inflation-busting council tax rise will only add to them.
“That’s why Conservatives on the council voted against the increase. Instead, we proposed a real terms freeze, to be funded from reserves.
“It’s of course important to be prudent, but these figures show that it would have been affordable to help residents in these exceptional circumstances. A Conservative-run council will keep council tax low to ease the pressures on residents across the Vale.”
Previously Labour councillors argued, when setting the council tax increase in March, that it would not be sensible to spend money from the council’s reserves, partly due to the uncertainty around coronavirus and new variants.
During the cabinet meeting this week, council leader Neil Moore said the pandemic meant some money could not be spent on work which had to be postponed, and the Welsh Government has provided a lot of financial support to councils to help with coronavirus.
Cllr Moore said: “Some of the transfers into the reserves were made due to the fact that we are in the middle of a pandemic and the fact that Welsh Government has given some extra money to places like schools, for example.
“[The increase in the housing revenue account] was partly due to the fact that they couldn’t carry out some of the work that they intended due to Covid-19. They weren’t able to carry out repairs and changes in people’s houses. We also wanted to build some extra facilities, which we weren’t able to do.
“The revenue position for 2020–21 was particularly challenging, both operationally and financially as a result of Covid-19. But since March 2020, the Welsh Government has provided financial support via the local authority emergency hardship grant. Between March 2020 and March 2021, the council received £15 million from the Welsh Government.
“Covid-19 was a particularly difficult year and I have to say the Welsh Government played trumps in supporting all local authorities.”
According to Audit Wales, the Vale council had £83 million of usable financial reserves, as of March last year. That’s about a third of the council’s annual spend on services, which is the highest rate of all 22 councils across Wales.
Responding to the opposition councillors’ comments after the cabinet meeting, Cllr Moore said: “As detailed in the closure of accounts report, the cost of Covid-19 has not been passed on to tax payers as Welsh Government grants covered most of this outlay.
“A council tax increase of 3.9 per cent was agreed in early March last year. This was modest compared to many other areas of Wales and necessary to protect vital services following years of local authority underfunding. The ability to make transfers into reserves was due to the receipt of a large number of Welsh Government grants very late in the financial year.”