Tax rises and spending cuts by middle of decade, predicts finance boss

Tax rises and cuts to public sector spending are likely to pay back the hundreds of billions of pounds the UK has borrowed to deal with the coronavirus crisis, Swansea Council’s chief finance officer has said.

Ben Smith said the “disappearance” this year of national budget statements and spending reviews was justified in the unusual circumstances.

But, addressing a meeting of full council, he said: “The slight cynic in me can’t help but think it conveniently avoids anyone having to face longer-term harsh realities that the country is likely to face – the hundreds of billions of pounds necessarily put in will have to be repaid by us all at some point.”

He added: “No political or economic commentator says the medium term – by which I mean around the mid-decade – is offering anything other than a clear need to raise taxes and see through real-terms cuts to public sector financing, or more likely a combination of the two.”

Mr Smith warned councillors at the outset that his comments about the council’s mid-year financial position would be “deliberately blunt”.

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He said it could be all too easy to “snipe from the sidelines” about what the UK Government, Welsh Government or council has done.

“Needless to say the position is, shall I say somewhat diplomatically, constantly evolving,” he said.

Mr Smith said the council might only know how much money it would get for 2021-22 from the Welsh Government as late as December 22, giving the authority less than three months to draw up a budget, consult on it and set it.

He said the council came into the crisis in a strong position because it under-spent in 2019-20 and was given a rare increase in funding for the current year.

But he reiterated that money would be taken from reserves to cover rising costs, which wasn’t sustainable in the long term.

Mr Smith said it was the most uncertain backdrop he’d known in 30 years, and that at times he’d doubted his own sanity, given the whirlwind of spending and other policy announcements.

He added: “I always model a range of scenarios and model accordingly – this time round I have to be honest, my uncertainties outweigh my certainties.”

But he expected some financial support from central Government, and indicated that council tax rises in Swansea would be in line with previous forecasts.

Leader of the opposition, Cllr Chris Holley, said it was important that the council’s budget underwent scrutiny, despite the constrained timescales.

Council Leader Rob Stewart said: “I have been very clear – it’s for national Governments to come up with necessary packages to ensure that councils have funding so that they can get through this crisis.

“Because it’s not in any council’s gift to deal with the sorts of pressures that they are seeing.”

WalesOnline – Wales News