Plans to increase council tax in Powys by 8.9 per cent will be considered by Cabinet next week.

Powys County Council’s Liberal Democrat/Labour Cabinet is expected to endorse a draft budget, which includes the council tax hike, at a meeting on Tuesday, January 14.

The council tax increase next year for a Band D dwelling would be £145.86, which means the annual bill would rise to £2,199.86, before Dyfed-Powys Police or community council precepts for 2025/2026 are added to it.

This proposed rise is less than the 13.5 per cent council tax rise that was floated by the Council Leader, Liberal Democrat, Cllr James Gibson-Watt just before Christmas. In December he also warned that “potentially unpopular” decisions would still need to be taken to balance the books.

This came following an announcement that Powys County Council is set to receive a below the Wales average funding settlement from the Welsh Government.

Since then, council number crunchers have been busy updating the budget proposal for next year.

Despite a 3.3 per cent Revenue Support Grant increase in funding from the Welsh Government, the council is facing a £22 million shortfall in its budget.

Savings of £12.3m are also proposed, alongside the council tax increase, to ensure the council can deliver a balanced budget, which is a legal requirement.

Cabinet Member for Finance and Corporate Transformation, County Councillor David Thomas said: “Although we have seen an increase in our local government provisional settlement from the Welsh Government, the reality is that it is not enough to bridge the gap in our increasing costs.

“The council continues to face increasing demand for services, particularly in social care. Price inflation, provider costs and national pay awards, many beyond our control mean that the council is facing a significant budget gap for 2025-26 and for many years to come.

“It is clear that the Council in its current form is not sustainable for the longer term, our ‘Sustainable Powys’ programme ensures that we can remain financially stable and provide sustainable services.”

Cllr Thomas continued: “In our draft budget we are trying to balance the need of front-line service delivery within severe financial constraints and the overall cost to the council taxpayer. We are taking this action now to ensure that we can continue to deliver care services, schools, highways and homeless support for the people of Powys.

“The planned budget savings will focus on transforming our services, increasing efficiency, driving down costs and raising more income. We will continue to invest in some capital schemes which improve key council assets supporting the delivery of statutory services and delivering budget savings.

“Powys will be joining with Welsh local authority leaders in actively lobbying Welsh Government to provide additional funding through a ‘funding floor’. Should a floor mechanism be implemented, Cabinet will consider amendments to the budget proposal following the increase in funding.”

If the draft budget is approved by Cabinet next week, it will be subject to several weeks of scrutiny before being considered by a meeting of the full council on Thursday, February 20

The council has calculated that to run its services next year it needs £378 million, which is a £36.4 million increase from the £341.626 million this year.

The extra funding is needed to deal with pressures, which include pay inflation of £7.356 million and “demographic” growth of the ageing Powys population of £8.437 million, as well as £3.743 million more to be given to schools.

The council calculates that it has £355.944 million to spend next year, which leaves a budget gap of £22.120 million.

The extra money raised by council tax will bring that gap down by £9.833 million, which means that £12.287 million in cuts, savings and efficiencies will need to be found during the year.

Director of corporate services and s151 officer, Jane Thomas said: “The significant impact of continued inflation, rising costs and additional service pressures have all added substantial financial pressure to the council’s budget.

“The funding settlement the council has received this year is improved from that which was estimated; however, the cumulative effect of increasing costs far outweighs the additional funding provided creating an even greater challenge in maintaining financial stability.

“In order to meet the statutory responsibility to set a balanced budget the proposal again includes a further significant level of cost reduction for 2025-26.

“Against that background, the draft budget continues to include a risk management allocation and the removal of prior years’ unachievable savings adds resilience and robustness to our budget plan.”

She concludes that the “estimates” used as the basis of next year’s budget proposal are “adequately robust” but a “heightened level” of risk remains.