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The budget gap at Caerphilly County Borough Council could grow by more than £6 million, the leader of the cash-strapped local authority has warned.

Cllr Sean Morgan said paying higher National Insurance contributions and teachers’ salaries – as well as rising home-to-school transport costs – were behind the latest gloomy forecast.

Speaking to the Local Democracy Reporting Service, Cllr Morgan said a previous target of saving £29 million by April 2028 could now grow to nearly £36 million.

The council’s budget gap has been blamed for several controversial policies in recent years, including the recent proposals to close some libraries.

So will this latest expected budget setback mean further service cuts?

Not “as of yet,” Cllr Morgan said. “You can never rule this out. Will some of those pressures be alleviated by central government? We don’t know.”

“We are very much in a position where we haven’t got the answer to the full £6 million, but we are certainly moving in the right direction… to take us a long way towards it”, he added. “We aren’t going to panic over it”, he said of the shortfall, before explaining the ongoing ‘transformation agenda’ at the council would deliver further savings.

In short, the budget gap in Caerphilly emerged because the costs of providing services rose faster than any increases to the central government settlement grants, which make up the vast majority of the council’s income.

Conservative-era UK austerity policies have drawn criticism from Labour politicians in Wales, and the council’s deputy leader, Cllr Jamie Pritchard, claimed their consequence – after 15 years of Tory rule in Westminster – was that “people are noticing it more at the sharp end” as they see purse strings tightened and services reduced.

But when asked whether he had expected the current pressures a year into UK Labour’s watch, Cllr Morgan’s assessment was measured.

“We thought they would be more significantly alleviated than what they are,” he said.

Cllr Pritchard said local authorities received “much better” settlement grants under UK Labour this year, but described them as “still leaving councils halfway where they need to be” financially.

The council is three years into its money-saving ‘transformation agenda’, which drew initial criticism because external consultants were hired to the tune of around £2 million.

Cllr Morgan defended the spending, arguing it would bring about much bigger savings in the long run, and described internal changes as producing “more incremental” returns which were harder to factor into budget forecasts.

More visible savings proposals have drawn plenty of criticism, however, and the council was forced to retreat from plans to scrap a meals on wheels service described by supporters as a “lifeline”.

It also issued a reprieve for the at-risk Blackwood Miners’ Institute after considerable local opposition against the venue’s closure – but Llancaiach Fawr was mothballed in early 2025 after the council decided to stop subsidising the heritage site.

Libraries were the latest service to face ‘transformation’, with ten smaller sites currently expected to shut down by August 31 despite impassioned appeals for a rethink.

Cllr Morgan defended those decisions, and said there were hopeful signs at least half of those libraries may be taken over by community groups.

He said the library closures were “something we have to do because of finances, and I see the opportunity there for communities”.

But those arguments have failed to stave off criticism, and the Plaid Cymru opposition group has tabled a motion of no confidence in Cllr Morgan, scheduled for July.

On Llancaich Fawr, Cllr Morgan said the local authority had received six proposals from potential operators, which could mean more weddings and events there while retaining the site’s museum.

But he acknowledged the delay between the mothballing and the eventual reopening of the site.

“There is that problem between when you make that decision… and when it comes to fruition,” he said. “It’s 12 months of misery we have to put up with.”