JAYNE BRYANT, the Cabinet Secretary for Housing and Local Government, has announced that local authorities will receive £6.1bn from the Welsh Government.
The award comes from the Revenue Support Grant and non-domestic rates. It means that the core revenue funding for local government will increase by an average of 4.3% next year.
Through the Council Tax Reduction Scheme, vulnerable and low-income households will continue to be protected from any reduction in support.
WE’VE BEEN LISTENING, SAYS BRYANT
Jayne Bryant said, “This settlement reflects our ongoing commitment to protecting core frontline public services as far as possible, supporting the hardest-hit households and prioritising jobs.
“We have been through a long period of austerity, with huge increases in demand for major services, a pandemic, and an extraordinary inflationary period.
“We have been listening to local government to continue to understand their challenges. The additional funding from the Autumn Budget means we have been able to increase our overall settlement for 2025 to 2026 by more than £1bn.
“We know that, even with this increase, councils will still have to make difficult local choices. However, no local authority will see an increase of less than 2.8% next year. We will continue to work with local authorities on areas where we can provide additional funding by the time of the final budget.”
The draft Budget published by the Cabinet Secretary for Finance and Welsh Language, Mark Drakeford, outlined increases to the general capital funding for local authorities to £200m.
The Low Carbon Heat Grant has also been increased to £30m to support authorities with decarbonisation and to continue the focus on contributing to the Net Zero Wales plan.
The Cabinet Secretary added: “It will take time for public finances to recover after 14 long years of austerity, but we will continue to work with our local authority colleagues to ensure the best use of resources and deliver for the people of Wales.”
WLGA HITS OUT AT DISAPPOINTING SETTLEMENT
The response from the Welsh Local Government Association, which represents Wales’s councils, was less than enthusiastic.
Councillor Andrew Morgan OBE, WLGA Leader and Labour leader of Rhondda Cynon Taf Council, said: “Over a decade of savage cuts and lack of investment in the public sector cannot be undone overnight in one settlement.
“Local government is wholeheartedly committed to continue working in close partnership with Welsh and UK governments alike to secure essential local services for the future so that they are still there to support those who need them.”
Councillor Mark Pritchard, WLGA Independent Group Leader, said: “This is a disappointing settlement which does not address the £560m gap in council funding for 2025-26. Local authorities have a statutory duty to present balanced budgets. To achieve this, they could now be forced into a ‘Sophie’s choice’ situation to meet the shortfall – either to look again at Council Tax levels to raise revenue or to consider cuts to everyday services to lower expenditure. These steps would be in addition to the impossible decisions that councils are already taking due to the scale of the funding challenges and a chronic lack of investment in the public sector.
“It is clear that the position is unsustainable. I urge the Welsh Government to reflect on the settlement and explore all avenues available to them to invest in our essential local services. It is only with long-term, sustainable funding that councils can support residents, communities, and businesses, and help to deliver national ambitions.”
Councillor Darren Price, the Leader of Carmarthenshire County Council and WLGA Plaid Cymru Group Leader, said: “Local government has been clear of the difficult financial outlook for local services. The average 4.3% increase announced for next year by the Welsh Government clearly falls short of meeting the 7% pressure on council budgets.
“Unless the Welsh Government increases the funding being made available to local councils in the final budget, Councils across Wales will have to make further cuts to services and significant increases in Council tax in order to balance the books.
“This settlement could very well be a case of the emperor’s new clothes, given that we are still awaiting clarity in relation to funding for employer National Insurance contributions. The increase represents a £109m pressure in direct costs, with £44m pressure for social care commissioning. We desperately need confirmation of that funding to ensure that we have confidence in planning our budgets.
“The Welsh Government needs to respond fully to the spending pressures facing local authorities. This draft budget does not do that. There needs to be clarity regarding NI support, and discussions also need to be held to secure additional support for authorities falling at the lower end of the range in the settlement.”
Councillor James Gibson-Watt, WLGA Liberal Democrat Group, said: “We know that the public purse is threadbare with all levels of governments having to face tough decisions. However, this settlement will be a difficult pill for many authorities to swallow.
“The demands on services such as social care, education, and housing are ever-increasing. Without the funding necessary to address those demands and rising costs, the ability of our essential local services to fulfil statutory duties and support residents’ needs will be severely impeded.
“There is also significant variation in the levels of increase across the 22 authorities, ranging between 5.6% and 2.8%. Councils receiving less-than-average increases will feel particularly exposed to the severe financial headwinds facing local services. That is why we need to see a funding floor introduced to help these authorities. I look forward to making that case to the Cabinet Secretary and her government colleagues during the consultation period.”
“AN EXISTENTIAL CRISIS”
Responding to the Welsh Government’s Provisional Local Government Settlement 2025-26, Plaid Cymru’s Local Government spokesperson, Peredur Owen Griffiths, said: “Local authorities needed at least a 7% increase in revenue to fill the £559 million funding shortfall caused by Labour mismanagement. That’s to maintain the vital public services they provide, let alone start on the improvement required in these vital services.
“The Cabinet Secretary’s announcement simply does not go far enough to ease the budgetary constraints faced by Welsh councils and will force them into tough decisions on the future of public services that have already been cut, some even disappearing entirely.
“At the same time – the Labour UK Government’s rise to National Insurance contributions plunge councils into uncertainty, as they may have to shoulder the burden of these increased costs.
“Every day of silence from Labour on this make it harder for our councils to plan. Both in the UK and Welsh Governments, Labour is forcing councils into positions where council tax may have to rise, and public services may have to be cut. Labour are pushing local authorities into an existential crisis – and it is the public that will bare the brunt of it.”
A FUNDING FORMULA FOR DISASTER
Welsh Conservative Shadow Minister for Finance and Local Government, Peter Fox MS, said: “Labour’s funding formula has prioritised their cash reserve-rich heartlands with this settlement, ignoring the needs of councils like Monmouthshire, Powys and Flintshire that have been left at the bottom of the pile.
“And we still lack clarity from the Welsh Labour Government as to whether the increased costs incurred through the Chancellor’s National Insurance rise will hit council budgets directly, impacting already sky-high council taxes.
“Labour’s funding formula is woefully outdated – it’s broken. The Welsh Conservatives will fix it to reflect the situation on the ground, promote fairness across Wales and deliver value for money for ratepayers.”
