Welsh councils have welcomed the Welsh Government’s provisional 2026-27 local government settlement but warned that it does not come close to matching the unprecedented financial pressures facing councils across Wales.
Welsh Government has confirmed a £6.4bn settlement for next year, giving councils an average increase of 2.7%. A fully funded funding floor willensure no authority receives less than a 2.3% increase.
In addition to the core settlement, Welsh Government has also announced over £1.3bn in revenue grants and more than £1.08bn in capital investment for local government.
Councillor Andrew Morgan OBE, WLGA Labour Group Leader, said:
“While we now need to go through the figures in detail, this draft settlement offers a degree of stability at a time when local services are under sustained pressure. The average increase shows that Welsh Government recognises the strain councils are facing.
“But stability doesn’t remove the pressures themselves. Social care, homelessness, education and workforce costs continue to rise faster than resources can keep up. Councils will still need to make tough choices, and that remains a concern.
“We will continue to work constructively with Welsh Government over the coming weeks on budget talks, as we have been clear that additional funding to increase the final settlement will be required to help protect and maintain services. Our shared goal is to maintain the essential services people rely on every day, and to do so in a way that is fair and sustainable in the long term.”
Councillor Mark Pritchard, WLGA Independent Group Leader, said:
“I urge Welsh Government to look again at the reality facing councils and to increase the final settlement. Without additional support, the strain on councils to deliver essential services to the public will become untenable. The pressures on council workforces will only get worse and redundancies will be inevitable.”
Councillor Gary Pritchard, WLGA Plaid Cymru Group Leader, said:
“Local government has been warning for some time that the pressure on core services is now structural, not temporary. This increase simply doesn’t keep pace with the underlying forces driving demand.
“Many councils are already operating at the limits of what is safe or sustainable. Even with a funding floor, the gap between need and resource continues to widen, and that poses real risks for the resilience of services, especially in rural areas. The funding formula really needs to be reformed.
“We need to see a final settlement that genuinely reflects the pressures councils face, alongside clarity on how wider cost increases will be supported. Without that, local authorities across Wales will remain on very uncertain ground.”
Councillor Jake Berriman, WLGA Liberal Democrat Group Leader, said:
“Councils are working hard to protect services, but demand is rising far faster than resources, particularly in social care and services for vulnerable residents. This settlement will still leave many authorities struggling to keep pace with that demand.
“It’s also important to recognise that every community faces different challenges. Rural and semi-rural areas deal with higher delivery costs and geographic pressures that a flat percentage uplift simply doesn’t reflect.
“I look forward to continuing discussions with Welsh Government during the consultation period. Communities need a settlement that acknowledges the real pressures on the ground and gives councils a fair chance to plan ahead.”