Welsh councils have welcomed the Welsh Government’s updated provisional 2026-27 local government settlement, which sets out revised figures for councils during the ongoing consultation period.
The new draft settlement now includes an average increase of 4.5% for councils, with a fully funded floor ensuring no authority receives less than a 4% uplift.
The Welsh Government has confirmed that the updated draft budget includes £112.8m in additional funding for local government, forming part of a wider Welsh Government–Plaid Cymru budget agreement.
The package also includes extra investment in health and social care, and additional capital funding to be allocated by the next government after the Senedd election.
Councillor Andrew Morgan OBE, WLGA Labour Group Leader, said:
“This is a very welcome improvement on the original draft settlement. The additional £112.8m for local government announced as part of the wider budget agreement is particularly welcome and strengthens the position further.
“I would like to thank the Welsh Labour Government and the opposition parties who have worked together, responding to the case made by the WLGA and local government for increased funding for our essential local services. The uplift to an average 4.5% increase provides a much stronger starting point for councils as we plan for next year.
“The pressures in social care, homelessness and education remain extremely challenging, but today’s updated figures will make a meaningful difference and give councils greater confidence to protect essential services.
“We will now work through the detail and continue constructive discussions during the consultation period. This is a positive step forward and will be widely welcomed across Welsh local government.”
Councillor Mark Pritchard, WLGA Independent Group Leader, said:
“The improved draft settlement is welcome and shows that Welsh Government has taken on board many of the concerns and issues raised by local authorities.
“The additional investment announced for health and social care is positive, but the scale of demand in these services continues to outpace the resources available. Therefore, while this is a step in the right direction, we must be clear that this does not solve the severe financial challenges councils face.
“Ultimately, this remains short of what is needed to place local government on a sustainable footing. We will continue to make the case about the scale of the pressures facing councils during this consultation period.”
Councillor Gary Pritchard, WLGA Plaid Cymru Group Leader, said:
“The uplift in the draft settlement will be helpful for councils, particularly those dealing with higher delivery costs in rural and semi-rural areas. It will provide some much-needed additional support as authorities navigate intense financial pressures.
“The commitment to further capital funding for the next government is also important for those rural authorities, where ageing infrastructure and higher delivery costs place added pressure on budgets.
“That said, the underlying issues facing local government remain structural, not temporary. Even with a 4% floor, the gap between need and resource continues to widen, particularly for rural areas where the costs of delivering services are higher.
“This is a positive step which shows the true value of parties working together for the good of communities throughout Wales. The contribution of Plaid Cymru in reaching this agreement has been important in achieving a better deal for councils.”
Councillor Jake Berriman, WLGA Liberal Democrat Group Leader, said:
“This updated draft settlement offers councils more certainty as they plan for the year ahead, and that will be welcomed across Wales. The uplift will help authorities maintain essential services, especially those supporting vulnerable residents.
“The wider investment announced for public services, including social care, will also support councils as they work to meet the needs of their communities.
“Every community faces different pressures, and this improved position gives councils a better foundation to respond to those local needs. It is a constructive development during a very challenging period for public services.
“We will continue to work positively with Welsh Government during the consultation to ensure councils can make informed decisions that protect services and support communities.”