, Cabinet Secretary for
Housing and Local Government: Following the publication of the
Welsh Government's Final Budget 2025-26, I am publishing details
of the core funding allocations for local authorities through the
final local government revenue and capital settlements for
2025-26.
In preparing the final settlement, I have given careful
consideration to the responses I received to the consultation on
the provisional settlement, which closed on 24 January. I
acknowledge the considerable financial pressures faced by local
authorities.
The budget agreement between the Welsh Government and MS, leader of the Welsh Liberal
Democrats, includes an additional £8.24m to secure a funding
floor in the settlement at 3.8%.
I want to pay tribute to the incredible amount of hard work and
resilience shown across the sector by both officers and elected
members over many years to respond to the ongoing challenges
councils have been facing. We know that 14 years of cuts cannot
be turned around in just one budget and it will take time for the
public finances to recover. I am proud the Welsh Government has
prioritised local government and other public services in its
budget decisions.
Adjusting for transfers, the core revenue funding for local
government in 2025-26 will increase by 4.5% on a like-for-like
basis compared to 2024-25. No authority will receive less than an
3.8% increase meaning that every authority will see a larger
increase than in 2024-2025. In 2025-26, local authorities will
receive £6.14bn from the Welsh Government Revenue Support Grant
(RSG) and non-domestic rates (NDR) to deliver key services.
A summary table setting out the settlement allocations (Aggregate
External Finance (AEF)) by authority is attached to this written
statement. The allocations are derived using the formula agreed
with local government.
In addition to the core settlement, I am publishing information
about specific revenue and capital grants planned for 2025-26,
which amount to more than £1.3bn for revenue and more than £1.0bn
for capital.
The Programme for Government commitment to reduce the
administrative burden on local government continues to deliver
the consolidation or de-hypothecation of grants across a wide
range of areas. We have transferred £15m of revenue grants into
the settlement in 2025-26. It is important that we work with
local authority colleagues to understand the impacts of these
changes as they are embedded. This is a cornerstone of developing
a strategic relationship with local government based on trust and
focusing on the outcomes that can be delivered in partnership.
This work will continue to ensure the best use of resources for
both local authorities and the Welsh Government.
Further details will be sent to all local authorities and
published on the Welsh Government Website
As set out in the Draft Budget, we are providing a package of
non-domestic rate support which will benefit every ratepayer in
Wales. This will cap the increase to the non-domestic rates
multiplier for 2025-26 to 1%, at a recurring annual cost to the
Welsh budget of £7m. As a result of this cap, the RSG element of
the settlement has increased by an equivalent £7m.
Alongside the settlement, we are also investing an additional
£78m to provide a sixth successive year of support for retail,
leisure, and hospitality businesses. This continued support
recognises the economic pressures faced by these businesses and
builds on £1bn of support allocated through our specific relief
schemes since 2020-21.
The Draft Budget increased general capital funding for local
authorities to £200m to recognise the impact of inflation in
recent years. As a result of the budget agreement between the
Welsh Government and Jane Dodd MS, leader of the Welsh Liberal
Democrats, the Final Budget includes an additional £5m for the
Low Carbon Heat Grant to increase the support available to local
authorities to install low carbon heating systems in their
leisure centres making them greener, warmer and more sustainable.
The setting of budgets, and in turn council tax, is the
responsibility of each local authority. They will need to take
account of the full range of funding sources available to them,
as well as the pressures they face, in setting their budgets for
the coming year.
I am proud of the working relationship Welsh Government and local
government have in Wales and we will continue to engage closely
through the Welsh Local Government Association.
The motion for the Senedd to approve the Local Government Finance
Report (No.1) for 2025-26 is scheduled for debate on 4 March
2025.
