MS, Cabinet Secretary for
Housing and Local Government: Following the publication of the
Welsh Government's Final Budget 2026-27, I am publishing details
of the core funding allocations for local authorities through the
final local government revenue and capital settlements for
2026-27.
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 7 January. I
acknowledge the considerable financial pressures faced by local
authorities, in particular Education and Social Care.
The budget agreement between the Welsh Government and Plaid Cymru
includes an additional £112.8m to support local government. This
agreement shows the strength of the Senedd parties working
together on shared priorities, to deliver for Wales. Adjusting
for transfers, the core revenue funding for local government in
2026-27 will increase by 4.5% on a like-for-like basis compared
to 2025-26, with no authority receiving an increase of less than
4.0%. In 2026-27, local authorities will receive £6.6bn
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 2026-27,
which amount to more than £1.3bn for revenue and more than £1.0bn
for capital.
Further details will be sent to all local authorities and
published on the Welsh Government Website
The Draft Budget increased general capital funding for local
authorities to £204m to recognise the impact of inflation.
Funding for the Low Carbon Heat Grant for 2026-2027 will be
almost £31m, continuing our work with local government to respond
to our joint priority of improving the local government estate,
by providing low carbon heating contributing to the Net Zero
Wales plan. The Final Budget also includes an additional £8m for
Transforming Towns and a further £2m for Green Homes Wales.
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.
Finally, I would once again like 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 challenges Councils have been facing. We continue to
prioritise our support for local government, as we have
throughout our Government through the annual settlement and
specific grants to respond to national and local
priorities. 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 2026-27 is scheduled for debate on 27 January
2026.
