Jayne Bryant MS, Cabinet Secretary for Housing and Local Government
Following the publication of the second stage of the Welsh Government’s Provisional Budget 2026-27, I am today publishing details of the provisional core funding allocations for local authorities through the provisional local government revenue and capital settlements for 2026-27.
The second stage of our one-year draft budget, which restated current departmental budgets, uplifted in line with forecasts for inflation was published on 3 November.
Whilst this approach allows our partners, including local government, to plan with some certainty, it is just the beginning of the budget process. It is our firm ambition to secure a Final Budget which uses all the resources available for 2026-27, safeguards jobs and protects frontline public services. The First Minister and the Cabinet Secretary for Finance and Welsh Language have been clear it is our collective responsibility to pass the Welsh Budget. We are committed to working with all parties to do just that.
The provisional settlement provides £6.4bn from the Welsh Government Revenue Support Grant (RSG) and Non-Domestic Rates (NDR) to spend on delivering key services. This is an average increase of 2.7% on a like-for-like basis and includes an additional £5.5m (on top of the £8.6m allocated at draft budget) to ensure no authority receives an increase of less than 2.3%.
We are all aware of the pressures on households. In 2013-14, we made a choice as a Country to protect vulnerable and low‑income households across Wales by maintaining full entitlements to support with their council tax bills, under our national Council Tax Reduction Scheme (CTRS), a choice that has been made every year for more than a decade. The tailored nature of our national scheme means this support is targeted towards those who need it most.
In 2024-25, this meant that almost 256,500 vulnerable and low-income households – around one in five households – benefited from a reduction in their council tax.
In line with this joint focus with local government on supporting households, we will continue to maintain the baseline funding of £244m for CTRS in the Settlement.
In addition to the core settlement, I am publishing indicative information on specific revenue and capital grants planned for 2026-27. At this provisional stage these grants amount to over £1.3bn for revenue and over £1.08bn for capital.
We continue to work closely with local government throughout the year reflecting the Strategic Partnership Agreement between the Welsh Government and Local Government in Wales that was signed earlier this year.
It is not appropriate for the Welsh Government to set an arbitrary level of council tax increase. The setting of budgets, and in turn council tax, is the responsibility of each local authority and authorities will need to take account of the full range of sources of funding available to them, as well as the pressures they face. I encourage councils to continue to carefully balance the impact of increases on household finances with the loss of support and services. I know that across Wales, leaders, elected members and officers alike will be striving to find ways to make the best use of their resources to make the most difference for their communities.
Our non-domestic rates arrangements for 2026-27 will be determined as part of the preparations for the Final Budget. This will take account of all relevant information following the UK Government’s Autumn Budget and the outcome of the next non-domestic rates revaluation, which will also take effect on 1 April 2026. The Draft Budget reflects the usual default expectation that non-domestic rates revenue will be maintained in line with CPI inflation.
The draft Budget set out the position on capital funding. As part of our approach to uplift budgets in line with inflation, the general capital funding for local authorities has increased from £200m to £204m. 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.
Attached to this statement is a summary table setting out the settlement allocations (Aggregate External Finance (“AEF”)) by authority. They are derived using the formula agreed with local government.
Finally, I would 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.
Further details will be sent to all local authorities and published on the Welsh Government website