Jayne Bryant 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.