Councils warn of stark choice between job losses or a 22% tax hike

WELSH councils have warned that plugging a £436m budget gap for next year would require an average council tax increase of 22% or the loss of 14,000 jobs.

- CHRIS HAINES

The Welsh Local Government Association (WLGA), which represents Wales’ 22 councils, said local authorities face £560m of pressures in 2026/27 - £100m more than expected.

Councils warned a 2% settlement in the Welsh Government's “rollover” draft budget would be “extremely damaging’ for services and leave a £436m shortfall.

Ministers have proposed an average 2.5% increase, with a funding floor to ensure no council receives less than 2.3%. Bridging the £436m gap would require “unconscionably high” council tax rises of about 22% or the equivalent of around 14,000 job cuts across Wales, according to the WLGA.

The stark warning was echoed by Wales’ outgoing auditor general who said some councils are “very close” to having to issue a formal section 114 (effective bankruptcy) notice.

Adrian Crompton told the Senedd’s finance committee that councils - which are forecasting a £184m overspend in 2025/26 - are struggling to balance their books.

He said: “There are undoubtedly a few authorities that are very close to having to issue a section 114.

“Our assessment at the time of publishing our report was that none were about to, so they all had sufficient grip on their in-year position, so it wasn’t imminent.