Council tax to rise by almost 5% in a Welsh county borough next year

Anthony Lewis, Local democracy reporter

A 4.95% council tax increase has been approved for Merthyr Tydfil residents next year.

The council’s budget proposals for 2026/2027 have been approved by cabinet and full council on Monday, February 23 and totals £183.69m.

On council tax, the budget report said that the initial provisional local government settlement would have meant a further increase in the level of council tax was needed for next year but in light of the final settlement, a 4.95% is proposed which will “avoid excessive increases in council tax and maintain as many services as possible.”

This results in a band D council tax of £2,186.33 for 2026/27 and equates to an additional requirement of £103.12 for 2026/27, equivalent to £1.98 per week.

The weekly increase ranges from £1.32 at the lowest band A to £4.63 at the highest band I.

This results in a net reduction in council tax levy income of £21,000.

The report says that as 84% of the properties within the county borough are valued at bands A to C, a significant proportion of council taxpayers will be liable to payments less than £2,186.33 and it also mentions the council tax reduction scheme.

In terms of cuts, the budget plan includes proposals to remove £3.58m from the revenue budget next year made up of £1.69m permanent savings, £34,000 in the use of one off service earmarked reserves and £1.85m of temporary savings which are not sustainable in the medium or long term.

No additional efficiencies are being asked of schools across Merthyr Tydfil, the report says.

But it adds: “Schools across Merthyr Tydfil continue to face significant financial pressure through pay, pension and other costs.

“Due to the ongoing financial challenges faced by local government the draft budget proposal does not provide the funding required to fully support the schools funding formula.

The report highlights the financial pressure schools face particularly in relation to the increased number and complexity of additional learning need.

“Governing bodies, like other council services, will need to consider how they manage these resources and deliver a budget that complies with the scheme for the financing of schools.”

The report also mentions pay pressures (£534,000) and £2.6m in unavoidable additional demands resulting from service financial pressures such as demographic growth, legislative changes, new initiatives, loss of income and changes to grants terms and conditions.

The final local government settlement from Welsh Government resulted in a funding increase of 4.7% for Merthyr Tydfil which reduced the budget gap by £7.74m

When these are taken into account along with adjustments to the council tax base (£146,000), employee costs reductions (£2.35m), capital financing costs (£1.35m), an accountancy review of assumptions (£1.18m) and the 2025/2026 transformation programme (£354,000), the council is left with a budget gap of £509,000.

To allow for timely formal notification of increases in fees and charges, the CPI rate of inflation projected on January 1 before the start of the new financial year is used so for 2026/27 that figure is 3.4%.

For all services, the council will seek to do this where possible from April 2026.

Extra budget adjustments from updated information include a £300,000 reduction in additional services demand.

In-year savings of £325,000 are needed for 2026/2027 as part of the council wide transformation programme.

The final settlement also provides additional grant of £10,000 because of minor settlement formula changes.

Transition from the Shared Prosperity Fund programme to Local Growth Fund has resulted in projects ending or being reduced, the report says.

Full council earlier this month approved a contribution of £427,000 from Biffa Profit Share to mitigate against the loss of SPF for 2026/27 only.

This budget includes £532,000, made up of £427,000 funded from the Biffa Profit Share and £105,000 funded from the council’s 2026/27 revenue budget, to support Shared Prosperity Fund legacy projects.

When taking into account the proposed council tax increase, these measures close the remaining budget gap.

Councillor Lisa Mytton, Independent, said it’s a very difficult decision when you’re trying to balance the books and agree council tax as well.

She said they’d been promised reform of council tax for nearly six years and that is so desperately needed because it’s “not fair and it’s not equal.”

Cllr Mytton said the First Minister and Plaid Cymru agreed to a budget designed to protect the most vulnerable and said “we in Merthyr Tydfil aren’t doing that.”

She said other authorities are doing that and said the council tax increase proposed when they could mitigate it in other areas is “not necessary” and they could bring it down by at least 1% saying it goes “against the grain and spirit of the national budget and the needs of our community.”

Councillor Geraint Thomas, leader of the Independent group, said: “We did have an opportunity over the last week or so to reduce council tax by 1% and 3.95 was getting closer to the inflation rate which I think was palatable.”

On setting a budget and council tax, he said it’s not a great place to be and it’s very difficult but they could have gone 1% lower so he wouldn’t be supporting the budget.

Councillor Brent Carter, Labour leader of the council, said: “I’d like to think throughout this process I’ve been open and honest with the public especially during the roadshows where I openly discussed a potential increase of 5% council tax.

“It’s great to say we could have reduced the council tax by 1% and I would have loved to have been able to reduce it by 1%.

“But to say those things you need to tell me and tell us where it’s actually going to come from.”

Councillor Andrew Barry, Reform UK, said they’re spending £180m to keep the council going and when the public look at a settlement figure of £9.1m, pension savings of £2.3m and cost reductions of £3.5m they must be thinking where is that money going.

He said he took the point about it being the most difficult thing to come to residents and continually ask them for council tax and he added: “We’ve done it infinitum and it just says to me that the model is wrong. We have to readdress the model. We have to do it differently.”

He said the cost of living crisis is not going away and there’s no sign of it going away in the near future which means they have to change their tack.

Cllr Barry the need to apply a different model so they’re not spending an “obscene” amount of money and they’re still in the same position of having deprived wards, some of the worst in Europe, and they don’t seem to be getting out of it.

Councillor Gareth Lewis, Labour cabinet member for education, said the budget sends a “clear and positive signal about our priorities.”

He said they’re investing an additional £2.669m in education, a 3.8% increase recognising the pay, pension and ALN (additional learning needs) pressures schools are facing.

He also said that for the second consecutive year the administration has honoured its commitment not to ask schools for further efficiency savings.

He also mentioned increases in grant funding from Welsh Government and said: “Together these measures demonstrate our clear and continued commitment to protecting education, supporting our learners and giving every young person the best possible chance to succeed.”

Councillor Anna Williams-Price, Labour cabinet member for finance, said she believes the budget to be “stable, responsible, forward looking protecting core services, avoiding use of budget reserves and as much as possible keeping financial pressures on residents to a minimum.”

She said that there’s no sensible or sustainable route to lower the council tax increase further and if there was she’s sure all members would be open to it and support it.

“I completely agree that council tax in its current form is regressive and a priority for the next Welsh Government needs to be reform of that system.”

She said that work had started in some shape or form but local government asked for it to be delayed until 2028.

She said she believes it remains and should remain a priority to reform a system that doesn’t work for the current make up of households and communities in Merthyr Tydfil.