Welsh councils warn they are ‘on the brink of financial ruin’ without government action

The leaders of four Plaid Cymru led local authorities have warned that Welsh councils face falling off a cliff edge unless the Labour governments in Cardiff and London take urgent action to address significant funding pressures.

In a letter to the UK Chancellor and First Minister, the leaders of Carmarthenshire, Gwynedd, Ceredigion and Ynys Môn Councils along with the Deputy leader of Neath Port Talbot Council say that “many councils find themselves on the brink of financial ruin and there is a duty on both Welsh and UK governments to act.”

Writing ahead of next week’s UK government budget, Darren Price, Nia Jeffreys, Bryan Davies Gary Pritchard and Alun Llewelyn warn that a failure to act now will mean ”many services that protect the most vulnerable in society disappearing altogether.”

Challenges

The letter says: “Whilst appreciating that the challenges you face are significant following 14 years of austerity, it is no exaggeration to say that many councils find themselves on the brink of financial ruin and there is a duty on both Welsh and UK governments to act.

“The UK Budget presents an opportunity to provide urgent additional funding to Wales for critical Services such as social care, children’s services, schools and highways.

“Without adequate levels of funding, our schools will continue to lack the resources they need to give pupils the education they deserve.

“As the National Association of Head Teachers amplified in its report last month, spending per pupil has fallen by around 6% in real terms – an unsustainable situation if we are to truly give learners the best start in life.”

Spending increase

The letter continues: “The Welsh Local Government Association estimates that local authorities in Wales face additional financial pressures of £559m for 2025-26. This would require a spending increase of just over 7% in net revenue.

“To address a pressure of £559m, without additional funding, will require a mix of council tax increases and further cuts to services and efficiencies. The pressure is equivalent to a 26% increase in council tax, or the loss of just under 14,000 posts.

“We know that we speak for all Local Authority leaders in Wales when we say that the weight of responsibility when it comes to protecting the most vulnerable in our communities is felt more acutely than ever.

“We trust that your respective governments will work together as you have repeatedly pledged to do to ensure that Wales receives a fair deal from the UK Budget and that our councils get the urgent financial support they so desperately need.

“Failure to do this will see many councils falling off the cliff edge with many services that protect the most vulnerable in society disappearing altogether and leaving a lasting legacy of inequality and deprivation.”

Emergency support

A report on Tuesday (22 October) on the perilous state of council finances In England suggested one in four local authorities there could be forced to request emergency support from the UK Government to avoid effective bankruptcy over the next two years.

A survey of council chief executives suggests projected funding shortfalls, which are expected to total more than £2 billion next year, will threaten the viability of many councils in England without measures in the Budget to ensure stability and protect vital services.

A total of 18 English councils were given exceptional financial support (EFS) from the Government in February to ensure they could meet their legal duty to balance their books in 2024-25.

But this unprecedented number could rise steeply over the coming years in the absence of an improved settlement, with the survey by the Local Government Association (LGA) finding one in four councils are “likely” to apply for support in 2025-26 or 2026-27 in this scenario.

The result suggests up to 79 of England’s 317 local authorities could be forced to request a bailout.