Introduction
Carmarthenshire County Council has received much-needed financial relief following a recent budget agreement between Welsh Labour and Plaid Cymru.
The collaborative deal, announced last week, is expected to provide significant additional funding for local authorities in Wales. Council officials indicated that this financial support will help lower a planned council tax increase and shrink projected budget deficits.
The development offers reassurance as Carmarthenshire and other councils work to finalise their budgets for the 2026-27 financial year, facing mounting spending pressures and a challenging economic environment.
Financial outlook and original projections
Before the announcement of increased funding, Carmarthenshire County Council had anticipated raising council tax by 6.5% in the 2026-27 financial year to cope with budgetary demands.
According to a cabinet report presented on 15 December, the council projected it would need to make £9.6 million in savings while still facing a £3.5 million deficit to balance its budget. These calculations were based on an expected Welsh Government funding increase of 2.3%, or £17.1 million, amid ongoing cost pressures.
The council noted that even with these savings and the tax increase, further measures would be necessary to reach a balanced position. Key areas contributing to financial strain included increasing expenditure on social care, staff salaries, and school budgets.
Impact of Labour-Plaid agreement
The recent agreement between Welsh Labour and Plaid Cymru includes provisions for additional funding to be allocated to councils. Carmarthenshire cabinet member for resources, Councillor Alun Lenny, stated the deal could deliver nearly £7 million in extra support to the county next year.
Councillor Lenny remarked that such an increase would significantly improve the council’s financial situation. He highlighted that the additional funding could eliminate the forecasted £3.5 million deficit, allow for a reduction in the proposed council tax rise, support the maintenance of specific services, and limit the number of savings required. However, he cautioned that significant financial pressures remain.
Ongoing budget consultation
Despite the anticipated relief, the official Welsh Government budget has yet to be approved. The council's current three-year budget strategy will form the basis for a public consultation, inviting feedback on taxation and expenditure plans before final proposals are set early next year.
Council leader Linda Evans encouraged local residents to take part in the consultation process, emphasising that public input would be considered as the cabinet formed by Plaid Cymru and Independent councillors prepares its final recommendations. “We do take their opinion into consideration and this is their opportunity to have their say,” Evans said.
Pressures on local authority finances
Local authority finances continue to face multiple pressures. Carmarthenshire Council’s financial forecasts indicate a £2.6 million deficit for the end of the 2025-26 financial year. This deficit could rise to £11.8 million when accounting for overspending by schools.
Expenditure on social care has risen, partly due to the area’s ageing population, while staff and service costs remain high. Funding for schools remains constrained, prompting concern among council officials.
Additional financial considerations
The cabinet has outlined further budgetary measures to address ongoing costs. An extra £1 million is planned for the 2026-27 financial year to meet increased employer national insurance contributions, which were raised in 2024.
In response to escalating costs caused by extreme weather, the cabinet also intends to allocate £500,000 annually for storm damage repairs. Speaking during a period of severe weather warnings for South Wales, Councillor Lenny described such events as evidence of climate change, rather than ordinary bad weather.
Final Summary
Carmarthenshire County Council’s financial outlook has improved following the Labour-Plaid agreement, which promises significant extra government funding and relieves pressure on local taxpayers.
While substantial challenges persist, including increased costs in essential services and the need for further savings, the proposed support is expected to shrink the projected council tax rise and close the deficit. Council leaders have encouraged residents to engage with ongoing budget consultations, noting the importance of public participation in the decision-making process.
For those monitoring local government finances and consultations, dedicated resources such as the Pie app can provide further updates and analysis.
