Like all other councils in Wales, Conwy County Borough Council is facing continued budget pressures and needs to make further savings to set a balanced budget for 2026-27. The budget gap for 2026-27, before any funding is applied, is £20.4 million due to rising costs of goods and services.
Approximately 70% of the Council’s funding comes from the Welsh Government. We received notification of our draft local government settlement towards the end of November, confirming a 2.3% increase. Together with other transfers into the budget, this equated to just £6.3 million in additional funding for Conwy.
On 11 December, Welsh Government announced further funding for all councils, which will increase our allocation for 2026/27 to 4.1%. This is a positive development and, with other adjustments, raises our additional funding for 2026/27 to £10.9 million. However, 4.1% remains the lowest percentage uplift of any council in Wales.
While this extra funding is welcome and much needed, Conwy continues to face significant financial pressures in meeting service demands. The amount will not be sufficient to close the funding gap and difficult decisions will still be required to balance the budget.
Reasons for the budget shortfall:
- Increasing demand for services: The cost-of-living crisis and pressures on the NHS have increased demand for services. More people are turning to Conwy Council for support. This includes support for vulnerable children and adults, as well as housing and homelessness services. Many of our services are ‘statutory’, which means that we have a legal duty to provide them and cannot turn people away because we haven’t enough budget left. The additional cost of this increased demand is estimated at £14 million for 2026-27.
- Pay pressures: Pay awards for teachers, council employees, and care workers are negotiated nationally. The Council is committed to paying the Real Living Wage to lower-paid staff. Pay-related pressures account for over £7.6 million of the budget shortfall.
- General inflation: Although inflation has fallen from its peak of over 11% in October 2022, it remains high in some areas and continues to drive up the cost of services. General price inflation is responsible for approximately £2.7 million of the pressures.
- North Wales Fire and Rescue Authority: Conwy, along with other North Wales councils, funds the Fire Service. The Fire Authority plans to increase its levy due to rising costs, adding to Conwy’s budget pressures. Every 1% increase in the levy costs approximately an additional £85,000.
Addressing the shortfall:
We understand the financial pressures everyone is facing. How the budget gap is met will depend on funding from the Welsh Government, additional income generation, reducing demand for services, further spending cuts and potential Council Tax increases.
Three ways to address the shortfall:
- Service changes: Over the past thirteen years, Conwy has made £94 million in budget savings by reviewing services and streamlining processes. Conwy Council is committed to protecting vital services and as a result further savings are becoming more difficult to find. Efforts include reducing costs through technology, reducing the number of buildings, and making further service changes.
- Council Tax: Each 1% increase in Council Tax is expected to raise an additional £866,000 and increase a Band D property’s tax by £18.88 a year (36p a week). It is not possible to close the budget gap using Council Tax alone. Despite a history of keeping Council Tax comparably low, an increase is inevitable given the current pressures. An increase will not remove the need for service reductions.
- Reserves: Conwy Council must remain cautious when choosing to use reserves. Conwy doesn’t have a lot of reserves, and many are earmarked for specific purposes. Reserves must never be used to fund recurring year on year spend. Once gone, the funding shortfall is still there, and the Council’s financial resilience is permanently reduced. Conwy Council needs to have sufficient reserves for emergencies, such as Storm Claudia. Currently, Conwy Council has £15 million in general reserves, which is only 5% of the budget. Using reserves to balance the 2026-27 budget would create additional financial pressures in future years.
If you want to read in more detail about how we manage the budget, please read the reports linked below:
Statement of accounts: Annual Statement of Accounts - Conwy County Borough Council
Pay policy statement: Pay Policy Statement - Conwy County Borough Council
Council tax leaflet: Council Tax Leaflet 2025-26