Officers have brought forward a draft 2026/27 Budget Strategy for Cabinet’s consideration, following January’s more favourable final Local Government settlement from Welsh Government. Members could agree for it to be the subject of the Phase Two budget consultation in the weeks ahead.
The proposals would set a balanced budget for next year and includes funding all pay and non-pay pressures for schools, providing an extra £1 million for Additional Learning Needs schools and increases the level of the Council’s local Non Domestic Rate relief for businesses.
A report to Cabinet on Monday, February 2, will set out for Members an updated financial position taking account of Welsh Government’s settlement. Officers had previously projected that the Council would face a budget gap of £22.5 million next year, based on the intention from the Welsh Government Cabinet Secretary for Finance and Welsh Language that a single-year budget would be presented for 2026/27, that increases spending by inflation only (2%). The Council’s budget gap arises as pay and non-pay costs are rising well above this level, alongside increased demand for many services.
On November 24, the provisional settlement indicated a 2.9% funding increase for Rhondda Cynon Taf and was followed by an announcement from Welsh Government on December 9 that a Budget agreement had been reached that would allow the 2026/27 Welsh Government Budget to pass. This agreement included extra funding for Welsh councils and an increase in funding for Rhondda Cynon Taf of 4.5%.
Monday’s Cabinet report notes that this equates to £17.2 million in additional resources, alongside updated base budget requirements that include social services pressures and additional costs in respect of Additional Learning Needs transportation, highways drainage, and Real Living Wage and National Insurance costs. Taking these updates into account, the remaining budget gap following the final settlement is £6.46 million.
Key elements of the draft Budget Strategy for 2026/27
The strategy proposes to further increase the level of the Council’s own local rates relief that businesses currently receive. The Local Business Rate Reduction Scheme provided £300 to qualifying businesses when it was introduced in 2020/21 and the level of support has increased to £500 for 2025/26. The current proposal is to increase the level to £625 for next year, with a further rise to £750 for 2027/28. It is estimated that around 1,400 businesses in Rhondda Cynon Taf would benefit.
Even when the Council has faced large financial challenges in previous years, funding for our schools has always been prioritised. In the same way, the 2026/27 strategy proposes covering all pay and non-pay pressures for our schools for the next year. In addition, a further £1 million is identified for ongoing pressures across our Additional Learning Needs schools. Overall, the schools’ budget will increase by £10.4 million (4.8% on a like-for-like basis) during next year, and will be fully-funded.
Over many years, the Council has identified and delivered significant efficiency savings that do not largely impact upon the delivery of services. This has been a council-wide programme of work that has included £13 million saved in the current-year budget (2025/26) and £40 million over the past three years. Further proposals have now been brought forward, amounting to £6.335 million.
Proposals for Council fees and charges include a standard 5% increase, recognising the significant increase in our cost base and the subsequent level of subsidy the Council provides. A number of specific exceptions to this standard increase are proposed, with further details outlined in a separate report to be considered by Cabinet.
As in previous years, the proposals would ensure the Council continues to act reasonably in relation to council tax levels, balancing the impact upon services and the ability of the public to pay. Previous financial modelling for 2026/27 was calculated based on a 4% council tax rise, which is again likely to be one of the lowest proposed rises in Wales. The draft strategy retains a 4% rise.
Taking everything into consideration, the remaining budget gap would be £911,000, and it is proposed this is managed through the use of the Council’s Transition Funding reserve.
Full details about the key elements of the proposed strategy are included in Monday’s Cabinet report. Once Cabinet has considered the report, Members could agree for the draft budget strategy to be the subject of the Council’s Phase Two public consultation.
Councillor Andrew Morgan OBE, Leader of Rhondda Cynon Taf Council, said: “Having previously prepared for an inflation-only budget to be presented for 2026/27, as reflected in our Medium Term Financial Plan, it was pleasing to receive a better settlement than expected. We lobbied for a funding rise that reflects our pay and non-pay costs rising well above the level of inflation – and Welsh Government’s confirmation of a 4.5% rise for Rhondda Cynon Taf is better than the 2% we had originally modelled. However, even this improved funding level remains short of covering all pressures, at a time when residents, communities and businesses continue to face a high cost of living.
“Officers will bring forward a draft budget strategy for Cabinet’s consideration next week that has several positive aspects. We’ve protected our schools through all financial challenges in recent years – in fact, increasing the overall schools’ budget by 45% over the past decade. This equates to an extra £18.6 million in comparison to other Council services. The 2026/27 draft strategy proposes to fully-fund all pay and non-pay pressures in our schools and, in addition, provide an extra £1 million earmarked for Additional Learning Needs schools.
“Officers have also been able to identify extra funding to increase the level of our own rates relief that qualifying local businesses receive – from £500 to £625 next year, and then £750 in the year after. We believe we are the only Council in Wales to offer this, helping to put more money into the pockets of traders in recognition of the continued challenges they face. If agreed, the increased level of rates relief would benefit 1,400 businesses across Rhondda Cynon Taf.
“Once again, we’ve been able identify significant efficiency savings that can be made without largely impacting upon services. This is a major undertaking by senior officers, with such savings more difficult to identify year-on-year as we’ve recently experienced the most significant budget gaps this Council has ever faced – £38 million in 2023/24, £36 million in 2024/25, and £36 million in the current year. The additional £6.335 million savings now identified in the draft Budget strategy for 2026/27 is the latest example of our invaluable work in this area. Without this, the alternative would be to consider significant cuts and much larger council tax rises in order to set a balanced budget each year.
“Cabinet will consider the draft strategy at their meeting on Monday, and could agree for this to be the subject of our Phase Two consultation. We continue to listen to people during these exercises, and the 350 people who took part in Phase One during the autumn have helped inform our priorities throughout the budget-setting process. If agreed, the Council will promote Phase Two in the weeks ahead, and I’d urge all interested residents to have their say as we work towards setting our legally balanced budget on March 4, 2026.”
Posted on 30/01/2026