Agenda item

1.     The Council's Medium Term Financial Plan was approved for the period of 2026/27 - 2028/29.

2.     The Chief Executive was commissioned to establish and lead on a range of options, as outlined in part 4 and 5 of the report, to pre-prepare for dealing with the significant gap in our budget over the next three years.

The report was presented by Cllr Huw Wyn Jones. 

DECISION

The report was accepted.

DISCUSSION

It was explained that the Medium-Term Financial Plan was essential in supporting the Council's resilience, by providing a strategic forecast of the financial outlook for a period of 3 years, commencing on 1 April 2026.

It was noted that these estimates were based on the latest available forecasts of the change in income that the Council will receive over the period (through the Government Grant and Council Tax), and the additional expenditure requirements over the same period.

It was stressed that the report was a live document, and that it would change as more information became available.

It was clarified that the Council did not expect to find out what the Government Grant would be for 2026/27 until at least November of this year, but with the prospect that the Cabinet Secretary for Finance and the Welsh Language intended to increase all Government budget expenditure headings by 2% for 2026/27, the Council could expect an annual increase of around 1.5% in its financial settlement.

It was stated that a cumulative funding gap of £40 million was being forecasted over the next three years.

It was mentioned that the Council had received additional funding during this year from the Welsh Government; it was noted that this was welcomed but that receiving this money at the start of the year as part of the settlement would be more beneficial for local authorities.

It was confirmed that the lack of clarity and inconsistent messages from the Welsh Government and Westminster Government made forward planning based on the likely 2026/27 settlement more difficult than usual.

Reference was made to the Welsh Government's threat of a "rollover budget" for 2026/27, which was a continuation of this year's budget including only a small addition towards inflation. It was added that this meant that there would be no remuneration of the other significant costs faced by local authorities. It was warned that this would be a budget cut unless the rate of inflation fell before April 2026.

Grave concern was expressed about the potential funding gap facing the Council, highlighting that the Council had already squeezed the budget and had identified £74 million of cuts and savings over the last 15 years or so.

There were concerns about the direct impact of further cuts on the services delivered to Gwynedd residents and their impact on communities, unless the Council received a fair settlement. These figures were noted to be alarming, underlining the importance of considering the next steps.

Observations arising from the discussion:

·       Reference was made to this uncertain situation, noting that there was a considerable difference between the level of inflation and the increase in the settlement. It was noted that having to increase council tax to close this deficit would be a direct consequence of the Welsh Government's failure to increase the settlement in line with inflation.  

·       It was added that local authorities, through the Welsh Local Government Association (WLGA), had been pushing for multi-year settlements, but that the Government's promises of that had not materialised.