Cardiff Council has revealed it is facing a predicted budget shortfall in 2026/27 of £38.4 million.
The council is now working on a budget plan for next year – which could see some services reduced or stopped completely – to bridge the gap.
The shortfall arises when the money the council receives from Government, combined with council tax income, isn’t enough to pay for the 700-plus services the council delivers to residents.
A report to Cardiff Council’s Cabinet, on Thursday, September 18, outlines the financial pressures the council is currently experiencing due to rising costs and increasing demand for social care, schools and education, roads and parks, alongside multiple other services.
In March, the Council’s Medium-Term Financial Plan highlighted a potential budget gap in 2026/27 of £40.4 million. For the longer period of 2026-2030, this gap was estimated at £122.2 million.
But councillors will hear next week that next year’s projected deficit has now been revised down slightly to £38.4 million, while the medium-term gap has increased to £126.9 million.
The budget gap is driven by a combination of additional costs and expected constraints on government funding for public services. Major impacts include increased demand for complex services, particularly for children in looked-after placements, adult social care, homelessness support, and a steep rise in the cost and number of placements required to support pupils with additional learning needs, including impacts on home-to-school transport.
Other inflationary pressures – including higher food costs (e.g. school meals), water bills, and externally commissioned services such as care home placements and school transport – are also putting significant strain on the council’s budget.
Workforce costs are also contributing to the pressure, including:
– Pay awards for council staff, including teachers
– A rise in the Real Living Wage
Cllr Chris Weaver, Cabinet Member for Finance, Modernisation and Performance, said:
“The Council has a responsibility to deliver a balanced budget for 2026/27 and we are committed to achieving that goal in what continues to be a very challenging financial landscape.”
“We will now work on putting together a Budget, and an updated Corporate Plan, which will prioritise the resources available on key services.”
Among the measures the council intends to take to address the budget gap are:
- Maximising income streams where possible, including increasing fees for some services
- Efficiency savings
- Reducing spending
Cllr Weaver added: “We know we have some difficult decisions and choices to make over the coming months, and we are determined to reduce the budget gap in ways that have as little impact on the people of Cardiff as possible. But the financial pressures we are facing make this increasingly difficult to achieve.
“Like councils across the UK, Cardiff has seen its budget reduced in real terms over many years, requiring hundreds of millions of pounds in savings. So far, we’ve managed to protect most of the services our residents rely on and care about. However, the budget gap we face next year and over the next four years, set against the funding we expect to receive, means it is very likely that we will no longer be able to deliver some services. We will continue to consult with residents throughout this process to understand what matters most to them.”
