Cardiff Council has published an update on preparations for its 2027/28 Budget, with rising prices, workforce costs and growing demand for essential services contributing to an estimated £45 million gap.
The latest forecast estimates that maintaining services at their current level will cost an additional £60.3 million in 2027/28.
This is expected to be partly offset by £15.3 million of additional funding, leaving an indicative budget gap of £45 million. The figure is £1.2 million higher than the forecast published in March and will continue to be reviewed as more information becomes available.
The additional costs currently forecast for 2027/28 include £22.4 million for price inflation, including the increasing cost of commissioned care, home-to-school transport and education placements.
A further £17.4 million is required for estimated workforce costs, while £11.3 million relates to growing and increasingly complex demand for services.
Another £9.2 million is forecast for capital financing, existing commitments, budget realignments and emerging financial pressures.
The council’s financial plans currently assume a 2% increase in general Welsh Government funding for 2027/28, although no indicative funding allocation has yet been provided.
Each 1% variation in the council’s general funding is worth almost £7.2 million, meaning the final settlement will have a significant effect on the size of the budget gap.
Reflecting on the current financial forecast, the Leader of Cardiff Council, Cllr Chris Weaver, said: “Like councils across the country, Cardiff continues to face significant financial pressures. The cost of delivering services is increasing, while demand in areas such as social care and Additional Learning Needs remains exceptionally high.
“Our priority will be to protect the services residents rely on and to support the children, adults and families who need us most. However, we do not underestimate the scale of the challenge ahead.
“These are initial forecasts and not a final budget. We will continue to make the case for a fair funding settlement for Cardiff, while working across the Council to identify savings, reduce costs and deliver services as efficiently as possible.”
Around £34.6 million of savings would be required in 2027/28 if the budget gap remained at its present projected level.
Cabinet Member for Finance, Modernisation and Performance, Cllr Leonora Thomson, said: “This report provides an early and transparent assessment of the financial position facing the Council as we begin preparing next year’s budget. The £45 million gap is based on the information currently available, but there remains considerable uncertainty around inflation, staff costs, demand for services and, crucially, the funding Cardiff will receive from Welsh Government.
“We will continue to prioritise efficiency savings and income generation, alongside the Council’s change programme. But the size of the gap means efficiencies alone are unlikely to be sufficient, and some proposals affecting the way services are delivered may also need to be considered.
“No decisions have been made. Detailed proposals will be developed, assessed and subject to consultation before the final budget is considered.”
Demand for essential services
Education, school funding and social services continue to account for most of the financial pressure facing the council.
Additional Learning Needs are placing growing pressure on school and council budgets, including the cost of specialist placements, education outside council-maintained settings and home-to-school transport.
Demand and price pressures also remain significant in Children’s and Adult Social Services, where the complexity and cost of care packages continue to grow.
Medium-term outlook
The council’s Medium-Term Financial Plan estimates a total budget gap of £163.7 million between 2027/28 and 2030/31.
Current modelling indicates that almost £119 million of savings would be required over the four-year period.
The council will continue to focus on operational efficiencies, income generation and its change programme. This includes using technology effectively, developing more preventative and integrated public services, and ensuring economic and environmental services work together efficiently.
However, the report acknowledges that the scale of the savings requirement means proposals affecting service delivery are also likely to be needed.
Capital investment
Alongside its day-to-day revenue budget, the council will update its five-year Capital Programme and extend it to cover the period up to 2031/32.
Because of higher borrowing costs and pressure on the revenue budget, new capital expenditure will focus on essential legal and regulatory requirements.
Other projects would generally need to be funded by external partners, grant funding or agreed asset sales, while major projects would continue to be developer-led.
The council will also focus on completing projects already included in its investment programme.
What happens next?
Cabinet will consider the Budget Strategy update on Thursday, September 17. Ahead of the meeting, the strategy was scrutinised by the Policy Review and Performance Committee on Wednesday, September 9.
Work will continue during the autumn to finalise the financial forecasts and develop potential savings and income proposals.
The Welsh Government’s draft Budget is expected on November 17, with the final Budget expected on February 16, 2027. The date of the provisional Local Government Settlement has not yet been confirmed.
Public consultation on Cardiff’s detailed draft budget proposals is planned to begin in January 2027.
Engagement will also take place with scrutiny committees, schools, trade unions, third-sector organisations and council employees.
The final 2027/28 Budget will be considered alongside the updated Corporate Plan in March 2027.
