All councils in England and Wales have a legal duty to deliver a balanced budget to fund the running of their services.
The 2026 to 2027 budget consultation closed on 1 February 2026.
Statement from the Leader, Councillor Huw Thomas
We are committed to delivering a Stronger, Fairer and Greener Cardiff.
A stronger city, with well-paid jobs, high-quality education, affordable housing and great public services.
A fairer city, where the many great opportunities of living in Cardiff can be enjoyed by everyone, whatever their background, where those suffering from disadvantage are supported and where every citizen feels valued.
And a greener city, which leads on the response to the climate emergency, promotes biodiversity and offers convenient, accessible, safe and sustainable transport options. We have made good progress against these ambitions.
Since 2022, we've delivered 25 major school projects - including new schools, expansions, and specialist facilities - helping strengthen Cardiff's position as one of Wales' top-performing areas for education. We are delivering one of the most ambitious housing programmes in the country, targeting 4,000 new homes by 2035 - with 1,800 already built. Our Money Advice Team have supported people access over £68 million in additional benefit support and thousands have been helped into-work.
We have improved the city's public transport network and started work on the Cardiff Crossrail tram line. We have continued to invest in the city, with the new Indoor Arena part of the wider redevelopment of Cardiff Bay. Similarly, we have invested in our district shopping centres, local hubs, libraries and parks and taken action on the Climate Crisis by completing the city's first heat network.
This progress, however, has been achieved in the face of incredibly challenging circumstances. Local authorities across the UK are facing major challenges. Demand for services is increasing, the cost of delivering them is higher than ever, and the funding available is not keeping pace with these pressures. That's why we have a budget gap to close.
Thanks to the budget settlement we have received from Welsh Government and continuous effective management of our finances, we will not need to make reductions to frontline services this year.
As we have always done, our budget will be consistent with our values and will invest in our priorities. It will support the most vulnerable, protect frontline services and prioritise funding for education and social services. In fact, as part of this consultation, we are proposing a net increase in spending on schools, children's services and adult services.
Please tell us what you think and respond to the questions in this consultation by 1 February 2026.
Cllr Huw Thomas
Leader, Cardiff Council
What's a budget gap?
A budget gap is the difference between the Council's available funding - such as general Government grant and Council Tax - and its predicted expenditure on delivering services over the year ahead. We need to make sure that the funding we have is enough to cover the costs of delivering our services.
The Council provides hundreds of different services to residents across the city, including education, social care, libraries and hubs, waste, street cleansing, street lighting, road maintenance etc.
What is the council's budget gap?
The council is facing a projected budget gap of over £22.7 million.
Why is the council facing a budget gap?
There are several reasons why the council is projecting a budget gap:
Increasing demand for our services
Demand for Council services is increasing for several reasons. Part of this is due to Cardiff's growing population, which means more people need our support. Additionally, the cost-of-living crisis has led to an increasing number of residents relying on our services whilst more and more people require intensive support. For example, the Council has to support more children with Additional Learning Needs, more adults requiring dementia services and a growing number of children in our care have significant support needs. Delivering education and social care - helping children, adults, and older people who need our support - accounts for over 74% of the Council's budget and the cost of delivery has risen significantly.
Inflation
A range of factors, beyond the Council's control, is affecting our finances with inflation driving up the cost of delivery.
How we propose to close the gap
The budget gap will need to be addressed through a combination of:
Efficiency savings
The Council is committed to protecting frontline services and is therefore generating savings through efficiency measures that will not impact service levels. This includes reducing the running costs of buildings, minimising the office space required, and adopting new technology where it can help save money.
Fees and charges
Fees and charges help the Council close the budget gap. As the cost of delivering services increase, the Council may need to increase fees and charges to help meet the cost of delivering those services.
Council tax
Council Tax accounts for around 26% of the Council's budget, with the remainder provided by the Welsh Government. Each 1% increase in Council Tax generates net income of around £2 million, making it unrealistic to close the budget gap through tax increases alone.
Use of reserves
The Council also holds reserves which, if they were to be used, they must be used cautiously as these funds are limited. Most of the Council's reserves are earmarked for specific purposes and are already committed, such as funding one-off community initiatives, or supporting homelessness prevention services. The Council does maintain a General Balance of £14.3 million to cover unforeseen costs, which equates to less than 1.7% of the Council's overall net budget.
About the budget
The council's budget is made up of 2 main areas:
- Revenue expenditure (day-to-day spending), and
- Capital expenditure (investment in infrastructure).
Revenue expenditure refers to spend on day-to-day services like:
- running schools,
- caring for vulnerable people,
- collecting waste,
- maintaining parks, and
- operating libraries.
The Revenue Budget sets out how much will be spent in these areas and how this will be funded over the financial year.
Capital expenditure has a longer-term focus. It refers to acquiring or improving assets. For example, building a new school or resurfacing a highway.
The Capital Programme is an investment programme that sets out capital expenditure plans and how they will be funded over a 5-year period. It will support the council's priorities and help address the long-term challenges facing the city.
2025 to 2026 budget gap (Revenue Budget)
The 2025 to 2026 Revenue Budget has been set taking into account the ongoing price and demand pressure. Although at lower levels than in recent years, inflation also continues to drive up costs.
We estimated that the cost of delivering services will increase by £67.2m for 2025 to 2026. Although the funding settlement from Welsh Government was better than we expected (+5.3%), this cost increase will not be fully covered by the additional funding. This leaves a £27.7m gap.
As in previous years, most of the gap has been bridged through savings and corporate measures (£18.3m). Corporate measures include Senior Management savings and use of reserves.We have met the remainder through a 4.95% council tax increase which generates £9.4m. This increase will make sure some of our key services are protected. Eligible residents will get support through Council tax reduction.
Savings (Revenue Budget)
We have continued to prioritise efficiency savings. These are savings that deliver the same (or more) for less cost, with no impact to the resident or customer.
Directorate efficiency savings total £12.5m and are included in the 2025 to 2026 budget. We have also made £2.8m in corporate savings and measures.
However, due to the size of the budget gap, we have made £3m in savings that impact on services. View the service change proposals on Modern Gov.
The service change proposals are consistent with the feedback from the city-wide budget consultation . We received over 3,000 responses. The service change proposals include increases to prices for chargeable services , including:
- bereavement services,
- residential parking, and
- learning for life courses.
There are also proposals to increase volunteers in Hubs and to review the ways care is delivered.
Support for corporate priorities
The budget continues to support the Stronger, Fairer, Greener priorities for the city.
It also takes the consultation feedback into account, which identified the top 3 funding priorities as:
- Schools and education.
- Vulnerable children and families.
- Vulnerable adults and older people.
Investment in these areas are important features in both the Revenue Budget and Capital Programme.
The 2025 to 2026 Revenue Budget includes:
- £22.9m additional funding for schools (an increase of 7.5%).
- £19.4m net additional funding for Social Services to support vulnerable children and adults (an increase of 7.3%).
- £8.8m net additional funding for Central Education Services (an increase of 16%).
There is also a £4.5m one-off investment in priority areas. This includes funding to support:
- neighbourhood and parks regeneration initiatives,
- community events,
- community safety, and
- the transfer of council assets to local sports clubs.
It also includes funding to:
- support initiatives for children and young people,
- improve recycling rates,
- enable additional drain clearance, and
- provide bus-shelters.
Capital Programme 2025 to 2030
The Capital Programme for 2025 to 2030 reaffirms our commitment to significant investments in the city's future. This includes investment in:
- affordable housing,
- school buildings,
- transport infrastructure and roads,
- improving air quality,
- tackling coastal erosion,
- core office replacement (such as County Hall), and
- economic development initiatives, such as the new Arena in Cardiff Bay.
Medium term financial plan (Revenue)
The medium term financial plan highlights that over the 4 years after 2025 to 2026, we will face a further budget gap of £122m. This is because the demand and the cost of providing services is increasing faster than the anticipated funding, with £40m needing to be addressed in 2026 to 2027.
In working to address this gap, we will continue to seek improvements in the way we deliver services. We will also carefully consider our priorities for future service delivery by continuing to engage with:
- residents,
- communities, and
- other stakeholders.
Budget archive
