Councils in Wales will receive at least a four per cent funding boost from April after a deal was struck between the Welsh Government and Plaid Cymru to push the budget through the Senedd.

The Welsh Government and Plaid Cymru reached an agreement on 9 December which will allow the budget for 2026-27 to pass and secured almost £300m of additional investment in Wales’ public service.

The agreement will avoid the potential of no budget being passed at all and the consequences that would flow from that.

The agreement includes additional funding for local government in 2026-27 – an extra £112.8m, which provides an overall 4.5 per cent increase to the local government settlement.

All councils will receive increases above four per cent.

It also includes additional funding for the health and social care budget – an extra £180m, which, taken with the funding in the Draft Budget, is equivalent to a 3.6 per cent increase in 2026-27.

Under the agreement, £120m of capital funding will also be available to the next government after the Senedd election to allocate.

The agreement will be reflected in the Final Budget – together with other allocations to be made by the Welsh Government, which do not form part of the agreement – which is set to be published on 20 January 2026.

First Minister Eluned Morgan said: "This agreement shows the strength of the Senedd parties working together on shared priorities to deliver for Wales.

“Through this agreement we have secured the passage of the budget and prevented potentially catastrophic cuts to funding next year.

“This agreement unlocks a further £300m of extra investment for Welsh councils and the NHS, on top of more than £27bn secured through the Draft Budget.”

Rhun ap Iorwerth, leader of Plaid Cymru said: “Our aim in negotiating with Welsh Government was to look after public services, protect jobs and keep council tax bills as low as possible.

“By securing £300m of additional funding for front line services, it avoids the potential of a cliff edge for public spending in Wales and, in May 2026, puts the next Welsh Government on a firmer footing than would otherwise have been the case.

“Whilst I recognise that councils and the NHS will continue to face challenges this marks a significant increase in funding compared to the draft budget.”

The Welsh Government’s provisional settlements in its draft budget for county councils in Wales saw Ceredigion, Powys, Pembrokeshire and Gwynedd earmarked for a 2.3 per cent increase in funding from April next year – the lowest among all 22 local authorities.

The budget agreement will see that increase almost double, allowing councils to mitigate the effect of spiralling costs amid service cuts and council tax rises.

Early indications during budget discussions in Ceredigion suggested that a 6.9 per cent council tax rise was on the cards for residents from April with the 2.3 per cent central funding increase, but that number could now be lowered with the four per cent funding rise.