Gwynedd Council could be looking at a funding shortfall of around £40 million over the next three years – raising concerns over council tax rises and more cuts.

That’s according to the council’s Medium-Term Financial Plan. It sets out the financial outlook for the three-year period starting on April 1, 2026, and helps council make decisions over its future planning.

The bleak report says “without interference” the council could face fiscal gaps in its budget during 2026/27 of £14.9 million, with a shortfall of £12.3 million in 2027/28. A £12.8 million shortfall is possible in 2028/29 - a cumulative gap of £40 million projected over three years.

The report notes concerns the funding situation could see it “pushed to significantly increase” council tax again for 2026/27.

Increasing it by 1 per cent could “result in additional revenue of around £1 million towards our financial gap,” the report says.

Estimated pressures are anticipated to come from areas including pay inflation over the years from £9.3m in 2026/27, £8m in 2027/28 and £8.3m in 2028/29 and price inflation over the same period of £4.7m, £3.9m and £4m, as well as levies and reductions in employer pension contributions.

Estimates in the plan are also based on the latest available forecasts about the change in income the council will receive over the period (through Government Grant and Council Tax), and the additional spending requirements over the same period.

The council is also not expected to find out what the Government Grant for 2026/27 will be until at least November 2025, although it’s forecasted that the Cabinet Secretary for Finance and the Welsh Language intends to give a 2 per cent increase on all Government budget expenditure headings for 2026/27.

The report said: “We can expect an annual increase in our financial settlement of around 1.5 per cent, especially given the potential instability that may result from the Senedd elections in May 2026.

“There is, therefore, a significant risk of severe financial instability from not taking early and decisive action to consider the situation and take remedial action.”

Over the last 15 years Gwynedd has squeezed budgets and find savings, prioritising schemes that had the least impact on the residents of Gwynedd.

A savings and cuts regime identified £74 million of savings over a period of around 15 years.

The report added: “But we have now reached a point where we cannot squeeze more of it without cutting services that would have a clear and direct impact on the residents of Gwynedd.”

The report also points to “a lack of clarity on behalf of the Government” meaning planning ahead on the basis of the likely settlement is “even more difficult for 2026/27 than usual”.

It also fears Welsh Government could set a “roll-over budget” for 26/27, to continue with this year’s budget with a small addition towards inflation only and “no consideration/recognition towards other significant costs facing local government.”