Gwynedd Council forecasts £9.8 million budget deficit

Gwynedd Council has forecast a substantial budget deficit of £9.8 million for the 2026/27 financial year, signalling severe financial strain across the authority. The council anticipates it will be forced to utilise its reserves to cover an “almost inevitable financial deficit,” according to a new internal review. This grim financial outlook is set to dominate upcoming Cabinet discussions regarding the Revenue Budget 2026/27.

The end-of-August 2026 review highlights that four distinct departments are currently operating with deficits exceeding the £100,000 threshold. Significant overspending is recorded in children’s extra-county placements, waste management, and residential and domiciliary care services. Additionally, post-16 care and the Derwen service for children with disabilities are also running above their allocated budgets.

Revenue shortfalls are further compounding the crisis, with parking and highway income targets failing to meet projections. The council tax yield and the £5.3 million council tax premium are both falling below this year’s budgeted figures. These income gaps are creating a widening chasm between expected receipts and actual operational costs for the local authority.

Chief Executive Dafydd Gibbard convened an urgent meeting with all relevant heads of department to address these escalating financial pressures. The session aimed to gain a better understanding of departmental issues and establish a clear programme to respond to the shortfall. A primary focus of this strategy is continuing to push for further savings across the organisation.

The report explicitly states that it is anticipated the council’s reserves will need to be used at the end of the financial year. This action is required to fund the “almost inevitable financial deficit” identified in the latest projections. Cabinet will subsequently need to determine which specific funds are appropriate to deploy based on statutory guidance.

Statutory finance officer recommendations will guide Cabinet in selecting the correct reserves for release to balance the books. The authority faces a critical decision on how to manage its remaining financial buffers effectively. This process is essential to ensure the council can continue delivering essential public services without further disruption.

Particular attention must be paid to the significant impact of housing transfers from tax and premium paying properties. These properties are moving to those subject to non-domestic rates, altering the revenue landscape for the council. This shift in property classification is a key factor in the current financial modelling and deficit calculations.

At the Cabinet meeting on 10 November, a formal decision will be sought to accept the report and note the forecasts. The significant budget deficit is concentrated in the Children and Families Department and the Adults, Health and Well-being Department. A lesser deficit is also projected within the Environment and Highways Departments, reflecting widespread financial challenges.

Cabinet will also seek to approve additional financial support above the contractual payment to Cwmni Byw’n Iach. This funding is to be sourced from the transformation fund to support ongoing operational requirements. The Cabinet Member for Economy will be delegated the right to agree on the final amount in consultation with key finance officials.