August 21, 2026 - 167 views
A major review of the way Welsh councils receive their funding could provide an opportunity to address long-standing concerns in North Wales, including Conwy County Borough Council's claim that it has repeatedly received one of the lowest funding increases in Wales.
The Welsh Government has commissioned the Wales Centre for Public Policy to examine the formula used to distribute money to local authorities, with the aim of making sure funding better reflects the real cost of providing services in different parts of the country.
The review will look specifically at factors including rurality, sparsity, deprivation and demographic change – issues which have particular relevance to parts of North Wales.
For Conwy, the announcement comes after the council highlighted what it described as significant financial pressures and criticised the level of its recent settlement.
For 2026/27, Conwy received a 4.1% increase in its Welsh Government funding, compared with an average increase of 4.5% across Wales. Conwy Council said this was the joint lowest increase in Wales, alongside four other councils.
The council says its financial pressures are being driven by rising costs and demand for services. It entered the 2026/27 budget process with a funding gap of £20.4 million before additional funding was applied.
Although additional Welsh Government funding eventually increased Conwy's allocation by around £10.9 million, the council says the 4.1% settlement remained the lowest percentage uplift of any authority in Wales.
The concern is particularly significant because of the very different geography and demographics of Conwy.
More than 85% of Conwy's population lives within the relatively narrow coastal belt, including the main population centres of Llandudno and Colwyn Bay, while rural communities are widely dispersed across the rest of the county. The council describes rural Conwy as predominantly agricultural, with limited alternative employment and a dispersed population.
That creates a difficult combination for a local authority.
It has relatively concentrated demand for services along the North Wales coast, alongside the additional costs of providing services across large rural areas and smaller communities.
There is also a substantial visitor economy.
Conwy County Council says tourism generated an estimated £1.1 billion in economic impact in 2022, with visitor spending supporting not just tourism businesses but wider local supply chains and services.
The council has argued that visitor numbers and tourism bring major economic benefits, but the concentration of visitors also places additional demands on infrastructure and local services – an issue reflected in its consideration of a visitor levy.
Conwy estimates that a visitor levy could potentially generate between £1.9 million and £2.1 million a year, with any money raised required to be used for purposes including managing the effects of visitor activity and improving infrastructure and services.
The wider financial pressures are not unique to Conwy.
Across North Wales, councils are dealing with increasing demand for social care and other services, rising employment costs and inflation, while also having to maintain roads, waste services, education, housing and other essential provision across communities with very different characteristics.
The Welsh Government's review is therefore significant because it will examine whether the existing funding formula properly captures those differences.
The first stage is concentrating on Education and Personal Social Services, which together account for almost three-quarters of the funding distribution. Evidence will be updated to take account of factors such as sparsity, rurality, deprivation and demographic change.
The Wales Centre for Public Policy will also examine how funding distribution works elsewhere in the UK and internationally.
Welsh Government says the work is being carried out with local government and that the Finance Sub-Group, which includes council leaders and the Welsh Local Government Association, has supported the direction of the review.
However, councils will not see any immediate change.
Because of the scale and complexity of the work, the earliest any changes could be introduced would be the 2028/29 local government settlement.
For Conwy and other North Wales authorities, that means the review is unlikely to solve the immediate budget pressures they face.
But it could provide an opportunity to examine a question that has become increasingly important along the North Wales coast and in rural communities: does the current formula properly reflect the cost of delivering services to a population spread between busy coastal towns, ageing communities and large, sparsely populated rural areas?
The Welsh Government says the purpose of the review is to make sure funding is based on evidence and keeps pace with changing communities.
For councils such as Conwy, the hope will be that the new evidence leads to a funding system that more accurately reflects the pressures they say they are facing on the ground.
