A better-than-expected financial settlement from the Welsh Government could lead to a reduction in the near-10 per cent council tax rise being mooted by Pembrokeshire and Ceredigion.

Both Ceredigion and Pembrokeshire had received a 3.6 per cent funding increase from Welsh Government, which has now been increased to 3.8 per cent in its final budget for 2025-’26 through a guaranteed 3.8 per cent funding floor for all local authorities.

Other Welsh Government budget announcements were a raft of other funding for local government Wales-wide, including £5m to improve playgrounds and play facilities for children and an extra £5m to support leisure centres to be more energy efficient.

This funding floor rate is still below the average increase of 4.3 per cent.

On the eve of the February 20 announcement of the final budget, Pembrokeshire County Council was to consider its own budget, with a 9.85 per cent council tax rise currently being proposed.

Members agreed to adjourn that decision until March 6, in part for them to await any movement in the final settlement from Welsh Government; this 0.2 per cent rise being worth some £500,000 in extra money for the local authority’s coffers.

The recommendation was moved by Cabinet member for finance Cllr Joshua Beynon, seconded by Leader Cllr Jon Harvey.

However, former council leader Cllr Jamie Adams proposed the meeting be deferred to an as-then undetermined future date, saying the meeting was held too early, providing an incomplete financial report while awaiting the final Welsh Government financial settlement and a potential increase in other forms of funding, which could change the council’s financial position.

Part of Cllr Adams’ concern was the possibility the Welsh Government local government settlement may increase from the 3.6 per cent rate publicised, with the final figure estimated at 3.8 per cent putting some £560,000 extra into the council’s coffers, with a potential knock-on effect on revenue or council tax rates.

Since the meeting ended, Welsh Government has now announced Pembrokeshire will receive a 3.8 per cent increase rather than the previous 3.6.

“Today is not the day for prudent decision making, today is the day when we might make a mistake,” he told councillors, adding: “I just think the starting gun has gone off too quickly.”

Members heard any deferment would be to March 6, with a legal obligation to set a budget by March 11 at the latest.

Following a call from Deputy Leader Cllr Paul Miller, members agreed to a half-hour suspension of the meeting to iron out discussions on the call.

On their return, Cllr Miller proposed an amendment to Cllr Adams’ call, the meeting being suspended and an alternative date of March 6.

A voice of concern was raised by Cllr Mike Stoddart, who called for a deferment later that day, a later meeting leading to a “take it or leave it” situation where there were no alternatives to the budget proposed.

The two motions saw overwhelming support, with 55 votes for and three against, with the budget decision now to be made on March 6.

A 9.85 per cent council tax increase had been recommended, adding £148.81 to the average Band D property’s bill.

PCC’s Cabinet member for finance Cllr Beynon welcomed the increase in funding from Welsh Government, but warned: “The increase to 3.8 per cent is positive for us in Pembrokeshire representing circa £500,000 in additional money.

“However, we still have a funding gap of around £26 million meaning this gap needs to be filled by a combination of service cuts and a council tax rise.”

Cllr Huw Murphy, leader of the Independent Group who moved the motion to suspend the decision on setting Council Tax until the full financial settlement from Welsh Govenment was known, commented after the meeting: “You can rest assured that when the Council Tax level is set it will be lower than 9.85 per cent.

“The level of Council Tax likely to be recommended for Full Council on March 6 has not yet been determined but rest assured we will work very hard to ensure a less painful Council Tax rise on Pembrokeshire residents than the 9.85 per cent Cabinet proposed,”

Neighbouring Ceredigion is currently on course for a 9.9 per cent council tax rise, with the final decision on March 3.

But reports for councillors have said: “Cabinet have already determined that any benefit from a funding floor in the final settlement would be used to reduce the proposed council tax increase.”

In Ceredigion, Elin Jones MS and Ben Lake MP have said the below 4.3 per cent level for the county will “inevitably mean that Ceredigion County Council will continue to face a challenging financial situation”.

Elin Jones MS said: “This is a miniscule uplift for Ceredigion Council and will give the council very little flexibility to ease its budgetary pressures. By having a lower-than-average uplift from Welsh Government, the effect of this will be felt by the important local services and the council taxpayers in Ceredigion.”

Ben Lake MP added: “There seems to be an inherent bias in the funding formula against rural areas and this needs to be investigated and rectified. Council taxpayers in rural areas are having to pay more than their fair share and this is increasingly unsustainable.”