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No Welsh council has yet had to file for effective bankruptcy but some are ‘close'(Image: WalesOnline\/ Rob Browne)<\/p>\nA number of authorities in Wales are ‘close’ to having to take drastic financial action<\/p>\n
11:28, 18 Nov 2025Updated 11:36, 18 Nov 2025<\/p>\n
No Welsh council has yet had to file for effective bankruptcy but some are ‘close'(Image: WalesOnline\/ Rob Browne)<\/p>\n
A number of Welsh councils “undoubtedly” face bankruptcy, it has been warned. Adrian Crompton, the auditor general for Wales, has said that some councils in Wales are “close” to declaring themselves bankrupt.<\/p>\n
In England, a number of councils<\/a> have had to issue what’s known as a section 114 notice. While a council cannot go bankrupt in the way that a company or an individual can, they can issue a notice that they are about to incur expenditure that is unlawful which triggers a whole range of measures, including a stop on spending.<\/p>\n Speaking to the Senedd’s finance committee<\/a> earlier this month, Mr Crompton was asked how close Wales’ 22 councils are to having to do that, as councils themselves warn of financial shortfalls.<\/a> For our free daily briefing on the biggest issues facing the nation sign up to the Wales Matters newsletter here<\/a><\/p>\n “Close,” he replied. “I did a big piece of work last year that looked at financial sustainability across the LG [local government] sector, and looked at each authority individually as well.<\/p>\n “There are undoubtedly a few authorities that are very close to having to issue a section 114.<\/p>\n “Our assessment at the time of publishing our report was that none were about to, so they all had sufficient grip on their in-year position, so it wasn’t imminent.<\/p>\n “But some are right at the edge, and they are all facing some very significant demand-led pressures in areas like children’s services, additional learning needs, temporary accommodation, which are very hard to predict.<\/p>\n “But when you’re right at the edge of financial sustainability, if you get hit with a couple of significant cases that you have to deliver against, that could be sufficient to tip authorities over the edge”.<\/p>\n He warned that if no Welsh Government<\/a> budget were passed it would seriously impact councils.<\/p>\n The budget process for the Welsh Government is ongoing, and Labour<\/a>, which has the most seats in the Senedd will have to find at least two people to back its plans.<\/p>\n The final vote will take place in January, but before then negotiations are going on behind the scenes.<\/p>\n Wales’ finance minister Mark Drakeford has said the total \u00a327bn budget<\/a> includes \u00a3380m of money which is unallocated, which is the money he will be able to negotiate with.<\/p>\n