Welsh Government cuts £100m budget deal with Lib Dems

The Welsh Government has struck a £100m deal with Welsh Liberal Democrat leader Jane Dodds to pass its £26bn spending plans for next year.

Ms Dodds, the party’s sole representative in the Senedd, secured extra funding for childcare, councils and transport as well as a ban on greyhound racing in return for her support.

Labour, which holds half the Senedd’s 60 seats, needed at least one opposition member to break the deadlock and help get its final 2025/26 budget through the Welsh Parliament.

Without a deal, ministers faced losing more than £4bn in the financial year from April.

Senedd Members will vote on the Welsh Government’s final budget as well as Welsh rates of income tax and the final settlement for councils on March 4.

‘Positive step’

As part of the agreement, Ms Dodds, who represents Mid and West Wales, is expected to abstain in the crunch vote which would allow the spending plans to pass.

The deal includes £30m for childcare, £10m for playgrounds and leisure centres, £10m for rural investment, £30m for social care and £5m for water pollution.

Under the agreement, £15m will also be spent on a pilot scheme for young people aged 21 and under to pay only £1 for a single bus fare. Funding will also be provided to restore the fifth train service on the Heart of Wales railway line.

Ms Dodds said: “I’m delighted we have secured funds needed to deliver my party’s key priorities of improving social care, increasing quality childcare, tackling water pollution, improving roads and public transport and protecting vital council run services.

“I’m really pleased the Welsh Government is taking this step to offer universal free childcare to families with children aged two to four across Wales. This is important to tackle child poverty and to help parents get into work to help with the cost-of-living crisis.”

‘Positive package’

The Welsh Government also announced a “funding floor” for councils as part of the final local government settlement, which was also published today.

With councils previously set to receive increases ranging from 2.6% to 5.6%, ministers agreed to a 3.8% minimum increase at a cost of about £8m.

Monmouthshire, Gwynedd, Powys, Vale of Glamorgan and Flintshire councils, which fared worst in the provisional settlement, would benefit most from the funding floor.

Announcing the final budget, finance secretary Mark Drakeford said: “This agreement demonstrates what can be achieved when the Welsh Government and Members of the Senedd work together constructively on areas where we have common ground.

“The additional investment will make a real difference to communities across Wales, particularly in rural areas. Taken together with the extra £1.5bn announced in our draft budget, this is a positive package of additional funding for every part of Wales.”

‘Woeful outcomes’

Sam Rowlands, the Conservatives’ shadow finance secretary, warned: “Labour’s budget will not fix Wales. It will not address the people’s priorities, with woeful outcomes like excessive waiting lists and low educational standards speaking for themselves.

“Whether it’s Plaid or the Lib Dems propping Labour up, it is clear that only the Welsh Conservatives have consistently opposed Labour’s damaging spending plans.”

Labour and the Lib Dems have worked together in the Senedd before, with Mike German and Jenny Randerson serving as Deputy First Minister in the early 2000s.

Kirsty Williams also served as education secretary from 2016 until 2021 but Ms Dodds is not expected to enter into a formal coalition as her predecessors did.

In recent years, Plaid Cymru helped the Welsh Government pass its budgets in return for 46 commitments but the party pulled out of the co-operation agreement last May.