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The Welsh Government has unveiled its £27bn spending plans as a high-stakes budget showdown looms, with billions of pounds for public services teetering on a knife edge.

Mark Drakeford has today (October 14) outlined the draft 2026/27 budget which funds everything from health and education to culture, councils and the environment in Wales. His draft budget includes an extra £800m compared with last year’s spending plans.

Prof Drakeford will be guiding his ninth and final budget through the Senedd as finance secretary or formerly first minister – and next year’s promises to be the most difficult yet.

Labour holds 29 of the Senedd’s 60 seats and needs the support of at least one opposition member – and likely two – to pass the spending plans for the 12 months from April.

Last year’s budget was voted through after ministers cut a £100m deal with Jane Dodds, the Liberal Democrats’ Welsh leader and the party’s sole Senedd member.

But a similar deal would leave ministers one vote short this year unless Labour holds the Caerphilly seat in next week’s by-election triggered by the death of Hefin David.

‘Irresponsible’

If not passed in the Senedd by April, spending plans would revert to 75% of last year’s budget which would rise to 95% if still not agreed by the end of July. This would also impact directly funded bodies such as the Senedd commission and Wales Audit Office.

Last year, it was estimated that failing to pass motions on the budget and Welsh rates of income tax could potentially see Wales lose around £7bn.

The parliamentary arithmetic suggests ministers would either need to win over Plaid Cymru, the Conservatives, Rhys ab Owen or Russell George – who sit as independents – or Tory-turned-Reform UK Senedd member Laura Anne Jones to escape such a scenario.

Plaid Cymru has helped ministers pass budgets in recent years before the agreement between the two collapsed in 2024. Rhun ap Iorwerth has not ruled out a deal though his party would be loath to lend its support with an election on the horizon in May.

But the Conservatives have extended an olive branch, saying a deal may be possible. Darren Millar, the leader of the opposition, suggested his party could help pass the budget if the Welsh Government scrapped land transaction tax – Wales’ equivalent of stamp duty.

In a letter to first minister Eluned Morgan, he wrote: “While we disagree fundamentally with the Labour Welsh Government on many issues, and on many of your spending priorities, we also accept that it would be irresponsible not to offer to engage with you on this issue.”

Plaid Cymru and the Conservatives voted against last year’s budget.

‘Business as usual’

Prof Drakeford published a “business-as-usual” draft budget, rising in line with inflation, in an effort to minimise political rows and avoid tying the next Welsh Government’s hands. The draft budget allocates 98.6% of available funds, leaving around £380 million unallocated.

He warned of “damage to Wales” if the draft budget – which includes about £13bn for health and social care as well as nearly £7bn for housing and councils – cannot be agreed.

Welsh rates of income tax and the main rates for land transaction tax rates would remain unchanged under current budget plans but the rates for landfill disposal tax would increase.

Prof Drakeford said: “My door remains firmly open to working with other political parties in the Senedd who share my conviction that we have a collective responsibility to pass the Welsh budget and believe a more ambitious budget could be agreed.”

The former first minister will give a statement in the debating chamber or Siambr this afternoon before unveiling a more detailed draft budget on November 3.

Prof Drakeford will also appear before the finance committee to give evidence on Thursday (October 16), kicking off weeks of Senedd scrutiny on the outline draft budget.

Chancellor Rachel Reeves will announce the UK’s autumn budget, detailing funding for Wales, on November 26. The final Welsh budget is then set to be published on January 20, with a key vote in the Senedd pencilled in for January 27 although further votes could follow.

Caerphilly’s by-election candidates for October 23

• Welsh Liberal Democrats – Steve Aicheler
• Gwlad – Anthony Cook
• Wales Green Party – Gareth Hughes
• Welsh Conservatives – Gareth Potter
• Reform UK – Llŷr Powell
• Roger Quilliam – UKIP
• Richard Tunnicliffe – Labour
• Lindsay Whittle – Plaid Cymru

This article was amended to revise the previous estimate of up to £4bn in cuts after Prof Drakeford later said the figure could be as high as £7bn.