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The Senedd could face a £22m funding gap and run out of money to pay staff, politicians and contractors by January 2027, the Welsh Parliament’s speaker has revealed.

Elin Jones, the presiding officer or Llywydd, warned of dire knock-on effects for the Senedd of a failure to agree the Welsh Government’s 2026/27 budget.

Labour lacks a majority and needs opposition support to pass its spending plans. If the deadlock is not broken, the Senedd – like the government – would be forced to operate on 75%, and subsequently 95%, of this year’s budget in the next financial year from April.

Ms Jones said such a scenario would present a significant financial challenge, resulting in the Senedd effectively running out of cash after only nine months in January 2027.

She told the Senedd’s finance committee that expansion from 60 politicians to 96 at the May 2026 election will cost about an extra £13m in pay and allowances.

‘Inability to pay staff’

Ms Jones, who chairs the Senedd commission, which manages the estate and support services, wrote: “This represents the principal factor behind a potential funding gap of around £22m.

“Such a shortfall could not be managed by simply reallocating resources, as the majority of the commission’s budget is committed to staff costs and contractual payments.

“Any reduction in these areas would likely incur further costs, such as redundancy payments or early termination penalties, thus intensifying budgetary pressures and significantly limiting the resources available to support the parliament at the outset of the new Senedd.

“If the Senedd were in this position, the budget would run out after month nine. This would mean an inability to pay staff, contractors, members and their support staff from this point.”

Ms Jones, who will stand down after two terms as Llywydd next year, suggested the Senedd would try to bridge the gap through a supplementary budget motion following the election.

The finance committee, chaired by Plaid Cymru’s Peredur Owen Griffiths, was concerned by a lack of contingency planning being undertaken by the commission.

‘Value for money’

In a letter, Ms Jones accepted all the committee’s recommendations following scrutiny of the commission’s £102m draft budget for 2026/27 – an £18m or 21% increase on 2025/26.

In an update on plans for the Pierhead in Cardiff Bay, Ms Jones said the grade one-listed building will primarily be retained for use by the Senedd. But she confirmed the commission will explore commercial interests but the process is unlikely to conclude before May 2026.

She also offered an update on the “Bay 2032” project, which is looking at options for office space with the lease on Tŷ Hywel – the red-brick building behind the Senedd – set to expire.

The speaker wrote: “This process has demonstrated that simply rolling-over the existing lease would not necessarily satisfy the accommodation requirements of the commission nor provide best value for money to the taxpayer.

“There are, it is now clear, alternative options that may provide better value.”

Other options are thought to include buying Tŷ Hywel, taking up a nearby building, or building new offices but a final decision is expected to be pushed beyond the next election.

The Senedd will debate a motion on the commission budget on Wednesday November 19 but pivotal votes on the Welsh Government’s spending plans will follow in the new year.