Welsh Government’s £27.5bn final budget proposals approved

The Welsh Government’s £27.5bn budget plans have been approved by the Senedd after ministers struck a deal with Plaid Cymru.

The budget plans, which cover the 2026/27 financial year, were approved on Tuesday January 27.

The budget includes £1.2bn more for public services and businesses than in the current financial year, along with £400m of new allocations added since the draft budget was published in October.

These new allocations include extra funding for councils and the NHS, secured as part of the agreement with Plaid Cymru, whose members abstained during the vote.

It also includes money for bus services, apprenticeships, further education, flood prevention, and maintaining school buildings.

The Labour-run Welsh Government needed the support of another party to get its budget plans through – because it is two seats short of a majority following Plaid Cymru’s victory in the Caerphilly by-election last year.

Wales’ finance secretary, Mark Drakeford, said: “This final budget provides extra resources to support the services Wales relies on.

“Every department has been protected with at least the same funding in real terms as this year, including extra funding for inflation and pay – recognising the vital work of our public service workforce.”

Mr Drakeford added: “By working across the Senedd, we are providing certainty and stability for public services now, while ensuring the next Welsh Government has the resources it needs to deliver its priorities from day one.”

The budget will see all councils in Wales receive a funding increase of 4% or more, along with an extra £180m for the health and social care budget – taking the total revenue budget to more than £12.6bn.

Meanwhile, the budget also includes a £116m support package for businesses over a two-year period to help with the impact of the 2026 non-domestic rates revaluation.

‘Fairness, stability, delivery’

First Minister Eluned Morgan said her party’s budget is “based on our Labour values – fairness, stability, delivery”.

She continued: “We said we would put more money into public services and that’s what we’ve done. We’re putting more money into our NHS as we know that’s what matters to people.

“This is Welsh Labour delivering for the people of Wales. Plaid will tell you they’re the ones who made this happen. But Plaid did not write this budget, they did not lead the negotiations, they didn’t even back it, they abstained. 

“Only Welsh Labour can take responsibility for the delivering this budget and for delivering for Wales.” 

‘Not an endorsement’

Speaking during a debate on the budget on January 27, Plaid Cymru’s Heledd Fychan said her party’s move to allow the budget to pass was “not an endorsement” of the budget – “but rather Plaid Cymru providing much-needed stability for public services and ensuring that we avoid a catastrophic situation had the budget not passed”.

Ms Fychan continued: “I hope all of us here today recognise that a solution had to be found, and that it was the responsibility of the Senedd as a whole to ensure the successful passage of a budget given that the government has no majority.

“Let me be clear – and I’m happy to repeat this time and time again – we do not support the budget in its totality. As you would expect, a Plaid Cymru government would have different priorities.”

Jane Dodds, the sole Liberal Democrat Senedd Member, also abstained and said: “Passing this budget is essential for the people of Wales. It is our responsibility, as all of the parties here in this Senedd, to make sure that the people of Wales get the money that they deserve.

“Actually, not passing this budget would mean that we would have the budget cuts to essential services.

“So, I’m pleased and relieved that there has been an agreement that has been brought to us today.”

‘Stitch-up’

However, the Welsh Conservatives – who had previously held budget talks with the ministers back in the autumn – described the final budget as a “stitch-up” by Labour and Plaid and a “bad deal for Wales”.

Sam Rowlands, the Tory shadow finance secretary, said: “A budget that contains funding for an ever-bloating bureaucracy, foreign aid, overseas offices, the Nation of Sanctuary plan, Senedd expansion and the creation of 36 more politicians is a budget that will not address the people’s priorities.”

Meanwhile, South Wales East MS Laura Anne Jones, of Reform UK, tore into the proposals and said: “Wales deserves better than this budget.”

The former Tory MS continued: “This zombie retirement budget from a dead-in-the-water government does nothing to fix the deep problems facing our country.

This final budget dressed up as a £27.5 billion plan simply does not deliver for the people who get up and pay their taxes. Much of the headline figure is swallowed up by inflation, pay pressures and recycled funding, meaning the real impact on services and communities is far smaller than the ministers suggest. 

“Instead it’s been stitched together by this tired, Labour-Plaid deal designed to limp on until May. It fails farmers, it punishes rural communities and it forces councils to make an impossible choice: raise council tax on working families or cut the services people rely on.”