Cardiff Bay’s Labour administration has managed to pass the Welsh budget after striking a deal with Plaid Cymru, releasing a real-terms funding increase for all government departments and local authorities before May’s Senedd elections.
With 100 days to go before the contest, in which polls suggest the pro-independence Plaid Cymru will end more than 100 years of Labour hegemony in Wales, the government has allocated £27.5bn in spending for 2026-2027, up £1.2bn on the previous fiscal year.
As a result of the deal, which the Senedd passed on Tuesday evening after Plaid Cymru agreed to abstain, the health and social care budget has risen by £180m, or 3.6%. Another £113m for local government means that all councils will receive a minimum 4% cash increase, and other additional spending includes bus services, apprenticeships, further education and flood prevention.
In a statement after the vote passed, the first minister, Eluned Morgan, said the budget was “based on Labour values – fairness, stability, delivery”.
“We said we would put more money into public services and that’s what we’ve done,” she said. “We’re putting more money into our NHS as we know that’s what matters to people.”
Observers described the budget as “politically neutral”, with £120m in capital set aside for the new government installed in May to spend on large infrastructure projects.
Labour was left unable to pass the budget on its own after October’s Caerphilly byelection, a Plaid Cymru gain in a Labour stronghold. A deal between the parties – one of many over the years – avoided an impasse that would have led to swingeing cuts. Both parties hope to win voters’ support for their role in getting the budget passed.
“Plaid will tell you they’re the ones who made this happen,” Morgan said. “But Plaid didn’t even back it, they abstained. Only Welsh Labour can take responsibility for the delivering this budget and for delivering for Wales.”
The overall package was roundly criticised by opposition parties. The Welsh Liberal Democrats said in a statement: “It is deeply worrying that, even with public services under this level of strain, Plaid Cymru are planning yet another independence study. People want their NHS fixed, not more time and money spent on constitutional distractions.”
Sam Rowlands, the Welsh Conservative shadow cabinet secretary for finance, previously called the Labour-Plaid Cymru deal a “stitch-up” and a “bad deal for Wales”.
Laura McAllister, a professor at Cardiff University’s Wales governance centre, said the overall budget increase was welcome but would not address underlying structural issues that were likely to worsen because devolution funding formulas and spending allocations did not address changing public needs.
“Whichever party comes in May will face serious problems … Plaid is going for a change agenda, but it will be difficult for [them] to fight an election on public service delivery and then actually follow through,” she said.
