In a move aimed at providing stability and certainty to public services, the Welsh Labour government has announced its final £27.5bn budget for the 2026-27 financial year. The budget, which was agreed upon in a deal with Plaid Cymru, will see all government departments receive increased funding to cover inflation and pay rises.
The additional funding includes £113m for local government, allowing council budgets to rise by 4.5% next year, with no individual council seeing an increase of less than 4%. The NHS and social care budget will also see a 3.6% increase, reaching £12.6bn, which accounts for more than 55% of the Welsh government’s day-to-day spending.
Other areas of increased spending include £6m for bus services, £10m to invest in buses and depots, and an extra £2.8m for rail services. Additionally, there is a £116m package of support over the next two years for businesses affected by changes to business rates, set to come into force in April.
The budget also includes £6m to cover pay increases for teachers in further education institutions and sixth forms, as well as £4.2m to support children with additional learning needs and £5m to support the increased number of learners in further education. A further £20m has been allocated for improvements to school buildings.
Commenting on the budget, Welsh Finance Secretary Mark Drakeford said it “provides stability and certainty to public services” and is an example of “parties working together to secure the vital resources people, businesses and public services need for the year ahead.”
However, the Welsh Conservatives have criticised the budget, with Shadow Finance Secretary Sam Rowlands describing it as a “stitch-up” and a “bad deal for Wales.” Rowlands argued that the budget 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,” rather than addressing the public’s priorities.
Darren Hughes, the director of the Welsh NHS Confederation, welcomed the budget but noted that it is a “fairly ‘business as usual’ budget, given the proximity to the Senedd election,” meaning that significant shifts in areas such as prevention and capital investment have not been seen.
The budget, which is the Welsh Labour government’s last before the Senedd election on 7 May, also includes £120m of capital funding for the next government to spend on major investment projects, such as building new hospitals or roads.
