Welsh Government and Plaid Cymru Reach Budget Deal to Support Labour Budget
The Welsh government and Plaid Cymru have reached a budget deal aimed at preventing a Labour budget defeat in January. Labour, which is two votes short of a majority in the Senedd, requires cross-party support to pass the budget.
As part of the agreement, Plaid Cymru, led by Rhun ap Iorwerth, is promised increased funding for health and local government sectors. This comes after Plaid pressed for more money amid warnings of potential cuts and council tax rises for local government. The budget allocations will cover the NHS in Wales, schools, local government, and other public services.
Earlier talks had involved the Conservatives, who advocated for stamp duty cuts. However, Plaid did not participate in the most recent budget deal, which saw Liberal Democrat Jane Dodds support Labour in exchange for a ban on greyhound racing.
Draft plans published in October for the 2026/27 fiscal year proposed around 2% increases in spending. Changes were anticipated, as around £230 million remained unspent for day-to-day services. Finance Secretary Mark Drakeford expressed openness to increasing NHS and council funding.
Meanwhile, the Institute for Fiscal Studies cautioned that budgeting at a fixed inflation rate risks mismatching cost pressures across services.
