A recap of the Welsh Budget: How will it affect Wales?

A recap of the Welsh Budget: How will it affect Wales?

Tuesday saw the Welsh Finance Secretary, and former First Minister, Mark Drakeford MS, present the Welsh Government’s budget for the next financial year, promising more money to every single government department compared to last year, aimed at improving the NHS in Wales, raising school standards, creating better transport infrastructure across Wales and, aligned with the Labour Government in Westminster, speeding up planning to drive growth.  

The Welsh Government has faced difficulties in 2024, most notably the resignation of Vaughan Gething MS just 118 days after succeeding Mark Drakeford MS and becoming the first black man to be elected Welsh Labour leader. Mr Gething came under sustained attack for a series of donations he accepted while running to be leader, which led to the collapse of a cooperation agreement between Labour and Plaid Cymru. 

The experienced Eluned Morgan MS, a former MEP and Cabinet Secretary for Health and Social Care in the Welsh Government from 2021 – 2024, has been brought in to steady the ship and guide the party through the choppy waters and into the 2026 elections.  

Morgan’s government will need the support of an opposition politician in the Senedd for the budget to pass. Given Plaid Cymru’s accusations that the plans are “underwhelming” and “unambitious”, Labour may seek to strike a deal with Jane Dodds MS, the only Liberal Democrat in the Senedd, who represents the Mid and West Wales region, and wants to see further childcare support.  

The UK General Election in July was a brilliant result for Welsh Labour, with the party taking 27 out of the 32 available seats in Wales, a huge increase on their result of 18 seats in the 2019 election, even more impressive when taking into account Wales lost 8 seats. Plaid took 4 seats, the Liberal Democrats one, whilst the Conservative Party was wiped out completely – the first time this has happened since the 2001 election.  

Wales has long been a stronghold for Labour, with the party continuously in power since the establishment of the Welsh Assembly – which has since become the Senedd – in 1999 and being the dominant political force in Wales for over a century.  

However, new polling in recent weeks will be causing some concern amongst the Welsh Labour strategists, showing a marked fall in support for the long-standing government, placing them neck and neck with Plaid Cymru, with one poll even putting the party a point behind Plaid and tied with Reform on 23% - a significant drop from the 37% poll average that it has maintained for over a decade.  

Whilst the party has outperformed people’s expectations at previous elections, the Welsh Labour’s machine will be confident that they will be able to turn out their support in the right numbers and areas, these will still be concerning times for the Welsh government – particularly given the changes we will see at the 2026 Senedd elections with an increase from 60 to 96 members and a closed proportional list system, making it significantly harder to get an overall majority – and they will hope that some of the measures in this budget can begin to turn the tide.  


The Budget – Headline Announcements 

The Welsh budget reflects a commitment to rebuilding and strengthening public services, with a clear focus on health, education, and economic support. Mark Drakeford stated "This is a budget for a brighter future, delivering an extra £1.5bn for our public services and priorities, helping to put Wales firmly back on the path of growth after 14 difficult years” and described it as a budget for “growth” and for “hope”.  

Among the main pledges: 

Health and Social Care: Reducing NHS waiting lists for the longest waits for treatment is a priority. Over £600 million has been allocated to both revenue and capital funding for health and social care. £437m is going on day-to-day spending, while there is also an extra £175m to maintain NHS buildings and equipment. This investment aims to enhance healthcare services and infrastructure, addressing critical needs within the NHS and lowering waiting lists.  

Education: The education sector will receive an extra £100 million, which will be used to improve school facilities, support educational programs to raise standards and improve attainment.  

Business Support: The budget continues the 40% business rate relief for the retail, hospitality, and leisure sectors in to a sixth and final year, providing much-needed support to businesses still recovering from the economic impacts of recent years. 

Infrastructure and Housing: Welsh Labour’s manifesto promised to create 20,000 social homes for rent by 2026, and £81 million has been committed for building social housing, whilst additional funds have been made available for maintaining and making safe coal tips 

Local Government: There is a 4.3% increase in funding for local governments, ensuring they have the resources needed to deliver essential services. 

Transport: There will get an additional £69.6m, and £51m extra in capital funding for transport projects like the A465, repairing roads and support for bus services.  


Reaction and Next Steps 

Mark Drakeford MS pledged the budget would "provide faster treatment for thousands and thousands of people in Wales." 

Welsh Conservative leader Darren Millar MS criticised it as a “smoke and mirrors” budget, claiming much of the funding would “go straight back down the M4 into the coffers of the Treasury.” Plaid Cymru’s Heledd Fychan MS called the budget “underwhelming” and “unambitious,” suggesting it failed to address Wales’s public service needs. Mark Drakeford urged Plaid to reconsider, accusing them of playing “political games.” 

Labour will now look to secure the support of the Lib Dems’ Jane Dodds MS, who said, “It’s important that we get the budget through and we get the money in full,” leaving the door open for collaboration. 

Facing polling challenges and a new electoral system in 2026, Welsh Labour’s focus will be on showcasing how their government in Cardiff Bay can deliver results for Wales, particularly in healthcare, something we know is a top issue for voters – it's a smart use of the extra money from Westminster.  

Before the next election Welsh Labour’s success at the polls will be influenced by how Wales views the work of the UK Labour Government – the UK Government’s success is delivering on their missions may have a sizeable impact on the outcome of the Welsh election.

Written by,

Jacob Tilley | Director 

Marc Strathie

Senior Policy Advisor for Devolved Nations

1mo
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