Welsh Budget: £1.5bn extra for Wales with £600m going to NHS and 40% business rate relief continues
The Welsh Government is to plough an extra £600m into the NHS as part of its spending plans for the coming financial year.
There’ll also be business rate relief at 40% for the retail, hospitality and leisure sectors for another year - something that many in those sectors had campaigned for.
£100m extra will be added to the education budget and there’ll be more funding for coal tip safety measures.
But political opponents say the increase won’t make up for what they describe as decades of Labour mismanagement of Welsh Government.
What’s more there’s political uncertainty - Labour doesn’t have a majority of votes in the Senedd chamber and so needs the support or abstention of at least one other MS or party to get the budget passed.
As things stand it doesn’t have that support but will look to reach a deal before a final vote in March.
Finance Secretary Mark Drakeford will set out his draft budget in the Senedd on Tuesday 10 December, which he says, will see an extra £1.5bn going to public services and help boost economic growth here in Wales.
Ahead of its publication he described it as “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.
"This is in stark contrast to the last couple of years when we have been forced to make some very difficult and painful decisions.
“This Draft Budget offers a real opportunity to start to rebuild and reinvigorate our public services.
"It delivers increases to all departments and a significant boost in capital funding, meaning more investment in the very fabric of our nation – in our school and NHS estate, in housing and in public infrastructure.”
According to the Welsh Government, the plans will include:
Over £600m in both revenue (day-to-day) and capital (for infrastructure) funding for health and social care
Funding for maintaining and making safe coal tips
£335m to pay for relief on business rates, known here in Wales as Non-Domestic Rates.
£81m more funding to build social housing
£100m for education
4.3% increase in funding for local government
£181.6m to improve rail services
Funding for roads including fixing potholes
Most (80%) of the £24bn budget comes from the UK Government with 20% coming from Welsh taxes.
There’s no increase in Welsh rates of income tax but there will be increases to the higher rate of the Welsh version of stamp duty, Land Transaction Tax, and Landfill Disposals tax, both matching increases in England.
Mr Drakeford added that this budget shows the power of two governments, which share the same values, working together.”
It’s being presented as a reversal of tight budgets and cuts of recent years for those who run public services.
But rising costs and pay rises will eat into much of the new money.
Businesses in the retail, hospitality and leisure sectors will welcome the news on Non-Domestic Rates, the Welsh version of Business Rates.
For the current financial year businesses in the retail, hospitality and leisure sectors have been able to claim 40% relief, a reduction from the covid-era 75%.
Their counterparts in England have continued to enjoy 75% relief although the Chancellor Rachel Reeves announced that that would be reduced to 40% from April 2025.
Organisations such as the Federation of Small Businesses and the trade body UK Hospitality Cymru have urged the Welsh Government to extend business rate relief in the Draft Budget and keep the level at least at 40% and have had their wishes granted.
Farmers have been calling on the Welsh Government for extra help and while there’ll be an increase in the Climate Change and Rural Affairs budget of £36.35m revenue and £71.95m capital funding it’s not yet clear if that will meet their concerns.
As well as anger about the UK Government’s changes to inheritance tax, the farming unions, NFU Cymru and the FUW, both say they wants the current Basic Payment Scheme to be kept at the same level for the coming financial year and for the rural affairs budget to be restored to the level it was at before it was cut by 13% in 2023.
There won’t be a vote at this stage of the budget process which now will move into scrutiny and further debate.
The Final Budget will be published at the end of February and the plans will be debated and voted on by MSs on the 4th March.
The Welsh Government needs a majority of votes in the Senedd to pass its budget but it only has exactly half the seats.
It needs at least one other MS to vote for it or abstain.
Failing to pass the budget will have serious consequences. If there’s no majority by the end of the process, 75% of current spending plans continue into the new year.
It could affect the amount available too, preventing the extra money earmarked for Wales by the UK Government from being spent and reducing the tax yield in Wales by up to £3bn - a potential windfall for Welsh taxpayers but a big cut for public services.
If the process reaches this point, the Senedd will be in a period of political crisis. Failure to pass a budget is usually seen as failure of a government to gain the confidence of a parliament and could well force Eluned Morgan to resign.
All of which explains why she is looking to reach a deal with another party or parties. The lone Liberal Democrat MS is one target; Plaid Cymru is another.
The Conservatives are unlikely to reach a deal with Labour but the other two parties will be holding out for a significant concession.
They’ve both been publicly very critical of the Labour Welsh Government and it’s not yet clear if either will be won over.
Welsh Conservatives' shadow minister for finance and local government, Peter Fox MS, said: “Under Labour, Wales is clearly broken, and only the Welsh Conservatives can address the issues facing businesses and hardworking families.
“Labour Ministers may want to crow about this budget, let’s not forget that it comes from £40 billion in tax raises and a maxed-out government credit card from Labour’s new Chancellor, all while pensioners are losing vital benefits and farmers are forced to break up family farms.
“Ministers now need to ensure that every penny of this funding is well-spent and efficiently allocated.”
Plaid Cymru finance spokesperson Heledd Fychan MS said: “Labour’s budget is underwhelming, unambitious, and falls woefully short of what’s needed to support Wales’ struggling public services.
“For local government, it’s a drop in the ocean compared to what’s required to meet the growing challenges councils face. This will inevitably lead to more cuts to essential services and higher council tax for families already struggling to make ends meet.
“The lack of meaningful investment in local government will have serious consequences for social care, creating a ripple effect that piles even more pressure onto our NHS. While additional cash is being directed to the NHS frontline to tackle immediate challenges—many of Labour’s own making—the failure to invest in preventative healthcare and social care through local councils will only deepen the vicious cycle dragging the NHS down.
“We were promised that two Labour governments working together would deliver for Wales, but instead, we’ve been handed a budget that doesn’t even provide enough to repair the roofs on our hospitals.
"Wales is still stuck with the worst funding settlement of any devolved nation, no sign of a reformed funding agreement, and no action on the £4 billion from HS2 or the devolution of the £835m Crown Estate—both of which are critical to fair investment in public services and driving economic growth.
“There’s also no guarantee that the Treasury will fill the gap created in our public services by their increase in National Insurance contributions, leaving Wales further shortchanged.
“After 25 years of mismanagement, Labour is out of ideas and scrambling to cover up their failures in government.
“It’s time for a fresh start with a Plaid Cymru government—one that will stand up for Wales, fight for the fairness we deserve, and deliver ambitious, long-term solutions to fix our NHS and grow our economy.”
Welsh Liberal Democrat Leader Jane Dodds MS said that she was “disappointed that the Welsh Government have missed the mark”.
She said: “Instead of taking this opportunity to steer Welsh families away from sky-rocketing childcare costs, the Welsh Government has instead left them to fend for themselves.
"Thousands of people from across Wales are being forced to make the difficult choice between paying out of pocket for childcare or leaving work.
"This shouldn’t be the case, we want to see a universal offer of 30 hours of funded childcare per week for every single child in Wales between the ages of 9 months and 4 years old.
"By taking away the burden of childcare costs, we can help people get back into work which will give our economy a huge boost.
"The UK Labour Government have been talking about encouraging more economic growth, but it appears as though their colleagues in Cardiff Bay didn’t get the message.”
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