Welsh Government draft budget: the negotiations start now
Craig Lawton, Grasshopper’s Head of Corporate Affairs, reviews Welsh Government’s draft budget and looks what could change as Welsh Government look for support
18th December 2024
Tuesday 10th December saw Welsh Government publish their draft budget for the 2025/26.
This sets out their plans for spending- and taxation where it is devolved- for the next financial year.
Significantly, this is both the first Welsh Government draft budget under new First Minister Eluned Morgan and, even more importantly, the first Welsh Government draft budget with a Labour-led UK Government since 2009.
After an additional £1.7bn was allocated to Wales in the recent UK budget, Welsh Government’s draft budget unsurprisingly sees increase in revenue of between 3.5% and 12% for each department.
On announcing the draft budget, Finance Minister Mark Drakeford called this a “a budget to build a brighter future for Wales.”
Key sector announcements
The draft budget includes proposals for the following:
Energy and Infrastructure
- £3.7m to accelerate and digitise planning – supporting renewable energy
- £181.6m to improve rail services – including “transforming Core Valley Lines… to a state-of-the-art Metro network”
Housing
£81m for social housing – to build more homes and reduce homelessness
Health and Wellbeing
- More than £600m for health and social care – to cut waiting times, improve mental health services, and strengthen women’s health services
- 3% increase in the local government settlement
- More funding to repair and monitor coal tips
Taxes
- Non-domestic rates multiplier capped at 1%
- Welsh Rates of Income Tax will remain unchanged
- Land Transaction Tax and Landfill Disposal Tax are set to rise
What happens next?
Despite significant increases in budgets being proposed, at present there is no guarantee that Wales and Welsh Government departments will see their extra funding.
As is the case each year, the draft budget will now be scrutinised by Senedd committees and ultimately voted on by the Senedd in early Spring 2025.
If the budget does not pass the Senedd vote, the budget will fall and Wales will not get the additional funding.
With Welsh Labour filling just 30 of the 60 seats in the Senedd, they do not have the numbers to get the draft budget through on their own. Therefore, they will need to rely on others.
In the past Welsh Government has relied on the Liberal Democrats, Plaid Cymru, or Independent MSs. They could therefore look to any of these for support.
In theory, Welsh Government could also call on the Welsh Conservatives for support. However, the Welsh Conservatives have never supported a Welsh Government budget since the Senedd was formed, and this is unlikely to change now even under the new leadership of Darren Millar.
Negotiations
Welsh Government therefore has the period between now and early 2025 to get support from sole Lib Dem Jane Dodds, Independent MS Rhys ab Owen, or the Plaid Cymru Senedd group.
Expect whoever does consider supporting the budget to push a hard bargain and negotiate support or funding for some of their key policy proposals.
Plaid Cymru, as we saw in their response to this draft budget, could well focus on the need for further funding for Wales as a result on HS2 spending in England.
In comparison, Jane Dodds could call for more funding for Powys County Council which, at present, is set to receive one of the smallest uplifts of any local authority at just 3.2%. Only Monmouthshire is due to receive a small percentage increase as things stand.
We can therefore expect to see some changes before the final version of brought before the Senedd and debated next year- at which point we will understand more about who has asked for what from Welsh Government.
Therefore, this draft budget from Welsh Government very much remains in draft form at this time.