Cut out the social media videos and negotiate seriously, Plaid and Labour are told over Budget deadlock

Martin Shipton

Labour and Plaid Cymru MSs should settle their differences, spend less time making social media videos and ensure they reach agreement on the content of a new Supplementary Budget, a senior Labour source has told Nation.Cymru.

The source contacted us after the minority Plaid government was defeated in the Senedd over its proposals for a Supplementary Budget.

Reform UK, Labour, Conservative and Liberal Democrat MSs all voted against Plaid’s Budget motion on Tuesday evening. The only non-Plaid politicians to back Plaid were the two Green Party MSs.

The Labour source told us: “Both Labour and Plaid Cymru MSs came out of yesterday looking diminished. Less time making social media videos, more time talking to each other like adults. It’s probably just as well the public weren’t paying much attention, because it was a dreadful look. The argument for better funding for public services was completely drowned out by an ocean of point-scoring.”

Before Tuesday’s debate, Labour and Plaid Cymru MSs made a series of social media videos in which they blamed each other for the inability to reach agreement on how the Supplementary Budget should be spent.

It is not unusual for more money to become available after the Welsh Government’s “Final Budget” has been voted on and agreed.

The Wales Fiscal Analysis Team at Cardiff University’s Wales Governance Centre explained the origin of the new money in a briefing document published last week.

Referring to the last Labour government’s Budget delivered by the then Finance Minister Mark Drakeford, the document stated: “Mark Drakeford’s ‘neutral’ approach to the 2026-27 Final Budget left around £40m of day-to-day spending unallocated. Since then, two ‘consequentials’ have topped up the pot:

* £327m from the UK Government’s Spring Statement – most of which comes from writing off accumulated Special Educational Needs and Disabilities (SEND)-related deficits held by English local authorities

* £46m from the UK Government’s Main Estimates.

“Taken together, these developments increased the amount of day-to-day spending available for 2026-27 by approximately £411m.

“Of the £411m available, the Supplementary Budget allocates £164m to new day-to-day spending priorities:

* £100m for the NHS aimed at reducing waiting lists;

* £47m for childcare and early years support, of which £24m supports the expansion of funded childcare to two-year-olds;

* £8m to continue the £1 bus fare scheme for young people;

* £5m to begin extending free school meals to secondary school pupils in households receiving Universal Credit;

* £2m for a new north-south bus service;

* £2m for school swimming provision;

“This leaves roughly £247m of day-to-day funding still unallocated – a decent-sized war chest for whatever comes next.”

NHS funding

However, the document points out that funding of the NHS remains a huge pressure, and that even after a £100m top-up in the Supplementary Budget, the NHS still faces a real term cut of 0.38%.

It continues: “Why will the NHS face real-terms cuts even with more than £100m in top-ups at the Supplementary Budget? This is happening because of an unusually large £286m drawdown from the Wales Reserve in 2025–26 – Wales’ piggy bank, which normally faces strict annual limits on how much can be taken out.

“The previous government secured sign-off from the UK Government for the withdrawal on the basis of ‘exceptional circumstances’, in an effort to bring down NHS waiting lists. That withdrawal gave 2025–26 spending a boost, but it also raised the baseline that this year’s Budget is being measured against. What’s more, it’s not obvious the waiting list pressures behind that drawdown were particularly exceptional or one-off. If they weren’t, that £286m cushion may have masked rather than resolved the pressure, and the underlying fiscal squeeze remains in place.”

On top of that, there’s huge uncertainty about what comes next. Wales Fiscal Analysis said: “The outlook for 2027–28 remains very challenging, with the Welsh Government’s resource budget currently projected to shrink in real terms. That said, there’s genuine uncertainty in both directions – for example, a future UK Government under Andy Burnham could loosen the purse strings in a way that increases funding available for Wales, or rising inflation and new pressures (including recent defence spending commitments) could make things tighter still.”

‘Challenging’

It was in this context that the row about extra funding for the education of children with Additional Learning Needs took place – a budget line that was originally not increased by the former Labour government.

The Labour source said: “The finances of the Welsh Government remain very challenging and must be addressed with the greatest of seriousness. It’s vitally important that Plaid Cymru and Labour sit down seriously and reach agreement on a way forward. They have the votes between them to resolve this situation. The future of our public services are too important to be toyed with.”