First Minister holds ‘constructive’ budget talks with Welsh Conservative leader

First Minister Eluned Morgan MS has held her first meeting with Welsh Conservative Leader Darren Millar MS to discuss next year’s Welsh Government budget, as negotiations begin in earnest to secure the votes needed to pass it.

The meeting, held in Cardiff Bay on Tuesday, was described by Mr Millar as “constructive”, with both sides agreeing to meet again for more detailed discussions in the coming weeks.

With Labour one seat short of a majority in the Senedd, the Welsh Government will need the backing of at least one opposition party to pass its 2026–27 budget.

The First Minister has warned that failure to do so could result in cuts to frontline services.

Priorities

In advance of the meeting, Mr Millar wrote to the First Minister stating that while the Conservatives “cannot support a ‘more of the same’ approach to the Welsh Government’s spending plans”, a budget agreement “may be possible” if key Conservative priorities are taken into account.

Among the proposals put forward by the Welsh Conservatives is scrapping the Welsh equivalent of stamp duty — Land Transaction Tax — for all primary residential properties, as part of efforts to stimulate the housing market and boost the economy.

Following the meeting, Mr Millar said: “I am grateful to the First Minister for a constructive first meeting on next year’s budget. We have agreed to meet again to engage in more detailed budget discussions in the coming weeks. I will continue to work hard to seek a budget deal that puts the people of Wales first and gets our economy moving again.”

Inflationary pressures

The outline of the Welsh Government’s draft budget for 2026–27 was laid before the Senedd last week. Ministers have warned of a difficult financial settlement, with continuing inflationary pressures and reduced spending power expected to squeeze public services.

When the previous budget was passed in March, the government relied on the single vote of Liberal Democrat MS Jane Dodds to secure a narrow victory.

However, her support alone may not be enough this time if Labour fails to retain the Caerphilly seat in the forthcoming by-election, triggered by the sudden death of Labour MS Hefin David.

Senedd Members are due to debate the draft budget on December 16, before the final version is laid on January 20. A vote on whether to approve the Welsh Government’s spending plans will take place on January 27.