Funding rises across all departments in Welsh Government draft budget

Further details of the Welsh Government’s £27bn Draft Budget showing increases in funding for all key departments were set out today.

Finance Secretary Mark Drakeford said the departmental spending plans show the government’s commitment to protecting vital public services, while maintaining stability ahead of the Senedd election.

Stage 2 of the Draft Budget 2026 – 27 sets out more than £800m of additional funding compared to last year’s budget, with protected funding for health, education and other essential services.

Finance Secretary Mark Drakeford said: “These spending plans show how we’re protecting the services people rely on most. Every key department will see increased funding, providing the stability our public services need.

“We remain open to working with other parties in the Senedd to build an even more ambitious budget. My door remains open to those who share our commitment to passing a Welsh Budget that works for everyone.”

The Draft Budget is being published in two stages. Stage one on 14 October outlined the high-level department allocations. Stage two features more detailed departmental spending plans will be published on 3 November.

The draft local government settlement will be published later in November.

The Final Budget will be published on 20 January 2026, with the Senedd vote scheduled for 27 January.
Speaking in response to the draft budget, Joshua Miles, Head of the Federation of Small Businesses Wales, said: “This draft budget provides a stable platform and the £380 million in unallocated funding offers genuine potential for ambition in the final budget to helps SMEs across Wales.

“Welsh Government have indicated that the current proposals on business rates for retail, hospitality and leisure relief will be removed, which would be a 40% tax increase for many businesses. At a time when business costs are rising, it’s crucial that cross-party negotiations lead to this being protected, either as a relief or as part of a new expanded retail, hospitality and leisure multiplier. We urge Ministers and Members of the Senedd to use the headroom this unallocated funding creates for targeted initiatives to help small businesses.

“FSB Wales calls for cross-party collaboration to deliver a final budget in January that keeps Welsh small businesses trading, hiring, growing and thriving for the benefits of all communities across Wales. Small businesses are the backbone of the Welsh economy”

Aaron Hill, Director of Confederation for Passenger Transport Cymru, said: “Bus operators welcome the Welsh Government’s continued support for buses – which are the country’s most used form of public transport, carrying nearly 200,000 passengers a day.

“While we welcome the additional funding for buses announced in today’s Budget, the money will not be sufficient to meet mounting costs. Wages, fuel and overheads are all rising steeply, contributing to a 5.8% increase in industry inflation over the last year – outstripping this 1.9% increase in Government support.

“Bus operators want to run as many financially viable services as possible, and reducing routes or frequencies is always a last resort. But these cost pressures pose a clear risk to the sustainability of some routes and services used daily by passengers across Wales.

“We urge politicians from all parties in the Senedd to prioritise funding for buses to avoid cuts to services before reforms the industry have a chance to take effect. Operators are ready and willing to sit around the table with Government to discuss the role we can all play in growing the bus network.”