Welsh budget: All government departments to receive cash increase next year

All departments will receive an increase in funding in the Welsh Government’s £26bn budget for next year.

Announcing the new draft budget on Tuesday (10 December), Cabinet Secretary for Finance Minister Mark Drakeford said it was in “stark contrast” to the last couple of years when the government was forced to make “painful decisions”.

Under the new spending plans to be rolled out in April, an extra £1.5bn will be allocated to strengthen public services, support small businesses and drive economic growth.

Capital spending plans will exceed £3bn for the first time at the Draft Budget stage, enabling investments in the school estate, NHS infrastructure, housing and public transport.

Growth

Mr Drakeford said: “This is 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 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.

“This is good budget for Wales. But it will take time to reverse the damage inflicted on Wales over 14 long years of neglect from previous UK administrations.”

Waiting lists

The Draft Budget includes more than £600m in extra revenue and capital funding for health and social care to help the NHS cut waiting lists.

Additional funding will also be made available to repair and monitor coal tips on the same day new legislation to improve disused coal tip safety is introduced in the Senedd.

There will be £81m more capital funding to build homes for social rent to help reduce homelessness as well as £100m more for the education budget and a 4.3% increase in the local government settlement, which will help fund schools and social care.

Railways

£181.6m has been earmarked to improve rail services, including transforming the Core Valley Lines from a Victorian-era railway to a state-of-the-art Metro network.

£3.7 million will be used to accelerate planning decisions and digitise planning services and there will be two new funds to maintain Wales’ road network – fixing potholes and repairing defects.

To support Welsh businesses, the non-domestic rates multiplier will be capped at 1% for 2025-26 and retail, leisure and hospitality businesses will continue to receive 40% relief towards their bills.

In total £335m will be spent on non-domestic rates support in 2025-26.

Welsh Rates of Income Tax will remain unchanged with Welsh income taxpayers will continue to pay the same rates as people in England and Northern Ireland.

But the Draft Budget does include a number of other tax measures, which will raise funding to support businesses and public services and help support Wales’ ambitions to recycle more waste.

From 11 December 2024, the higher residential rates of Land Transaction Tax applying to purchases of additional residential properties will increase by 1%, raising an estimated additional £7m in 2025-26.

The Welsh Government says this change is broadly in line with changes made to Stamp Duty Land Tax in England and Northern Ireland.

The standard rate of Landfill Disposal Tax will rise to £126 and to £6.30 per tonne for the lower rate to help reduce the amount of waste sent to landfill and encourage more recycling.

Debate

The Cabinet Secretary said the Budget shows the “power of having two governments which share the same values, working together.”

The Welsh Government will lay its draft budget for the next financial year before the Senedd this afternoon when it will be scrutinised and debated by MSs before final vote in March 2025.

In order to be passed, it needs the support of at least one opposition politician.

Plaid Cymru have ruled out cutting a deal with Welsh Labour – but Jane Dodds, the only Liberal Democrat in the Senedd, hasn’t ruled out her support.

‘Broken’

Responding to the Draft Budget, Welsh Conservative 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.”

‘Underwhelming’

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.”