What happens if the Welsh Government can’t pass its budget?
Mike Hedges – MS for Swansea East
The Welsh Government has published its draft budget, currently being scrutinised by Senedd committees, which show substantial increases in budgets for all the Welsh government funded public sector, but it needs to be passed by the Senedd in order to be enacted and the money distributed.
The decision to pass or not pass the budget is decided at a full meeting of the Senedd where all members except the Presiding Officer and Deputy Presiding officer vote.
The Government need a majority to pass the budget, failure to achieve a majority means that the budget does not pass. The current Senedd numbers are Labour 29, Conservatives 16, Plaid Cymru 12 including Rhys ap Owen and the Liberal Democrats 1.
The budget has been passed previously by the Welsh Government reaching agreement with Plaid Cymru or the Liberal Democrats to abstain in the vote which involved funding their pet projects such as in the case of Plaid Cymru the building of a second Llandeilo bypass.
Serious
Both have said publicly they will not allow the budget to pass this year. The implications of the Budget not being approved by the Senedd, are serious for all the Welsh Government funded public services in Wales.
The Senedd’s agreement of the annual Budget Motion authorises the Welsh Government and bodies directly funded by the Welsh Consolidated Fund to spend resources as specified in the Motion during the fiscal year associated with that Budget.
It also sets the limits of income that may be retained by the Welsh Government and directly funded bodies, and the amount of cash each body can draw from the Welsh Consolidated Fund.
Supplementary Budget Motions are laid in the Senedd to amend these limits within a fiscal year. And the second supplementary budget is due to be published in February allocating currently unallocated funds but usually much of this expenditure will have been committed or spent by the Welsh Government.
What happens if a Budget Motion is not passed before 1 April of the upcoming fiscal year, Section 127 of the Government of Wales Act 2006 automatically takes effect.
This would give the Welsh Government and directly funded bodies authority to spend resources, retain income, and draw cash from the Welsh Consolidated Fund of up to 75% of the limits approved in the previous fiscal year.
If a Budget Motion still has not passed by the end of July, up to 95% of the previous fiscal year limits are deemed authorised. This means that the additional funding given to Wales in the Westminster budget would not be able to be spent.
Settlement
The first Supplementary Budget Motion of 2024-25, approved by the Senedd on 22 October 2024, contains the current authorised limits.
It is intended that these will be revised in the forthcoming second Supplementary Budget, which will be published next month. If the second supplementary Budget Motion is not approved by the Senedd, the limits from the first Supplementary Budget Motion continue to apply.
Local authorities and council tax budgets are based on figures expected from the Welsh Government as set out in the Draft Budget and provisional local government settlement.
What are the options remembering the Conservatives always vote against the Welsh government budget. Plaid Cymru get several hundred million pounds for their pet projects and abstain. This is not money for which there is no use or need but it allows the budget to be passed.
Agreement is made with Jane Dodds to abstain, but this will only work if all Labour members are able to be present.
If an agreement cannot be made, we either provide less money than this year or the solution, I prefer is to call an election rather than not use the additional money provided by Westminster.
Prior to an election the Senedd needs to agree minimum payments to publicly funded bodies and to then complete the budget after the election. The election will be based on the current constituencies and regions not on the new constituencies being produced for Senedd reform.
The incoming Government post-election will then be able to produce a new budget and put that to the Senedd if that fails then we cannot keep having elections so compromise with be necessary to pass a budget.
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They should negotiate a budget acceptable to a majority who will pass it. This would involve behind the scenes negotiations before presenting it to the chamber. The role of the Parliament is to get things done.
Disingenuous and threatening (again), being able to pass a budget (or not) is a confidence issue, as such the administration must fall and new elections called, this is just the latest attempt in a campaign of intimidation…
Has this government ever had the confidence of the electorate ? Shuffling around moaning about lack of funds then come a change at Westminster and they change their tune. Bunch of lightweights clutching at straws. And the Opposition parties are no better.
Senedd Pods: works every time…
World leaders visit Auschwitz…it does not bear thinking about, the clouds gather…
The Welsh Cons are toast if an election happens now. For another year to try and turn their fortunes around they could surprise every and do a deal. What might they ask for? 🤔
The advantage of having an election now is it will be held using the current system of Proportional Representation by additional members, thus giving the people the opportunity to vote for their individual Senedd member by name FPTP and then additional party members by party lists.
If the election produces a Plaid Cymru plus Liberal democrat majority then we can also change the electoral system to the more democratic Single Transferable Vote System for 2026, which is what should have been before labour removed the right of the electorate to choose their individual candidates.
Perhaps the only Lib Dem will demand STV in return for supporting the budget.
The Plaid Cymru vision for publish spending in Wales is not ‘pet projects’ as this washed up MS claims. It’s a complete rejection of Labours priorities. As Plaid Cymru is aiming to form the next government of Wales it’s important to bin the Labour budget. This can involve a subsequent vote of no confidence in the First Minister and if a new one does not command the confidence of the chamber, the calling of a national election. Whilst Labour have had more leaders in Wales than Cardiff City have had managers, it’s time to clip the wings of all Labour… Read more »
Remember in 2011 when labour couldn’t pass the budget. Plaid then negotiated funding for a science park to be built in Anglesey, which the the former Ynys Mon MS was appointed to as chief exec on a 6 figure salary. Crazy way to do politics
That’s not true. The 2011 budget was a LibDem and Labour deal. Kirsty Williams and Carwyn Jones. Be remined that for every Reform fakey there’s Cymro on hand to debunk.
https://www.bbc.co.uk/news/uk-wales-politics-15891842
Ieuan Wyn Jones did not become a director of the Menai Science Park until he left the Senedd in 2013 and was not conditional on anything.
Sorry it was the 2012 budget then. A lawyer in charge of a science park?! No, nothing funny about that
If the budget fails then we should tell the Welsh Labour Party representatives to get on their bikes. Oh I forgot ! not a single one of them ride to work (some live quite near) but prefer chauffeurs and their own cars, and that not Active Travel is it ?
Oh Mike, it is so good to have your wise and wholly unbiased explanation of what would happen! I’m sure your views have nothing to do with party political advantage! On the other hand, given that up to 95% of previous years’ expenditure can carry on as before, all the budget provisions really do is provide a necessary concentration of minds so that a Government with no majority (like now) have time to bring forward alternative budget proposals that might be able to command a majority. Apart from the froth of political reporting most of us would notice no difference… Read more »
A bully boy approach and threats to what may occur if the budget isn’t past. The hubris! This article places before the reader why the “Welsh” Labour Party must have its budget voted down. It’s why all opposition parties must force an early election. Cymru needs a coalition/alliance of parties who push back at Westminster. A government standing up for the citizens of Wales. It is no good pretending that the settlement between London and Cardiff can perpetuate. Taxes, profits from companies operating in Wales, Crown Estate money, all of this must be collected and retained within our nation –… Read more »
I wish people would read the article before commenting. The point I was making is that if we do not pass the budget then we have an election. Personally I would prefer an election but that is not the view of the Labour party.
Well said Mike. Is the ‘don’t risk an election’ the view of the Labour Party in Cardiff or the view of the Labour Party in London?
Welsh Labour’s time in the spotlight is coming to an end. If the budget isn’t passed for whatever reason will have to call an early Senedd election. FM Eluned Morgan has failed miserably to persuade UK Labour to give us our HS2 consequential, or challenged Rachael Reeves & WS Jo Stevens how can billions be found to fund Heathrow’s third runway but there was no money in the pot to give Wales the billions owed that’s rightfully ours? There’s zero mention of powers requested by Welsh Labour such as policing , criminal & youth Justice pledged in numerous Senedd manifestos… Read more »
She lied about communication the need for HS2 consequential. That’s a signed letter on Welsh Government headed notepaper. Not a slight mention while sipping latte with Jo on the pavement outside Ty Gwydyr in London.