Welsh Government and Plaid Cymru strike budget deal
Welsh Government and Plaid Cymru strike budget deal
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The Welsh Government has reached an agreement with Plaid Cymru to pass the 2026–27 Budget, securing almost £300 million in additional investment for Wales’ public services and averting the risk of a budget failing to pass entirely.
The deal brings clarity to councils, the NHS and other frontline services that had been facing uncertainty as negotiations continued.
Under the agreement, local government will receive an extra £112.8 million in 2026–27, representing a 4.5% increase in the settlement for councils. Every local authority in Wales will benefit from increases of more than 4%.
The health and social care budget will also receive an additional £180 million, bringing the uplift for the sector to 3.6% once combined with allocations already included in the Draft Budget.
A further £120 million in capital funding will be held for the incoming government after the May 2026 Senedd election, allowing whichever party forms the next administration to shape strategic long-term investment plans.
These commitments will be included in the Welsh Government’s Final Budget, due for publication on 20 January 2026, alongside further allocations that fall outside the agreement with Plaid Cymru.
First Minister Eluned Morgan, said: “This agreement shows the strength of the Senedd parties working together on shared priorities to deliver for Wales.
“Through this agreement we have secured the passage of the budget and prevented potentially catastrophic cuts to funding next year.
“This agreement unlocks a further £300m of extra investment for Welsh councils and the NHS, on top of more than £27bn secured through the Draft Budget.”
Plaid Cymru leader Rhun ap Iorwerth said: “Our aim in negotiating with Welsh Government was to look after public services, protect jobs and keep council tax bills as low as possible.
“By securing £300m of additional funding for front line services, it avoids the potential of a cliff edge for public spending in Wales and, in May 2026, puts the next Welsh Government on a firmer footing than would otherwise have been the case.
“Whilst I recognise that councils and the NHS will continue to face challenges this marks a significant increase in funding compared to the draft budget.”
Leader of the Welsh Conservatives, Darren Millar MS, said: “Yet again, it appears that the Welsh Government is set to pass a budget that falls short, thanks to another Plaid-Labour stitch up.
“The Welsh Conservatives reached out in good faith to offer a bold agenda to cut tax and cut wasteful spending in order to get the Welsh economy moving again, but the First Minister was clearly playing games.
“Labour and Plaid’s deal will mean yet more of the same wasteful spending on extra politicians, overseas embassies and trees, instead of focusing resources on the priorities of the people of Wales, and putting more cash into people’s pockets.
“It’s clear that only the Welsh Conservatives can be trusted to end the Labour-Plaid axis in Wales and deliver a credible plan to fix Wales.”
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