Welsh Government’s Draft Budget overlooks cost pressures on small businesses, says FSB
Welsh Government’s Draft Budget overlooks cost pressures on small businesses, says FSB
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The Federation of Small Businesses (FSB) Wales has welcomed the stability in the Welsh Government’s Draft Budget for 2026/27, but warned that it does not go far enough to support Wales’s 200,000-plus small firms facing mounting cost pressures.
The draft budget includes an uplift in overall funding and leaves £380 million unallocated for cross-party negotiations. However, FSB Wales said the document lacks clarity on one of the most pressing issues for small businesses: non-domestic rates (NDR).
While the Welsh Government says NDR policy will be determined after the UK Autumn Budget on 26 November, the draft assumes revenue will remain the same “in real terms,” leaving questions over how the multiplier will be set and whether relief will be distributed fairly between businesses of different sizes.
FSB Wales noted that the draft budget maintains support for key business areas. Business Wales will receive £22 million to continue supporting SMEs and entrepreneurs, and £9.7 million will go to Business Finance Funds for micro-businesses, SMEs and social enterprises.
Investment in the planning system remains at £5.1 million, with the focus shifting to a 50% increase in application fees to fund local services. Meanwhile, an additional £21.5 million through Medr will boost higher and further education, including skills and apprenticeships vital to small employers.
The creative industries will also benefit, with Creative Wales receiving £8.4 million, including a new £1.4 million fund to cover non-domestic rates bills for studios, bringing Wales in line with similar support across the UK.
Elsewhere, the Welsh Revenue Authority will receive £0.29 million in day-to-day funding and £2.77 million in capital to help set up a national register for visitor accommodation ahead of potential local levies from April 2027.
Responding to the draft budget, Joshua Miles, Head of FSB 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.”
Mark Drakeford MS, Cabinet Secretary for Finance and Welsh Language, said: “Today, the Welsh Government’s Detailed Draft Budget for 2026-27 is published.
“This Budget invests over £27bn in Wales – £22.3bn of resource funding, £3.6bn of capital funding and £1.2bn of non-domestic rates funding to local government. It provides more than £800m of additional funding to Welsh Government departments.
“In setting these draft spending plans, Cabinet has built on the foundations of 2025-26 when the Welsh Budget received a considerable uplift in both resource and capital funding.
“These allocations have been carried forward and departmental allocations increased in line with forecast inflation in the first stage of the Draft Budget.”
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