Five things to look out for as Mark Drakeford unveils Wales’ budget

Mark Drakeford is preparing outline the Welsh government’s £25bn spending plans that will take Wales into 2026.

Wales’ finance secretary will publish the budget, which impacts the economy and some taxes paid by people and businesses, on Tuesday afternoon.

But with Labour just short of a majority in the Senedd, a deal must be struck with another party in order to get it through.

Here’s what to look out for.

First Minister Eluned Morgan made a big admission recently when she called record-long waiting times for NHS care “a crisis”.

Reducing the backlog of operations created by Covid was the Welsh government’s top priority after the pandemic.

Three years later – the majority of which Morgan was health minister – and more people than ever are waiting.

Health will swallow half this budget, which covers the period up to the next Senedd election in 2026.

But Mark Dayan, a policy expert at the Nuffield Trust, says it takes time to improve things.

“What I think we’ve seen, both when waiting times improved before in the ’00s and in some of the cautious improvements we’ve seen elsewhere in the UK, is even once you start to turn things around it takes a really long period of time before the amount of weeks the average person will be waiting is really significantly changing,” he said.

In October, Chancellor Rachel Reeves gave the Welsh government an extra £1bn to spend in this budget.

It puts them in “a different world” after a long period of spending squeezes and high inflation, says Drakeford.

Experts at Cardiff University say it should allow for a boost to NHS spending without having to raid other departments.

But the picture is not so rosy after 2026, which could create difficult decisions for public services in the not-too-distant future.

Most of those services are run by Wales’s 22 local authorities, some of whom have issued dire warnings about their finances.

Social care, schools, bin collections, libraries and swimming pools are all provided by councils, which get most of their funding from Drakeford.

Yawning gaps have appeared in their budgets and it’s not clear how some will balance the books.

Their leaders argue the NHS cannot be sorted out unless social care is fixed.

But the companies delivering care say there’s barely enough funding to pay staff the Real Living Wage that the Welsh government wants.

Soon they will also have a bigger National Insurance bill as a result of the UK government’s Budget.

Drakeford is chuffed Reeves has given him more to spend, but every week in the Senedd opponents attack other big decisions she has taken.

They include means-testing pensioners for the winter fuel payment and maintaining the two-child benefits cap.

The Scottish government has offered to provide help for people affected.

Even though the Welsh government does not have the same powers over the benefits system as Scotland, it will still face calls to help people with the cost of living.

It does, however, have some powers over tax, including over a portion of income tax and the land transaction tax you pay when buying a home.

They could give ministers some more money to spend. Lots of businesses saw their rates go up after the last budget.

But hiking income tax would be a huge decision. The Welsh rates haven’t changed since they were devolved in 2019.

Because it has fewer than half the seats in the Senedd, Labour can’t make this budget a reality unless it can convince at least one member from another party to back it in a crucial vote next year.

We can expect a lot of negotiation and bargaining behind the scenes, if it hasn’t started already.

Morgan has tried to up the ante, with a blood-curdling warning about the money Wales loses if her budget fails to pass.

Losing votes could also lop 10p off every £1 of income tax, depriving the Welsh government of crucial funds.

That might appeal to some, but it would represent a political and financial crisis for the Senedd – and it’s difficult to see a government surviving that.

Drakeford says the draft of his budget will offer a “bright future for Wales”.

The Welsh Conservatives said social care needed more funding, as did the NHS “which is at crisis point”.

Tory shadow finance minister Peter Fox also called for a “root and branch review so that taxpayers’ money is well-spent and efficiently allocated”.

The support of the Welsh Liberal Democrats’ sole MS, Jane Dodds, would be enough to pass the budget.

Her spokesperson said she wanted more funding for social care, child poverty and rural investment.

The last three budgets passed as part of a co-operation deal with Plaid Cymru, which has now ended.

Plaid finance spokesperson Heledd Fychan said the first minister should “fight for a fair deal” from Keir Starmer’s UK government.

“If she fails, then Labour’s budget will mean more cuts and NHS funding that delivers ever-diminishing returns,” she said.