The Welsh Government and Plaid Cymru have reached an agreement which will allow the budget for 2026-27 to pass and secures almost £300m of additional investment in Wales’ public service.
The agreement will avoid the potential of no budget being passed at all and the consequences that would flow from that.
There are three elements to the agreement:
- Additional funding for local government in 2026-27 – an extra £112.8m, which provides an overall 4.5% increase to the local government settlement. All councils will receive increases above 4%.
- Additional funding for the health and social care budget – an extra £180m, which, taken with the funding in the Draft Budget, is equivalent to a 3.6% increase in 2026-27.
- £120m of capital funding will be available to the next government after the Senedd election to allocate.
The agreement will be reflected in the Final Budget – together with other allocations to be made by the Welsh Government, which do not form part of the agreement – which is published on 20 January 2026.
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.”
Rhun ap Iorwerth, leader of Plaid Cymru 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.”