Welsh Government and Plaid Cymru strike deal to pass 2026–27 budget

The Welsh Government and Plaid Cymru have reached a last-minute agreement to ensure the 2026–27 budget passes, securing almost £300m in additional investment for councils, the NHS and social care.

Ministers said the agreement avoids the risk of the Senedd failing to pass a budget at all—an outcome that could have triggered severe financial disruption across public services.

Under the deal, local authorities will receive an extra £112.8m, giving every council a settlement increase of more than 4% and raising the overall uplift to 4.5%. The health and social care budget will receive a further £180m, equating to a 3.6% rise when combined with allocations in the draft budget.

A further £120m in capital funding will be left for the next Welsh Government to allocate after the May 2026 Senedd election.

The provisions will be incorporated into the Welsh Government’s Final Budget, due to be published on 20 January.

First Minister Eluned Morgan said the deal demonstrated the value of cooperation between Senedd parties.

“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,” she said.

“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 his party had sought to protect frontline services and minimise pressure on households.

“Our aim in negotiating with Welsh Government was to look after public services, protect jobs and keep council tax bills as low as possible,” he said.

“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.”

'Carve-up'

However, the Welsh Conservatives condemned the deal, describing it as a political carve-up that failed to address Wales’ economic challenges.

Party leader 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… Labour and Plaid's deal will mean yet more of the same wasteful spending instead of focusing on the priorities of the people of Wales.”

He added that the Conservatives had offered proposals to cut taxes and reduce waste, which he said ministers had ignored.

The Senedd will vote on the Final Budget in early 2026.