Drakeford hopes budget talks help NHS and councils

A 2.5% increase is currently proposed for the Welsh NHS

Finance Secretary Mark Drakeford hopes the Welsh NHS and councils will get extra cash, on top of spending plans announced on Monday, as a result of budget talks with opposition parties.

Public services in Wales face "challenges", he said, after releasing details of the draft spending plans for more than £27bn in 2026-2027.

Around £230m of cash for day-to-day spend is yet to be allocated but Drakeford hopes "a significant slice" will go to "core public services".

After losing the Caerphilly by-election last month, the Welsh government does not have enough support to pass a budget without making a deal with at least two opposition members.

On Monday, the Welsh government published draft plans to increase day-to-day spending on most public services by more than 2% in 2026-2027.

The NHS, local government and housing look to be the main winners with 2.5% and 2.3% proposed rises.

Inflation is currently 3.8% but the Office for Budget Responsibility (OBR), expects inflation to be nearer 2% next year.

Drakeford said the proposals showed "we're protecting the services people rely on most".

Speaking to BBC Wales, Drakeford said: "That's not to say there won't be challenges in public services. We know there will be.

"The NHS and social care together for the first time goes above £13bn of investment next year and we're using 55% of all the revenue we have here in Wales on our NHS."

He added: "I hope that with the money that we haven't allocated so far, we need to have those discussions with other parties, that a significant slice of that money will be invested in our core public services and that will certainly include local government and the health service."

Guto Ifan, of Cardiff University's Wales Governance Centre, said of the 2.5% planned rise in Welsh health service spending: "This would still be an historically low increase in NHS spending."

The NHS in England is getting a bigger percentage increase in spending but Drakeford said England was "catching up" with Wales.

He said the Welsh government spent more money per head of population on the NHS and social care than England.

The Welsh Local Government Association previously warned of steep council tax rises or local authority job cuts without a significant budget increase.

Drakeford has held budget talks with the Welsh Conservatives over their proposal to scrap a tax paid when buying a home.

He has ruled out abolishing the Welsh version of stamp duty altogether but said he was open to amending it.

If the Welsh government fails to strike a deal with another party, the budget will pass at 75% of this year's level.

This could have a catastrophic effect on public services, with cuts and potentially major job losses.

Labour was one seat short of a majority before losing the Caerphilly by-election, and depended on Liberal Democrat Member of the Senedd (MS) Jane Dodds to pass the budget for this financial year, 2024-25.

But with Plaid Cymru winning the by-election, Labour will now need at least two opposition MSs to vote with it, or abstain, in the budget vote, to get the spending plans through the Senedd.