Welsh Government warns of ‘catastrophic’ impact if budget fails

The Welsh Finance Secretary has warned of “catastrophic” repercussions if the devolved government fails to pass its budget.

Mark Drakeford has appealed for support from opposition members after the Welsh Government published its draft budget for the next financial year.

When passing its last budget in March, the Government needed the help of an opposition member to get it through by a tight margin.

While Labour is the largest party in the Senedd, it does not have a majority, and an upcoming by-election in the Caerphilly constituency could make the next budget vote even more difficult if the party loses the seat.

The Finance Secretary has urged other political parties to engage with the government ahead of the crucial vote in January.

Addressing the Welsh Parliament, Mr Drakeford said: “The failure to pass a budget is genuinely catastrophic, catastrophic to the reputation of the Senedd, undermining to the reputation of devolution.

“But most importantly of all, catastrophic in the lives of those thousands of people who will be left without a service, without a job, without a prospect that we can hold out in front of them of things continuing to improve in the future.

“That’s why the next few weeks are so important.”

If the budget does not pass by the start of the financial year in April the government is only allowed to spend 75% of the previous budget.

The 2026/27 draft budget sets out spending plans worth more than £27 billion for public services.

The budget is being rolled over from last year but departmental allocations have been uplifted in line with the Office for Budget Responsibility’s inflation forecast.

The next stage of the budget, which will include more detailed departmental spending plans, will be published in November.

The Senedd will vote on the final budget in January.

Mr Drakeford said around £380 million available to the Welsh Government remains unallocated.

“There is a more ambitious budget, therefore, that could be agreed in January, but that, of course, requires the participation of other political parties,” he said.

“The case for doing so seems to me to be clear, given the challenges facing our public services even with a real-terms uplift to budgets.

“We must work together to secure a final budget which can be passed by this Senedd.

“It is our responsibility, our shared responsibility, as elected members, to secure the best possible budget for public services in Wales.”

Sam Rowlands, Conservative MS for North Wales, said: “Broadly, the Cabinet Secretary has indicated that he’s bringing forward a business-as-usual budget, which will adjust with inflation.

“We are clear, though, that business as usual cannot continue.

“Our frontline public services are under strain, our economy is stagnant and communities feel neglected.”

Darren Millar, leader of the Welsh Conservatives, has already written to First Minister Baroness Eluned Morgan, offering to discuss a budget agreement if the Welsh Government considers scrapping the land transaction tax, the Welsh equivalent of stamp duty.

Liberal Democrats MS Jane Dodds, who helped Labour pass its last budget, also said she is “willing to work with any party” to find a “constructive way forward”.

Mr Drakeford added: “My door is firmly open to working with other political parties in the Senedd who share my belief that a more ambitious budget can be reached and that we have a collective responsibility to pass the Welsh budget.”