Labour short of votes, Plaid delivers lifeline
Labour is two votes short of a Senedd majority and could not pass the budget alone. The agreement with Plaid avoids the risk of no budget being passed at all — a scenario ministers warned could have led to “catastrophic cuts” to public services.
The deal was sketched out in the days before the announcement, with Plaid pushing hard for more money for health and local government.
What the deal delivers
The final agreement secures £112.8m of additional funding for local government in 2026‑27, giving councils a 4.5% rise in their settlement, with every council receiving increases above 4%.
It also provides £180m more for health and social care, which, combined with the draft budget, amounts to a 3.6% increase next year. In addition, £120m of capital funding will be set aside for the next Welsh Government after the May 2026 Senedd election to allocate.
First Minister Eluned Morgan hailed the deal as proof of parties “working together on shared priorities to deliver for Wales,” adding that it “secured the passage of the budget and prevented potentially catastrophic cuts.”
Plaid claims credit for frontline boost
Plaid Cymru leader Rhun ap Iorwerth said the party’s priority was to protect jobs and keep council tax bills down. “By securing £300m of additional funding for front line services, it avoids the potential of a cliff edge for public spending in Wales,” he said, arguing the deal puts the next Welsh Government “on a firmer footing than would otherwise have been the case.”
Opposition fury
The deal sparked anger from rivals. Welsh Conservatives leader Darren Millar MS accused Labour and Plaid of another “stitch‑up,” claiming the agreement “falls short” and would mean “wasteful spending on extra politicians, overseas embassies and trees, instead of focusing resources on the priorities of the people of Wales.”
Reform UK Wales said the deal showed “a vote for Plaid next year is a vote for Labour,” while Lib Dem Jane Dodds warned that without a serious social care settlement “it will be yet another year of people stuck in hospital beds who should be at home, carers pushed to breaking point, and councils struggling to keep services afloat.”
What happens next
The agreement will be reflected in the Final Budget published on 20 January 2026, alongside other allocations made by the Welsh Government. With Plaid once again stepping in to save Labour, the deal sets the stage for a fierce election battle in May 2026, where opposition parties will seek to portray the arrangement as proof of a Labour‑Plaid axis.
That will be wasted then