The Welsh Government has published its outline Draft Budget for 2026-27, setting out high-level allocations for each Cabinet Secretary.
More than £27.1 billion is being allocated, which amounts to 98.6% of the funding available to the Welsh Government for 2026-27.
Finance Secretary Mark Drakeford described it as “just the start” as he urged political parties to work with the Welsh Government to make sure the Budget is passed in January 2026.
The Welsh Government said the Draft Budget “provides a stable platform on which public services can plan in the run-up to the Senedd election”.
All government departments in the next financial year will have at least the same amount of funding in real terms as they had this year, the Welsh Government said. Last year’s increased budget is being rolled over to this year, uplifted by a further 2%, which recognises the Office for Budget Responsibility’s forecast for inflation.
The Welsh Government said it was providing more than £800 million of additional funding to Welsh Government departments.
The health, social care and early years department receives the largest revenue allocation, at £12.4 billion.
There is no increase in Welsh Rates of Income Tax or the thresholds for Land Transaction Tax. The rates of Landfill Disposal Tax will increase by the forecast Retail Price Index.
The Welsh Government said:
“We are determined to recognise the particular circumstances of local government as we work together on a settlement which will protect jobs and frontline services, understanding the strict rules it has to comply with when making its budgets.”
The draft local government settlement will be published later in November.
Finance Secretary Mark Drakeford said:
“The Draft Budget is the beginning of the budget process – not the end. It provides a firm foundation to help public services plan for the year ahead.
“They can have confidence more can be done as we work towards the Final Budget in January. A lot will change between now and the vote in the Senedd at the end of January.
“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.
“We want to provide certainty and stability for our public services and to the people who rely on them. Our spending plans will continue to prioritise a healthier Wales, green jobs and growth, connecting communities, and opportunities for every family.”
Responding to the Draft Budget, Sara Jones, Head of the Welsh Retail Consortium, said:
“Welsh Ministers have made headway on aspects of the business rates agenda in recent years, notably introducing more regular revaluations. However, the Welsh business rate is the highest in Great Britain and has risen to a 26-year high at a time when retailers are facing challenging trading conditions whilst being thwacked by a range of statutory costs.
“The plan to reduce rates for the smallest shops is encouraging, but a high proportion of retailers operate from medium-sized and larger premises and are threatened with a new business rate surtax. These medium sized and larger stores help underpin the health and vitality of our town and city centres and high streets across Wales and account for a large share of retail jobs, and the surtax could see them pay even more than their counterparts occupying equivalent stores in England.
“The Welsh Budget needs to ensure a commensurate rates reduction applies to medium-sized and larger stores too. It’s not in the interests of the Welsh economy for retailers to be incentivised to invest in Cheltenham over Cardiff.”
The Draft Budget is being published in two stages, with department allocations published in this first outline stage. The detailed Draft Budget with budget expenditure lines will follow on 3 November. The Final Budget will be published on 20 January 2026, with a debate and vote scheduled for 27 January.
