PA MediaHealthcare in Wales is being offered hundreds of millions of pounds more next year to tackle record high waiting times.
The Welsh government says there will be an extra £1.5bn to spend on public services in its £26bn budget for next April.
All departments will see an increase – with transport receiving the biggest percentage boost partly to pay for upgrading the Heads of the Valleys road.
Finance Secretary Mark Drakeford said the budget was a “real opportunity” to “reinvigorate our public services”.
The Welsh Conservatives warned that “hundreds of millions” may go back to the M4 in the form of increases National Insurance costs.
Plaid Cymru accused the government’s plans of being “underwhelming” and “unambitious”.
Most of the extra cash is going to the NHS, with £437m more for day to day spending.
It is a contrast to the last budget which imposed cuts to all departments except health.
Drakeford, the former first minister, added: “This is a good budget for Wales. But it will take time to reverse the damage inflicted on Wales over 14 long years of neglect from previous UK administrations.”
Most of the funding comes from the UK government, which gave the Welsh government a cash boost when Chancellor Rachel Reeves announced her budget in October.
But it is not clear how much money will be swallowed by the higher national insurance payments for employers that she introduced.
Welsh officials expect extra funding to cover the cost for public sector employers, but not for the private companies that provide many services, including businesses running care homes.
There is no change to income tax rates in Wales, meaning they will remain the same as in England.
The rates of land transaction tax paid by people buying homes will also remain the same, unless they already own one or more property. Those people pay a higher rate which is going up by 1% point.
Despite a steep increase in funding this year, the budget confirms “the outlook for public finances beyond (2026) looks challenging”.
Finance experts at Cardiff University have warned that could mean more tough decisions for public services after next year.
The budget covering the day-to-day running costs of the NHS will grow by around 3.9% next year, rising to almost £11.4bn.
Reducing the longest waits for treatment is a priority, Labour says.
The most recent data show that by September 23,701 waits for treatment had lasted more than two years. The equivalent figure in England is 113.
Rising demand for healthcare means the NHS will still have to find savings and become more efficient, the Budget said.
There is also an extra £175m to maintain NHS buildings and equipment.
Other headline figures from the Welsh government say:
- Housing and local government will receive an additional £279.9m (5.4%) and £120m more in capital
- Transport will get an additional £69.6m (12%), and £51m extra in capital funding
- Education (which does not include schools, which are paid for by councils) will receive £83.6m (4.9%), and £28m more in capital funding (8.1%)
- Climate change and rural affairs will receive an additional £36.35m (6.6%) and £71.95m in more capital (31%)
- Social justice will receive an additional £6.8m revenue findings (4.7%) and £3m for capital funding
Councils will get an extra £235m – up by 4.3% – while an extra £20m is being spent on the Welsh government’s childcare offer.
Transport’s boost includes annual charges that the Welsh government will have to pay for the A465 Heads of the Valleys Road.
The scheme is privately financed and the Welsh government will have to pay a service charge once it is completed. It was reported in 2020 it will cost £38m a year.
Arts and culture bodies and Sport Wales saw a 10% cut this year. They will get an increase of £4.5m, but it will not make up for previous cuts.
Support for bus services will increase by £9.1m. Bus lobbying group CPT Cymru welcomed the cash but said “with costs rising fast, this money may not be sufficient to sustain existing routes and services, let alone grow them”.
‘Smoke and mirrors’
In the Senedd on Tuesday, newly appointed Welsh Conservative Senedd leader Darren Millar asked the first minister how much of the budget will be “gobbled up” to cover National Insurance increases.
“The truth is, as you well know, that hundreds of millions of pounds that you say is extra money coming to Wales will simply go straight back down the m4 into the coffers of the Treasury.
Millar said it was a “smoke and mirrors situation and that gives with one hand and takes away with the other”.
First Minister Eluned Morgan said those who are directly employed by the public sector will be “covered” for national insurance.
She added it was the “highest budget uplift since the beginning of devolution”.
The Welsh government will need an opposition politician to help them pass their plans in the Senedd, with a final vote planned in March 2025.
A Plaid Cymru politician appeared to rule out a deal on budget on Tuesday morning.
The party’s finance spokesperson Heledd Fychan, asked if she was up for a budget deal on Radio Wales Breakfast, said “No. We want fair funding for Wales.”
Later added: “Labour’s budget is underwhelming, unambitious, and falls woefully short of what’s needed to support Wales’ struggling public services.”
She said the funding for local government “is a drop in the ocean compared to what’s required to meet the growing challenges councils face”.
In an interview with Radio Cymru, Jane Dodds, the only Welsh Liberal Democrat in the Senedd, did not rule out her involvement.
“It’s important that we get the budget through and we get the money in full,” she said. “I’m open to speaking to them but I don’t know what will happen yet.”
