Copyright standard
The Welsh Government’s draft budget could increase risks to Wales’ public services and finances, a think tank has warned. The Institute for Fiscal Studies (IFS) said the budget in its current form is unrealistic and could put strain on frontline services. The draft 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. Currently, around £380 million remains unallocated in the budget. Welsh Finance Secretary Mark Drakeford has urged other political parties to help the Government shape a “more ambitious” final version. But the IFS has warned the inflation-based increase to departmental budgets will not be sufficient and said rising costs and demand mean most, if not all, of the as-yet unallocated funding would be required to maintain key services such as health and social care. David Phillips, an associate director at the IFS, said: “With a smaller increase in overall funding than recent years, its lack of a majority, and a highly competitive election looming, setting a budget for 2026–27 is undoubtedly a challenging task for the Welsh Government. “However, the approach taken in the draft budget – effectively inflation plus a little bit extra for all services – is not ‘business as usual’ as has previously been claimed by the Welsh Finance Secretary. “In reality, some services such as health and social care would need much bigger increases just to maintain services in the face of increases in demand and costs, implying difficult decisions for other services. “Leaving it until after the elections to make clear those trade-offs would create both practical and political risks. “With over three months until a vote on the budget in the Senedd in January, there is scope – and, it seems, appetite – for negotiations between the Welsh Government and opposition parties. “The fact that more money than usual has yet to be allocated to particular services gives the other parties more opportunity to shape the budget than usual – and potentially also to be more accountable for tricky budget decisions too.” After announcing the draft budget last week, Mr Drakeford warned of “catastrophic” impacts if it fails to pass in January. When passing its last budget in March, the Welsh 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 a by-election in the Caerphilly constituency this week could make the next budget vote even more difficult if the party loses the seat.
