Senedd election 2026: Welsh think tanks find unfunded pledges across manifestos
The Institute for Fiscal Studies and the Wales Governance Centre at Cardiff University have both assessed the Welsh manifestos ahead of the 7 May vote and reached similar conclusions: no party has set out a credible plan to fund its pledges. Reform UK’s tax-cutting package alone is costed at £450m a year by 2030-31.
No Welsh political party has set out a credible plan for funding its manifesto pledges ahead of the 7 May Senedd election, according to two pieces of independent fiscal analysis.
The Institute for Fiscal Studies has published per-party assessments of six Welsh manifestos through March and April. The Wales Governance Centre at Cardiff University, working with the University of Strathclyde’s Fraser of Allander Institute, has published its own analysis of the fiscal outlook and the parties’ spending priorities. Both have reached similar conclusions: the next Welsh Government will inherit a tight budget, and none of the manifestos under review confront the position fully.
The Wales Governance Centre’s Wales Fiscal Analysis team forecasts real-terms growth in the Welsh Government block grant for day-to-day spending averaging just 0.5 per cent a year from 2026-27, with funding set to fall in real terms in 2027-28. The IFS has reached a similar conclusion, with David Phillips, the think tank’s head of devolved and local government finance, saying the slowdown in UK government funding alongside rising NHS and social care costs would put the next Welsh Government’s budget under significant pressure.
The current Welsh Government budget stands at £27.5bn. Welsh NHS spending is currently set to fall in real terms in 2026-27, the Wales Governance Centre said, for the first time since 2012-13.
Phillips said voters were already frustrated by years of slow economic growth, rising costs and public services that had not recovered from the pandemic, but the next Welsh Government would need to confront the position regardless.
The 2027-28 budget, the first full budget of the next Senedd term, would see overall funding essentially flat. Any increase in health or social care spending, both think tanks said, would mean cuts elsewhere.
What the parties propose on tax
The Welsh Conservatives and Reform UK have both pledged income tax cuts, although the detail differs.
The Welsh Conservatives propose a one penny cut in the basic rate of the Welsh rates of income tax on non-savings, non-dividend income. The Senedd has set those rates at ten per cent on each band since the power was devolved in 2019, meaning Welsh taxpayers currently pay the same overall rate as those in England and Northern Ireland.
Reform UK goes further, proposing a one penny cut across all bands of Welsh income tax by the end of the Senedd term. Official estimates put the cost of the income tax measure alone at £371m in 2026-27, rising to £420m a year by 2030-31 based on OBR forecasts cited by the IFS.
The Wales Governance Centre has costed the full Reform tax-cutting package, including the income tax cut and other measures, at £450m a year by 2030-31. The Welsh Conservative tax-cutting package, which includes the income tax cut, scrapping land transaction tax on primary residences and eliminating business rates for small enterprises, is costed by the centre at £705m a year by 2030-31.
The gain from the Reform income tax cut would vary with income. According to IFS calculations, someone earning £24,785 working full time on the National Living Wage would gain up to £122 a year. A higher-rate taxpayer at the £50,270 threshold would gain £377. Someone earning £125,000 would gain £1,250.
Both parties also propose cuts to business rates. Reform has pledged a lower permanent rate for pubs, hotels and hospitality venues, in line with the position in England. The party has also pledged to scrap the visitor levy powers passed by the Senedd last year. Those powers would have allowed councils to charge £1.30 per person per night on overnight stays from 2027. Flintshire County Council would have held that power.
How Reform says it would pay
Reform UK’s manifesto says the income tax cut would be funded through reductions in expenditure elsewhere, without cuts to frontline services. Party leader Dan Thomas has set out three specific savings in interviews and debates: £145m from cuts to ‘green subsidies and levies’, £135m from ‘quangos’, and £95m from civil service pay restraint and estate management.
The Wales Governance Centre said that level of savings “could not be found from current Welsh Government spending on decarbonisation and green energy projects”. The IFS said the cuts implied by Reform’s tax pledges were “implied – but left unspoken – in Reform UK’s plans.”
The Welsh Conservative manifesto includes a pledge to reverse the planned increase in Senedd member numbers from 60 to 96, which the Wales Governance Centre estimated could save £20m a year, but only after the next election in 2030. The IFS said the Conservative manifesto lacked a credible plan for where the savings to fund the tax cuts would come from.
What the other parties propose
Welsh Labour’s central tax pledge is to hold the Welsh rates of income tax at their current level for four years. The manifesto also commits to a council tax review, which the IFS noted could be fulfilled simply by proceeding with the revaluation already legislated for 2028, and a root and branch review of business rates.
Plaid Cymru has pledged to reform business rates to favour high streets over out-of-town retailers, and to press for further tax devolution so that Welsh income tax bands, not just rates, can be set in Cardiff Bay. The Welsh Liberal Democrats have raised the possibility of a one penny rise in Welsh income tax as an emergency measure to fund social care. The Green Party has proposed replacing council tax and business rates with new taxes based on land value, without setting out the rate structure.
What the parties propose on spending
On the spending side, the Welsh Liberal Democrats’ pledge to expand childcare is the most expensive single commitment identified by the IFS, at more than £600m a year. The manifesto does not say how it would be funded.
Plaid Cymru has pledged to increase childcare spending by around £400m a year by the end of the Senedd term, along with a Welsh child payment and expanded free school meals. The IFS said Plaid had not faced up to the fiscal reality and had not explained in its manifesto how the pledges would be paid for.
The Green Party’s manifesto proposes a broad expansion of the Welsh welfare state and of health and social care services. The IFS described it as a vision lacking the costings needed to function as a plan for government.
Welsh Labour has pledged a £4bn Hospitals of the Future Fund. The manifesto names Wrexham Maelor Hospital and the University Hospital of Wales in Cardiff as the two existing hospitals to be replaced under the fund, alongside a major hospital development in West Wales. The IFS, citing costings provided by the party, said the £4bn was intended to be spread over ten years, an average of £400m a year compared with planned health and social care capital spending of £625m for the coming year. The think tank said the manifesto offered more spending for priorities, but also raised the chance of cuts to other services.
The Social Democratic Party, which is standing candidates in Wales, has not been the subject of a published assessment by either think tank.
What it means locally
For Deeside readers, several manifesto items have direct local effect.
A one penny cut in Welsh income tax under the Conservative or Reform plans would, for the first time since the power was devolved, open a tax gap between Wales and England. A Flintshire resident commuting to Chester would pay less Welsh income tax than an Alyn and Deeside neighbour working in Wales.
Scrapping the visitor levy powers, as Reform proposes, would remove a future revenue option from Flintshire County Council, which serves a county with a mix of coastal and border tourism.
Welsh Labour’s pledge under the £4bn Hospitals of the Future Fund has direct local consequence. The manifesto names Wrexham Maelor Hospital, the closest district general hospital to most of Deeside in the BCUHB region, as one of two existing hospitals to be replaced under the fund. The IFS, citing Labour costings, said the £4bn was intended to be spent over ten years and across multiple sites, including the University Hospital of Wales in Cardiff and a major development in West Wales.
For the local NHS, the position that Welsh NHS spending is already set to fall in real terms in 2026-27, before any manifesto commitments are taken into account, applies directly to Betsi Cadwaladr University Health Board. NHS funding takes up almost half the Welsh Government’s annual budget. The health board, which serves Flintshire, was first placed in special measures in 2015, briefly de-escalated in 2020, and returned to special measures in 2023 where it remains.
And for Flintshire County Council, whose settlement from Welsh Government is already under pressure, the view from both think tanks that 2027-28 funding will be essentially flat means any increase in NHS or social care spending will come at the cost of services the council delivers.
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