Welsh Government Budget filled with ’empty words’ Senedd Committee warns

The Welsh Government’s proposed Budget for the next financial year is riddled with ‘empty words’, according to the Senedd’s Finance Committee, which has called for urgent changes before it is finalised.

A report published today warns that the 2025-26 spending proposals ‘lack focus and clarity’, failing to provide adequate support for key services, charities, and local authorities struggling with financial pressures.

The Budget will be debated in the Senedd tomorrow, 4 February, with a final vote set for March.

Concerns over rushed budget scrutiny

The Committee has raised concerns that scrutiny of the Budget is becoming increasingly rushed, limiting opportunities to fully examine spending proposals. It is calling for the Cabinet Secretary and officials to continue attending pre-budget scrutiny sessions to ensure key financial decisions can be properly assessed.

The Welsh Government is also being urged to work with the Finance Committee to explore ways to improve budget scrutiny, including allowing more time for stakeholders, charities, and local authorities to provide evidence.

Concerns over transparency have also been raised, particularly regarding how financial comparisons are presented. The Committee has criticised the lack of clear explanations of how capital funding has changed from previous years and is recommending that future Draft Budget documents include full comparisons with outturn figures from past spending rounds.

The Welsh Government has also been urged to publish block grant transparency data before the Final Budget debate, so it is clear exactly how much funding Wales is receiving from the UK Government and how it is being allocated.

Financial pressures grow as National Insurance rises hit services

A major concern for the Committee is the impact of employer National Insurance Contribution increases, which could place additional financial strain on public services, charities, and social care providers.

Homelessness charity Llamau has said the rise will add an extra £500,000 to its costs next year, while Marie Curie has warned of a £260,000 increase in Wales alone. The NHS Confederation has also raised concerns about the knock-on effect on healthcare providers.

The Committee’s report highlights that Wales is likely to be disproportionately affected by the change, as the country has a higher proportion of lower-paid workers compared to the UK average.

There is also uncertainty over whether the Treasury funding pledged to offset these rising costs will be enough to cover the additional burden. The Committee has called on the Welsh Government to clarify exactly how much it will receive from the UK Government and to ensure that all additional funding is passed on to local authorities and essential services.

Local authorities, particularly Flintshire, have warned they are facing serious financial difficulties.

The council has expressed concerns over the possibility of issuing a Section 114 report, a measure that would effectively declare the local authority bankrupt and unable to balance its budget.

While the Welsh Local Government Association (WLGA) has said that immediate council bankruptcies are unlikely, it has warned that many local authorities could face financial collapse within the next two years unless additional support is provided.

The Committee is calling for the Welsh Government to introduce multi-year funding settlements to give councils greater stability and to ensure that local authorities are not forced to make short-term cuts that could harm essential services.

It has also recommended the introduction of a funding floor to prevent councils from falling below a financially unsustainable level and has urged the Welsh Government to clarify how it will support councils that face serious financial difficulties.

‘Empty words’ – Budget does not match rhetoric

The UK Chancellor of the Exchequer has described Wales’ financial settlement for 2025-26 as the “largest real terms funding increase since devolution”, promising optimism and a “brighter future”.

However, the Finance Committee argues that the spending plans do not reflect this claim.

While departmental budgets have been increased, there is concern that these allocations will not be enough to protect frontline services from mounting financial pressures.

The Committee has urged the Welsh Government to publish detailed comparisons between past and present spending to ensure transparency. It has also called for the publication of block grant data so that it is clear exactly how much UK funding Wales is receiving and where it is being allocated.

Cost of living crisis ‘entrenched’

Despite claims that the worst of the cost of living crisis has passed, the Committee found that financial hardship remains a daily struggle for many households across Wales.

It is urging the Welsh Government to prioritise support for struggling families rather than scaling back financial assistance.

One example is the Baby Bundle scheme, which provides essential items such as baby clothes and changing mats to new parents under financial pressure. The Committee argues that this scheme should be expanded across Wales rather than being available only in selected areas.

The Bevan Foundation, a social policy think tank, reinforced the Committee’s findings, stating:

“Far from the cost-of-living crisis being over … we actually think it’s getting more entrenched into the conditions that people face.”

‘Now is not the time to cut support’ – Finance Committee Chair

Peredur Owen Griffiths, Chair of the Finance Committee, said that multiple Senedd Committees had raised concerns over the Budget, particularly regarding the risk of funding shortfalls for councils and charities.

“The National Insurance rise for employers was cited as a major worry by many organisations, like those who work in social care, with some saying that it might even lead to their closure.

“We know that the cost of living challenges that many people face haven’t gone away, and our message to the Welsh Government is clear: now is not the time to be cutting back on supporting vulnerable people.

“Today’s report outlines serious concerns about the proposed Budget and provides clear recommendations for the Welsh Government to consider. If the upcoming Budget is meant to signal a new start and a break from austerity, unfortunately, there’s quite some work still to do.”

Reaction

Responding to the Senedd Finance Committee’s scrutiny of the Draft Budget, Plaid Cymru spokesperson for finance, Heledd Fychan MS, said:

“This is a damning report, echoing Plaid Cymru’s concerns that this is a budget devoid of principle and purpose. It fails to tackle the crises facing our NHS, councils, and higher education.

“Labour have nowhere to hide – the cross-party scrutiny process has shown with stark clarity that this draft budget simply isn’t the good news it’s made out to be. There is widespread worry about the impact of the UK Government’s hike in employer National Insurance Contributions. Labour in Westminster’s refusal to fully reimburse Welsh public sector employers, as recently admitted by the Cabinet Secretary for Finance himself, will leave our councils bearing the brunt.

“Without a fair funding formula to address Wales’ needs, Labour’s promise of a partnership in power is nothing more than an empty slogan.”

Welsh Conservative Shadow Cabinet Secretary for Finance, Sam Rowlands MS said:

“Labour’s woeful budget will not fix a broken Wales. It must be voted down.

 “The Budget lacks long-term planning and it’s clear they have abdicated responsibility to the most vulnerable. Labour deserves to lose this budget vote and must be turfed out of office as soon as possible.

“A first step to easing the cost of living for those currently being let down by Labour, would be to restore payments to pensioners by introducing a Welsh Winter Fuel Allowance, paid for by slashing the Welsh Labour Government’s inflated spending on central bureaucracy.”

The Welsh Government has said it will carefully consider the Finance Committee’s report before publishing the final Budget in late February.

The Final Budget Debate and vote will take place in the Senedd on 4 March.

[Photo: depositphotos.com]