Nation.Cymru staff
An extra £60 million for additional learning needs is a stopgap that leaves wider pressures on Welsh public services unresolved, according to analysis of the budget agreement between Plaid Cymru and Labour.
Cardiff University academics Ed Gareth Poole and Owain Cynfab also calculate that core NHS spending will fall by roughly 0.4% in real terms this year, despite an additional £100 million for waiting times and elective care.
Their analysis, published by Wales Fiscal Analysis at the university’s Wales Governance Centre, examines the agreement reached on October 13 after months of negotiations.
The deal allows the Welsh Government to bring its proposals back to the Senedd following the first-ever defeat of a supplementary budget on July 14. The revised budget will be debated on November 3.
It retains planned investment in the NHS, childcare and other services, with the additional learning needs (ALN) funding securing Labour’s support.
The academics warn that negotiations over the approximately £27 billion budget for 2027-28 will be more difficult, as ministers seek to expand childcare while meeting rising costs across public services.
ALN spending is heading towards £1 billion a year and, according to ministers, has grown 2.5 times faster than overall education spending over the past decade.
“In the absence of wider reform or definitive commitments regarding future funding, this can best be seen as a stopgap measure,” Poole and Cynfab write.
The agreement provides £44.8 million directly to schools, £11.2 million to local authorities, £2.5 million to further education and £1.5 million towards developing a long-term sustainability plan.
Labour had sought £100 million for ALN this year. The Welsh Government’s final offer before July’s defeat was £40 million annually for three years.
The agreed £60 million increases this year’s allocation, but no figure has been announced for subsequent years. Those decisions have been deferred to negotiations over the 2027-28 budget.
The academics also note that the agreement does not appear to resolve the trade dispute declared by school leaders’ unions NAHT Cymru and ASCL Cymru in July, which covers pay as well as ALN.
Welsh Labour leader Ken Skates said: “This money will make a huge difference to schools and colleges across Wales, and it is important that it now delivers for the children and young people who need it.”
First Minister Rhun ap Iorwerth said the agreement would allow ministers to proceed with investment in the NHS, childcare and free school meals.
The NHS package totals £145 million. Alongside the £100 million for waiting times and elective care, it includes £25 million for surgical and diagnostic hubs and £20 million for maintenance.
Waiting lists
The projected real-terms fall in core NHS spending reflects substantial additional spending on waiting lists in the previous financial year. Before the latest uplift, the reduction had been estimated at 1.2%.
Childcare receives £55 million to extend 12.5 hours of funded provision a week to all two-year-olds, completing the Flying Start expansion announced under the 2021 Labour-Plaid co-operation agreement.
Ministers describe this as a first step towards Plaid’s pledge of 20 hours a week for children aged nine months to four years, for up to 48 weeks annually.
The supplementary budget draws largely on additional funding arising from UK Government spending decisions. Together with other adjustments, these increased the day-to-day funding available to Wales by approximately £411 million.
July’s rejection left the existing annual budget in force, allowing services to continue while ministers sought approval for the new allocations.
Pressures
The revised package allocates £224 million in additional day-to-day spending, leaving £187 million to address pressures later in the financial year.
Poole and Cynfab warn that the energy price shock linked to the conflict in Iran is increasing the cost of pay, services and infrastructure.
For Wales, much will depend on whether Chancellor John Healey compensates English departments for those pressures in his forthcoming budget. Increases in comparable spending would feed through to the Welsh budget under the Barnett formula.
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