Wales: funding review woes

While the announcement of rail funding dominated the headlines in Wales, the 2025 UK government Spending Review presented on 11 June provided crucial detail on the outlook for the Welsh Government spending. It will set the fiscal context for next year’s Senedd election and much of the preceding political debate.

The Welsh government can raise taxes, but most of what it spends comes in a grant from the Treasury. Its funding will be £22.4 billion on average over the each of the next three years (beyond next year’s Senedd elections). Under the review Wales has suffered a drop in capital spending of almost 1 per cent.

Not enough

The figures also include £445 million on railways in Wales, most for new stations. The cost of upgrading existing valley lines means the figure does not cover other costs and has been criticised as not enough.

There is also £118 million set aside for making coal tips safe but estimates for this are now up to £600 million. The Chancellor, Rachel Reeves, again claimed the figure of £118 million was what the Welsh government had asked for. Only £25 million was previously allocated in last year’s autumn budget.

Not answering

Asked why the Welsh government did not ask for more rail and coal tip money, First Minister Eluned Morgan said the £445 million rail package was “not something to be sniffed at”. Which typically does not actually answer the question.

Guto Ifan from the Wales Governance Centre warned: “If the Welsh government decided to transfer that money to the health service in Wales, which would still be below the historical growth in health spending, it would mean difficult settlements for everything else in the budget.”