Senedd rejects Plaid Budget demands with amendment vote tied

Heledd Fychan MS (Member of the Senedd) opened the debate by presenting Plaid Cymru's motion, which called for the Welsh Government to make representations to Westminster on nine specific areas ahead of the Budget. These included developing a new needs-based funding formula, reversing inheritance tax changes on family farms, enabling the Senedd to set its own income tax bands, providing full HS2 consequentials, devolving the Crown Estate, removing the two-child benefit cap, devolving justice and policing, and introducing a 2% wealth tax on assets over £10 million.

The Plaid Cymru spokesperson highlighted what she sees as the stark reality facing Wales: "a spending review that will deliver the lowest real-terms growth to the Welsh budget outside the immediate austerity years, and a shrinking capital budget—in short, a deal for Wales that is even less generous than what we got from the Rishi Sunak administration."

Labour's 'Delete All' Strategy Questioned

The Welsh Government's decision to table an amendment deleting all substantive calls from the motion drew immediate criticism. Fychan challenged Labour members directly: "can I ask why 'delete all' and not replace with even a single call? Is there nothing you want to see the UK Chancellor announce next week that will benefit Wales? Or do you simply know there's no point in asking because they aren't listening?"

Lee Waters MS, intervening from the Labour backbenches, defended the approach: "I'm very sympathetic to the aims that you've set out in your motion, but this is not a debating society, and were we to pass your motion, we'd be able to achieve none of it, because we're simply calling on the UK Government. Meanwhile, we are grappling with passing a budget and Plaid Cymru seem to be refusing to engage with the practical realities of engaging in those trade-offs; instead, preferring gesture politics where we're making demands of Westminster."

However, another Labour backbencher, Alun Davies MS, offered a more supportive perspective, stating: "I largely agree with the motion as well, although I do suspect that Lee and I come to it from slightly different directions, and I do regret the government's amendment, because I do believe that if these debates are to be worth having, then they need to be debates where there is engagement between the government and other parties here."

Plaid’s Llyr Gruffydd MS used his contribution to highlight concerns about farm inheritance tax changes, describing the policy as one that "will do lasting harm to many of our small Welsh family farms. It represents a deeply unfair policy that targets the very people who feed us, who care for our land, who are in the front line of the fight against climate change and reversing the loss of nature."

Gruffydd welcomed the cross-party Welsh Affairs Committee's recent call for the UK Government to pause the changes, noting they had said "the UK government has been unable to provide any clarity on the specific impact of its proposed inheritance tax reforms in Wales, or supply any Welsh-specific data, and that the change in policy may actually have a disproportionate impact on elderly farmers or those with terminal illness."

For the Welsh Conservatives Sam Rowlands MS said Labour's “so-called partnership in power” is “failing the people of Wales” but much of Plaid’s motion was “built on a fantasy that would be dangerous for our Welsh economy”. “We oppose devolving more powers when this Welsh government has failed to get to grips with the powers that they currently hold,” he said. “Devolving justice and enabling the Senedd to set its own income tax bands would be not only costly, but would carry significant economic risk.” He said a wealth tax was “not a solution, it's a threat to the prosperity of Welsh families and the future of our economy. Such a tax would punish success, discourage investment, and risk driving businesses and talent away from Wales.”

The Welsh Conservative amendment called on the Welsh government to make a representation to the UK government to review the fiscal framework, including borrowing powers; to reverse inheritance tax changes that unfairly penalise family firms and farms; and to reimburse Wales for the unfunded costs of national insurance increases.

When Rowlands attempted to draw parallels between opposition to farm inheritance tax and opposition to wealth taxes, Gruffydd responded forcefully: "If you are putting our family farms in the same bracket as the mega-wealthy people, the 40 people who have the wealth of half of the population of this country, then that tells us more about the Tories than it tells us about anybody else. Whose side are you on?"

Cabinet Secretary's Robust Defence

Cabinet Secretary Mark Drakeford delivered a robust defence of the Welsh government's position, arguing: "I'm the Cabinet Secretary for Finance charged with the responsibilities that are devolved to this Senedd, the things that we can actually make a difference to, the decisions that we make that make a difference in people's lives. There is nothing more important in that than the clear and direct responsibility that this Senedd has for passing our own budget."

He continued: "But we've just spent an hour not talking at all about those responsibilities. We spent an hour talking about decisions that have never been devolved to this Senedd, and which not a single vote here can determine."

Drakeford dismissed the notion that government priorities should be communicated through opposition debates: "the notion that a government would choose an opposition party debate as the vehicle for communicating our priorities to the UK government is not simply fanciful, but it would actually be a dereliction of our responsibility to use all the avenues we have as a government to make sure that our priorities are clearly communicated."

He outlined specific priorities he wanted from the budget: "I look to the Budget next week to confirm that what was said in the comprehensive spending review will be still the policy of the UK Government, because that's the policy that would deliver £5 billion additional investment to Wales." He also called for progress on the fiscal framework, Barnett reform, and abolition of the two-child benefit cap.

The voting revealed the political arithmetic of the Senedd. The original motion was rejected by 37 votes to 11. However, the Government's amendment deleting all substantive calls resulted in a tied vote of 24-24, requiring the Llywydd to exercise her casting vote against the amendment in accordance with Standing Orders. The Conservative amendment was also rejected by 35 votes to 13.

Read the full debate here.

NB. The drafting of this report was assisted by Claude.AI but it has been checked, edited and added to by CIOT's External Relations Team.