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Families and businesses in Wales will get breathing space as a result of action announced in Budget 2026. 

Families and businesses in Wales will get breathing space from action announced in Budget 2026. 

Against a backdrop of global uncertainty, rising energy costs and pressure on household finances, Chancellor John Healey has taken action on the cost of living, fuel prices, and local jobs — alongside continued funding for the Welsh Government to deliver public services. 

In the Budget, John Healey announced: 

• Energy costs: The removal of the 4% tariff on Kerosene will support the 105,000 Welsh households that rely on heating oil to heat their homes. The UK government will extend 0% VAT on household electricity bills for three months, to 30 June 2027., while a Debt Relief Scheme will write off crisis-era debt for eligible households. 

• Fuel: The extension of the 5p cut to fuel duty for a further six months until 30 June 2027. The 3.7p cut to red diesel duty continues, which matters for farmers, rural hauliers and other fuel-heavy users across Wales. He also announced a permanent increase to the generosity of mileage rates to support those who drive for work.    

• Food prices: Tariffs axed on over 100 food products, including chocolate and fruit juice. Combined with tariff suspensions earlier this year, this will save households up to £21 annually.  

• Pensions: By the end of this Parliament, roughly 64,000 low-income pensioners in Wales will pay less tax or none at all on their income, as a result of reducing the disproportionate administrative burden of paying small amounts of tax  

• Wages: Increasing the National Living Wage by 3.9% to £13.21 per hour and the National Minimum Wage by 3.9% to £11.27 per hour for 18 to 20-year-olds and by 3.9% to £8.31 per hour for 16 to 17-year-olds and eligible apprentices. The last minimum wage increase helped 170,000 people in Wales. 

Backing growth in Wales

• £30 million will fund the next stage of Cardiff Parkway railway station, driving growth along the M4 corridor  
• £2.5 million to expand the M-SParc science park in Anglesey, subject to business case, delivering additional space and support for SMEs.  
• £11 million of new funding to replace the Port Talbot Aberavon Bridge – part of the town’s regeneration – subject to business case.    
• Extending duty suspensions for 350 goods to help businesses in the chemicals, plastics, hydrogen, automotive and food and drinks sectors.  
• The Budget strengthens Britain’s national security by fully funding the £15 billion Defence Investment Plan, including £4.7 billion that was previously unfunded. Defence spending supports 7,800 jobs in Wales, including 4,900 industrial jobs, up 26% from 2025. 

Secretary of State for Wales, Stephen Kinnock, said: 

We are taking action by providing households in Wales with much needed breathing space, through reducing the cost of food and energy and putting more money in the pockets of lower income pensioners and workers. 

Having previously secured a £6.5 billion uplift to increase Wales’ budget to record levels, we are now making an additional £450 million available to the Welsh Government to fund public services such as the NHS. And in these uncertain times, I am also enormously proud of our new defence investment which will underpin our collective security and support thousands of jobs in Wales. 

This UK government has already committed generational investment across Wales – from new nuclear, to defence and rail – and today’s Budget will help us turn numbers into reality.” 

Extra funding for public services

Wales gets money for public services through the block grant. This is money collected from taxpayers across the UK, including people in Wales, which the Welsh Government can then spend on devolved services like health, education and housing. 

This Budget means the Welsh Government has at least 20% more funding per person than equivalent spending in the rest of the UK. For each £1 of equivalent UK government spending in the rest of the UK, the Welsh Government has at least £1.20 to spend per person in Wales. The higher amount reflects that providing services across Wales genuinely costs more, and ensures the Welsh Government is funded above what experts say Wales needs, considering factors like geography. 

The Welsh Government will have an additional £450 million for public services, on top of the additional £1 billion from Budget 2025 and Spring Forecast 2026, meaning Wales continues to receive funding well above its assessed level of need.