The Welsh Government has announced its Budget for 2024-25, revealing increased funding for the NHS and local government in Wales.

However, other spending departments will experience reduced funding due to the poor performance of the UK economy and a real terms reduction in funding from Westminster.

With a total Budget worth £1.3bn less in real terms compared to 2021, the Welsh Government claims that it has not received an adequate funding settlement from the UK Government. This has made it challenging to meet the pressures faced by services, businesses, and individuals in Wales.

High inflation, public sector pay, and energy costs remain ongoing challenges for the Welsh Government.

Although the recent UK Autumn Statement provided an extra £165m for running services in Wales, the Welsh Government states that this amount falls far short of the additional funding needed. Consequently, there is a significant gap between the funds required and what is available.

Ministers have made decisions based on a set of priorities, prioritizing extra funding for core front-line public services. They have also aimed to benefit households most affected by the cost of living crisis and protect jobs wherever possible.

Collaboration with other public sector bodies has been imperative in facing the difficult challenges. The NHS in Wales will receive an additional £450m for the 2024-25 financial year, in addition to the £425m made available in October for the current 2023-24 year. This equates to a 4% increase in funding for the NHS in Wales, compared to less than 1% in England.

Nevertheless, the Welsh Government acknowledges that 2024-25 will still be a challenging year for health boards. Local government, responsible for funding schools, social services, social care, bin collections, and leisure services, will receive the promised 3.1% increase. In order to protect areas such as the NHS, the Welsh Government has conducted a "rescoping exercise" to identify sources from which funding can be released.

Consequently, all other spending areas face reductions. The department experiencing the largest cut is Rural Affairs, down by 8.97%, followed by Climate Change with a 3.19% reduction and Social Justice with a 3.16% reduction. The rural investment program within Rural Affairs faces the biggest reduction.

There will be no changes to income tax rates as the Welsh Government believes it is inappropriate to raise them during the cost of living crisis, particularly when many individuals are struggling financially.

Finance Minister Rebecca Evans acknowledged the difficult decisions that had to be made to redirect funding towards essential services.

She emphasized the challenging financial situation Wales faces, attributing it to years of austerity, the repercussions of Brexit, and the ongoing cost-of-living crisis. Despite the financial constraints, the Welsh Government intends to continue supporting individuals hardest hit by the cost-of-living crisis.

This includes providing assistance through the Council Tax Reduction Scheme and a £384m support package for non-domestic ratepayers, which includes relief for retail, leisure, and hospitality businesses.

Additionally, a new £20m Future Proofing Fund will be introduced for businesses in early 2024-25.

To address the budget situation, the Welsh Government will examine whether charges for services such as NHS dental care, university tuition fees, and domiciliary care should be increased to generate extra funding for public services and higher education.