The Welsh Government has unveiled its spending plans for next year with an additional £1.5bn allocated to public services, including an extra £610m for health and social care.

Mark Drakeford announced all government departments will receive increases in day-to-day revenue and longer-term capital funding, marking a departure from last year’s cuts.

Wales’ finance secretary described the £26bn draft budget as offering an opportunity to “rebuild and reinvigorate public services”.

He said: “This is a budget for a brighter future, delivering an extra £1.5bn for our public services and priorities, helping to put Wales firmly back on the path of growth.

“This is in stark contrast to the last couple of years when we have been forced to make some very difficult and painful decisions.

“This is a good budget for Wales.

“But it will take time to reverse the damage inflicted on Wales over 14 years of neglect from previous UK administrations.”

The draft budget includes an extra £610m for health and social services, £186m to improve rail services, including the core valleys lines, and £81m to build more social housing for rent.

Councils will receive a 4.3 per cent increase in the local government settlement.

Welsh rates of income tax will remain unchanged, with taxpayers continuing to pay the same rates as in England and Northern Ireland.

However, the Welsh Government announced that higher residential rates of land transaction tax – Wales’ equivalent of stamp duty – will increase by one per cent, raising an extra £7m.

The standard rate of landfill disposal tax will also rise to reduce waste and boost recycling.

The big question is how the Welsh Government will pass its budget, with parliamentary arithmetic in the Senedd on a knife-edge and Labour one seat short of a majority.

Eluned Morgan, who has warned Wales could lose out on £1bn if opposition parties do not support the spending plans, will need to cut a deal with at least one opposition member.

Previous budgets have been passed with the help of Plaid Cymru, Liberal Democrat and independent Senedd members, with a deal with the Conservatives seeming unlikely.

Plaid Cymru backed the Welsh Government’s budget in recent years in return for 46 commitments but the co-operation deal between the two collapsed in October 2023.

The first minister could also reach out to Jane Dodds, the Lib Dems’ sole Senedd member, or Rhys ab Owen, who sits as an independent.