Plaid Cymru had pushed for more money for health and councils, amid warnings the Welsh government’s existing plans for a 2% increase next year had left local government facing significant cuts and council tax rises.
However, those initial proposals had been expected to change, after hundreds of millions were left unspent, and Finance Secretary Mark Drakeford suggested he would be willing to give the NHS and councils more cash.
The new agreement proposes £113m additional funding for local government, with budgets effectively increased by 4.5% next year.
Health and social care’s budget will rise by £180m, meaning an overall increase of 3.6%.
Meanwhile a total of £120m will be set aside in capital for the new government to decide how to spend following the May Senedd election – something that Rhun ap Iorwerth is hoping to win.
Eluned Morgan said: “This agreement shows the strength of the Senedd parties working together on shared priorities, to deliver for Wales.
“Through this agreement we have secured the passage of the budget and prevented potentially catastrophic cuts to funding next year.”
Rhun ap Iorwerth said: “By securing £300m of additional funding for front-line services, it avoids the potential of a cliff edge for public spending in Wales and, in May 2026, puts the next Welsh government on a firmer footing than would otherwise have been the case.”