{"id":2183,"date":"2026-04-23T07:28:47","date_gmt":"2026-04-23T06:28:47","guid":{"rendered":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/?p=2183"},"modified":"2026-04-23T07:28:47","modified_gmt":"2026-04-23T06:28:47","slug":"2026-senedd-manifesto-analysis-capital-spending-and-investment","status":"publish","type":"post","link":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/2026-senedd-manifesto-analysis-capital-spending-and-investment\/","title":{"rendered":"2026 Senedd manifesto analysis: Capital spending and investment"},"content":{"rendered":"

By Guto Ifan, Ed Gareth Poole and Owain Cynfab<\/em><\/p>\n

This blogpost \u2013 the fourth in a series of manifesto analyses<\/a> as part of the 2026 Scottish and Welsh Elections Project, conducted in partnership with the Fraser of Allander Institute and supported by the Nuffield Foundation \u2013 looks at some of the key manifesto plans for capital spending and infrastructure projects, in the context of a difficult outlook for the capital budget.<\/p>\n

Capital spending is set to fall in real terms over the next Senedd term<\/strong><\/h3>\n

Finance Secretary Mark Drakeford\u2019s \u201cneutral<\/a>\u201d approach to the 2026-27 Draft Budget \u2013 where each spending area was only uprated to reflect forecast inflation \u2013 means there is \u00a3118 million in capital spending (i.e. not day-to-day spending) left to allocate for the next Welsh Government in 2026-27. However, this immediate headroom masks some difficult choices and trade-offs for the next government to make over the course of the seventh Senedd term.<\/p>\n

The core capital block grant is set to remain at around \u00a33.3 billion in cash terms to 2029-30, and given indicative plans for 2030-31, this will likely fall slightly in the final year of the forecast. This stagnation partly reflects UK government spending more on defence, which as a reserved area, does not draw consequentials for the Welsh Government.<\/p>\n

If it chooses to, the Welsh Government can borrow \u00a3165 million for capital spending in 2026-27 and this will now increase in line with inflation. Some capital funding from the UK government \u2013 \u00a3152 million in 2026-27 \u2013 sits outside the core block grant and is set to fall to \u00a344 million by 2029-30.[1]<\/a><\/p>\n

Overall, this means that the Welsh Government\u2019s core capital budget (excluding Financial Transactions funding) could fall by 9% in real terms from 2026-27 over the course of the next Senedd term.<\/p>\n

Capital spending for healthcare<\/strong><\/h3>\n

As in the case of day-to-day spending<\/a>, all parties make significant pledges on NHS capital spending.<\/p>\n

Most immediately, Plaid Cymru, <\/strong>the Welsh Conservatives <\/strong>and Reform UK <\/strong>promise new surgical hubs to tackle waiting lists.<\/p>\n

Plaid Cymru <\/strong>propose creating a new Sustainable Health and Care Facilities investment programme to address the current maintenance backlog. Welsh Liberal Democrats <\/strong>propose a capital investment programme to repair, replace and upgrade hospital buildings. Reform UK <\/strong>promise estates modernisation and renewal with a multi-year capital programme.<\/p>\n

Other specific commitments on the number of beds (Plaid Cymru,<\/strong> Green Party<\/strong>) will also require capital spending.<\/p>\n

In terms of building new hospitals, the Welsh Conservatives<\/strong> call for a \u201821st<\/sup> Century Hospitals Fund\u2019 to modernise and build new hospitals, including four new Community Hospitals with Minor Injuries Units, though without specific cost estimates.<\/p>\n

Welsh Labour\u2019s <\/strong>manifesto contains a specific headline pledge of investing \u00a34 billion through a Hospitals of the Future Fund, including replacing Wrexham Maelor Hospital and University Hospital Wales, and a major hospital development in West Wales. Previous announcements suggested this spending would be over 10 years, though no information has been publicly published on the estimated costs of the specified projects, how it would be funded or the profile of spending across years.<\/p>\n

Capital spending on health is set to be around \u00a3566 million in 2026-27.[2]<\/a> Removing funding for maintenance backlogs, digital transformation, diagnostic equipment, vehicles, health and social care community hubs, and smaller programmes and policy schemes, this leaves \u00a3250 million to be spent this year on approved and non-approved capital projects and the Targeted Estates Fund.[3]<\/a> This means that \u00a34 billion on new hospitals over 10 years \u2013 or \u00a3400 million a year on average \u2013 would be sizeable increase in capital spending levels.<\/p>\n

Welsh Labour\u2019s<\/strong> plans will reportedly<\/a> be funded through the existing block grant funding, capital borrowing and the \u2018Mutual Investment Model\u2019 (MIM). In the context of a capital budget set to fall in real terms, this last option gets around some immediate trade-offs with other areas of capital spending, through using private sector borrowing to fund the up-front costs of the investment.<\/p>\n

However, this option is ultimately more expensive, with the Welsh Government eventually repaying costs from its day-to-day spending. These costs could become significant by the end of the Senedd term and beyond, in the context of a tight budgetary outlook for day-to-day spending. As an example, the New Velindre Cancer Centre currently being built using the MIM has a capital value of \u00a3312 million; on completion of the project, the Welsh Government will make annual service payments of \u00a334 million (with a portion indexed to inflation) over the next 25 years.<\/p>\n

Transport spending <\/strong><\/h3>\n

Welsh Labour<\/strong>, the Welsh Liberal Democrats<\/strong>, the Green Party<\/strong> and Plaid Cymru<\/strong> all commit to expanding rail infrastructure, including building new stations and upgrading existing lines. Meanwhile, Reform UK <\/strong>and the Welsh Conservatives<\/strong> say they would increase rail capacity.<\/p>\n

Reform UK<\/strong> and the Welsh Conservatives<\/strong> promise to build the M4 relief road \u2013 a proposal for a six-lane road south of Newport, previously scrapped by the Welsh Government \u2013 alongside other road projects such as upgrading the A55. Plaid Cymru<\/strong> leader Rhun ap Iorwerth has also suggested he backed alternative routes to improve traffic on the M4, referencing the \u2018Blue Route\u2019 (i.e. upgrades to the A48 Newport Southern Distributor Road) in leader debates.<\/p>\n

When the decision was made to cancel the M4 relief road in 2019, the reported cost<\/a> of the scheme was \u00a31.6 billion. Since then, estimates of construction costs<\/a> for new infrastructure projects have increased by approximately 29%.<\/p>\n

Reform UK\u2019s <\/strong>manifesto refers to funding the M4 relief road via a \u201cReform instituted British Sovereign Wealth Fund\u201d \u2013 presumably requiring a Reform-led UK government \u2013 or seeking private funding. As in the case of using private finance for hospital building, this would have significant implications for the Welsh Government\u2019s day-to-day spending at a later stage.<\/p>\n

For example, private funding was used to complete the dualling of the A465, with an estimated capital value of \u00a3590 million. This is now reflected in an annual service payment of \u00a338 million in the Welsh Government\u2019s Transport day-to-day spending budget for the next 30 years.<\/p>\n

In interviews<\/a>, Reform UK<\/strong> leader Dan Thomas has also talked about \u201crevisiting\u201d the \u00a314 billion announced for investment in Wales\u2019 railways and devoting \u00a32.5 billion to roads instead. This relates to the rail investment prospectus<\/a> published by Transport for Wales back in February, which contained a list of rail projects which could amount to \u00a314 billion by the 2040s.<\/p>\n

Unfortunately, however, this \u00a314 billion announcement was not accompanied by actual spending commitments, beyond the inadequate amounts – just \u00a3350 million over four years \u2013 confirmed at the 2025 Spending Review<\/a>. Since it did not trigger any additional funding, the rail announcement should instead be best viewed as a political signal that Welsh rail projects might potentially<\/em> be awarded more funding at future spending rounds over the next two decades. But not only is rail infrastructure a reserved area of spending \u2013 in other words, it would be the Westminster government and not the Cardiff government who would determine how it is spent \u2013 but since there are no additional funds it cannot be reallocated for devolved roads spending in the 2026-2030 Senedd term.<\/p>\n

Social housing and decarbonisation<\/strong><\/h3>\n

Building social housing represents a significant share of the Welsh Government\u2019s capital budget, with the budget for Social Housing Grants reaching \u00a3446 million in 2026-27.<\/p>\n

Some manifestos make significant commitments in this area: Welsh Labour <\/strong>commit to building at least 40,000 social homes over the next decade; Plaid Cymru<\/strong> promise 20,000 new social homes by 2030; the Green Party<\/strong> promise 60,000 over ten years; while the Welsh Liberal Democrats<\/strong> promise to build 30,000 (presumably over the next Senedd term).<\/p>\n

In scale and timing, the Welsh Labour <\/strong>and Plaid Cymru<\/strong> commitments are broadly similar to the previous Welsh Government target of delivering 20,000 additional social homes over the last Senedd term. The latest data suggested the target will be narrowly missed<\/a> despite an uptick in delivery, though these figures<\/a> include non-social housing and some existing social homes.<\/p>\n

Welsh Labour<\/strong>, Plaid Cymru <\/strong>and the Green Party<\/strong> also make commitments on expanding energy efficiency upgrades and retrofitting, alongside commitments to decarbonise the public sector.<\/p>\n

In contrast, the Reform UK <\/strong>manifesto says they would \u201cscrap net zero in devolved policy\u201d and \u201cremove ideology from Welsh Government energy subsidies\u201d. In interviews<\/a> and debates, leader Dan Thomas has claimed they would cut \u00a3145 million in \u201cgreen subsidies and levies\u201d. This would free up capital spending for other areas, but as we\u2019ve previously outlined<\/a>, will not help fund the promised tax cuts as claimed.<\/p>\n

Conclusion<\/strong><\/h3>\n

Taken together, as in the case of tax and day-to-day spending, there are significant differences in promises and emphasis between party manifestos, particularly on transport, housing and decarbonisation. The manifesto commitments across all parties paint an ambitious picture for capital investment in Wales \u2014 from new hospitals and social housing to new trunk roads and railway stations. Yet ambition and affordability are difficult to reconcile against a capital budget that could shrink by around 9% in real terms over the next Senedd term. Whichever party or coalition forms the next Welsh Government will face hard choices about prioritisation, and the scale of pledges made \u2014 particularly on hospitals and housing \u2014 will inevitably test the limits of what the block grant, borrowing powers, and private finance mechanisms can collectively deliver.<\/p>\n

The reliance on instruments like the Mutual Investment Model, or private funding for road building, may ease immediate pressures on the capital budget, but they do not make spending disappear \u2014 they defer it, at greater long-run cost, into future day-to-day budgets that are themselves under strain. Voters and policymakers alike would benefit from greater transparency about how parties intend to fund their commitments over the full Senedd term, not just in year one. As this analysis has shown, headline figures can mask significant uncertainty about timing, funding sources, and trade-offs \u2014 and it is precisely that detail which will determine whether these ambitions translate into bricks, mortar, and meaningful public services.<\/p>\n

\u00a0<\/strong><\/p>\n

****<\/p>\n

This work is supported by the Nuffield Foundation.\u00a0The Nuffield Foundation is an independent charitable trust with a mission to advance social well-being. It funds and undertakes rigorous research, encourages innovation and supports the use of sound evidence to inform social and economic policy, and improve people\u2019s lives. The Nuffield Foundation is the founder and co-funder of the Nuffield Council on Bioethics, the Ada Lovelace Institute and the Nuffield Family Justice Observatory. Find out more at:\u00a0nuffieldfoundation.org<\/a>.<\/p>\n

The views expressed are those of the authors and not necessarily those of the Foundation.<\/p>\n

 <\/p>\n

[1]<\/a> This funding relates to border facilities, the Holyhead Breakwater, City and Growth Deals, Coal Tips, and the Core Valley Lines enhancements settlement. We assume this funding is maintained at \u00a344 million in 2030-31 but may well be topped up at future Spending Reviews.<\/p>\n

[2]<\/a> This excludes IFRS16 spending, reflecting recent accounting changes.<\/p>\n

[3]<\/a> See written evidence provided to the Health and Social Care Committee in November 2025: https:\/\/www.gov.wales\/sites\/default\/files\/publications\/2025-11\/health-and-social-care-committee-cabinet-secretary-for-health-and-social-care-november-2025.pdf<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"By Guto Ifan, Ed Gareth Poole and Owain Cynfab This blogpost \u2013 the fourth in a series of manifesto analyses as part of the 2026 Scottish and Welsh Elections Project, […]","protected":false},"author":1297,"featured_media":2184,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[60,172],"tags":[],"class_list":["post-2183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","category-senedd-election-2026"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p8iFWs-zd","meta_box":[],"jetpack_featured_media_url":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-content\/uploads\/sites\/509\/2026\/04\/a465.jpg","_links":{"self":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts\/2183","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/users\/1297"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/comments?post=2183"}],"version-history":[{"count":2,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts\/2183\/revisions"}],"predecessor-version":[{"id":2186,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/posts\/2183\/revisions\/2186"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/media\/2184"}],"wp:attachment":[{"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/media?parent=2183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/categories?post=2183"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/thinking-wales\/wp-json\/wp\/v2\/tags?post=2183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}