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Extra funding to help plug National Insurance shortfall in Wales

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Welsh Government steps in to protect vital services

WELSH public services are set to receive additional funding to help meet rising employer National Insurance (NI) costs—after a shortfall in support from the UK Government left a significant funding gap.

The increase in employer NI contributions has added an estimated £257 million in annual costs to the Welsh public sector. Of that, the UK Government has committed £185 million, leaving a £72 million deficit.

To help cover this shortfall, the Welsh Government has announced it will allocate £36 million from its reserves. This brings the total support package to £220 million, which will cover approximately 85% of the increased costs.

Finance Secretary Mark Drakeford said: “We’re protecting our vital public services by using £36 million from our reserves to help address the National Insurance shortfall left by the UK Government.

“While the UK Government has provided some funding, it does not match the actual financial burden now facing Welsh services. This leaves a multi-million-pound gap year after year.

“We’ve stepped in to support our services as much as we can, but we cannot afford to plug the entire shortfall. The UK Government should treat public services equally across the UK and honour its commitment to fully fund these extra costs.”

The Welsh Government warned that continued shortfalls could place pressure on frontline services if the funding gap is not fully addressed.

The Welsh Lib Dems responded to what they say was Mark Drakeford’s National Insurance Bombshell. Leader Jane Dodds MS said: “The Welsh Lib Dems have opposed this disastrous jobs tax from day one. Not only is it hammering our small businesses with unemployment in Wales rising, but it is now clear it will leave Wales with a gaping hole in its public finances and our public services worse off.

“The fact that the First Minister cannot even convince the UK government that the increased cost to the public sector should be covered by the Treasury shows how little influence Welsh Labour have in London.

“The Liberal Democrats will continue to argue for a reversal of the national insurance hike and fair funding for Wales.”

The Welsh Conservatives have criticised the UK and Welsh Labour Governments.

They said that despite receiving £185 million from the UK Government, the total cost to devolved public sector employers in Wales is estimated at £257 million, leaving a funding gap of over £70 million. The Tories highlighted that the Welsh Government said the additional funding will mitigate the impact on public services, but concerns remain about how this decision will affect their ability to address other financial pressures throughout the year.

Welsh Conservative Shadow Cabinet Secretary for Finance, Sam Rowlands MS, said: “Before the general election Labour promised that two governments working at either side of the M4 would deliver for Wales. Instead, we see a party at war with itself, with a Welsh Labour Government seemingly powerless to influence their UK counterparts.

“If Labour hadn’t squandered hundreds of millions of pounds on vanity projects and inefficiencies, this funding gap would not pose such a substantial challenge. They must also explain how they will address other financial pressures later in the year after depleting reserves to plug this shortfall.

“This situation lays bare the UK Labour Government’s disregard for Wales and Welsh Labour’s ongoing failure to competently manage its own budget.”

Entertainment

Gavin & Stacey stars reunite for Christmas advert

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GAVIN & STACEY favourites Joanna Page and Mathew Horne have reunited on screen for a Christmas special – though not the one fans might have hoped for. Instead of returning to Barry or Billericay, the duo appear together in a new festive advert for Waitrose, sharing a turkey pie while responding to a fan’s heartfelt letter about expressing love through food.

The short film marks their appearance in How to Say It With Food, a six-part series in which Page and Horne tackle some of the nation’s most common Christmas food dilemmas. The clip opens with Page teasingly nodding to their iconic sitcom: “Oh, you didn’t think we’d let Christmas roll around without showing up again, did you?”

Horne quickly follows with his own playful line: “Us? Miss Christmas? Not a chance. But this time we’re here to help you say it with food.”

The pair are then handed an envelope “from Santa”, containing a letter from a viewer asking how he can show his “leading lady” he loves her through food. Mathew quips: “First time saying it, you want a statement. Sixteenth time, you want a statement that doesn’t involve socks.”

He then introduces Waitrose’s new Christmas advert starring Keira Knightley and Joe Wilkinson. The main campaign follows an unlikely festive romance sparked by Sussex Charmer cheese and culminating in Wilkinson presenting Knightley with a turkey pie decorated with the words “I love you”. Watching the moment unfold, Page smiles at Horne and mirrors another classic Gavin & Stacey reference: “Oh, that’s so romantic.”

The duo are soon given their own turkey pie to try. Horne eagerly tucks in before cutting Page a slice, prompting laughter from his co-star. The advert ends with the pair wishing viewers a Merry Christmas as Knightley and Wilkinson share a warm festive kiss on screen.

The reunion comes almost a year after audiences tuned in to the BBC sitcom’s much-anticipated finale, which drew an impressive 12.3 million viewers on Christmas Day. The episode wrapped up storylines including Gwen’s blossoming romance with Dave Coaches, Smithy’s near-wedding to Sonia, and the moment fans had long debated – Smithy and Nessa tying the knot.

Reflecting on the new project, Page said: “You thought you’d seen the last of us! Well, we’re back and what fun we had.” She added: “It was such a treat working with Mat… food is what brings people together over the festive season.”

Horne described the experience as “brilliant”, calling their on-screen reunion “a Christmas tradition”.

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Health

Government orders clinical review amid sharp rise in mental health diagnoses

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4.4 million working-age people now claiming sickness or incapacity benefit, up by 1.2 million since 2019, many because of a mental health condition

A CLINICAL review into how mental health conditions are diagnosed across the UK is expected to begin this week, following concerns within government over rapidly rising sickness-benefit claims linked to conditions such as autism, ADHD and anxiety.

Health Secretary Wes Streeting has commissioned leading clinical experts to examine whether ordinary emotional distress is being “over-pathologised” and to assess why the number of people receiving sickness and incapacity benefits has grown to 4.4 million – an increase of 1.2 million since 2019.

According to reports in The Times, ministers are particularly alarmed by the surge in the number of 16- to 34-year-olds now out of work because of long-term mental health conditions.

Streeting said he recognised “from personal experience how devastating it can be for people who face poor mental health, have ADHD or autism and can’t get a diagnosis or the right support,” but added that he had also heard from clinicians who say diagnoses are “sharply rising”.

“We must look at this through a strictly clinical lens to get an evidence-based understanding of what we know, what we don’t know, and what these patterns tell us about our mental health system, autism and ADHD services,” he told the newspaper. “That’s the only way we can ensure everyone gets timely access to accurate diagnosis and effective support.”

The review is expected to be chaired by Prof Peter Fonagy, a clinical psychologist at University College London specialising in child mental health, with Sir Simon Wessely, former president of the Royal College of Psychiatrists, acting as vice-chair.

Prof Fonagy said the panel would “examine the evidence with care – from research, from people with lived experience and from clinicians working at the frontline of mental health, autism and ADHD services – to understand, in a grounded way, what is driving rising demand.”

The move comes as the UK Government faces mounting pressure over the rising welfare bill. Ministers earlier this year pulled back from proposed changes to disability benefits, including those affecting people with mental health conditions, after opposition from Labour backbenchers.

Speaking on Monday, the Prime Minister said a fresh round of welfare reform was needed.

Keir Starmer said: “We’ve got to transform it; we also have to confront the reality that our welfare state is trapping people, not just in poverty, but out of work.”

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Business

Welsh Govt shifts stance on business rates after pressure from S4C and Herald

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Ministers release unexpected statement 48 hours after widespread concern highlighted in Welsh media

THE WELSH GOVERNMENT has announced a new package of tapered business rates relief for 2026-27, in a move that follows sustained pressure from Welsh media — including S4C Newyddion and The Pembrokeshire Herald — over the impact of revaluation on small businesses.

In Milford Haven, the hard-pressed pub sector is already feeling the impact: the annual bill for The Lord Kitchener is rising from £5,000 to £15,000, while rates at the Kimberley Public House have nearly doubled from £10,500 to £19,500. The Imperial Hall’s rates are increasing from £5,800 to £9,200, prompting director Lee Bridges to question why businesses “are being asked to pay more when we use less services”. In Haverfordwest, the annual rates bill for Eddie’s Nightclub is increasing from £57,000 to £61,500.

A written statement, issued suddenly on Wednesday afternoon, confirms that ministers will introduce a transitional “tapering mechanism” to soften steep increases for tourism, hospitality and small independent operators. Full details will be published with the draft Budget later this month.

The announcement comes less than two days after The Herald’s in-depth reporting brought forward direct concerns from Pembrokeshire business owners and councillors, highlighting the uncertainty facing one of Wales’ most important local industries.

Herald reporting credited by senior councillor

Cllr Huw Murphy

Pembrokeshire County Council Independent Group Leader Cllr Huw Carnhuan Murphy publicly thanked The Herald for pushing the issue into the spotlight.

In a statement shared on Wednesday, Cllr Murphy said: “Welcome news from Welsh Government. Thanks to Tom Sinclair for running this important item in the Herald in relation to the revaluation of businesses and the consequences it will have for many.

He added: “Newyddion S4C hefyd am redeg y stori pwysig yma ynghylch trethi busnes.,” which in English is “and thanks to S4C Newyddion as well for running this important story about business taxes.”

He added that the Independent Group “will always campaign to support our tourism and agriculture industry, on which so many residents rely within Pembrokeshire”.

Media spotlight increased pressure on Cardiff Bay

On Monday, ministers said business rates plans would be outlined “within the next two weeks”.
By Wednesday afternoon — following prominent coverage on S4C and continued pressure from The Herald — Welsh Government released an early written statement outlining new support.

Industry sources told The Herald they believed the level of public concern, amplified by the media, “forced the issue up the agenda much faster than expected”.

A cautious welcome for ‘better than nothing’

Cllr Murphy welcomed the partial support, though he stressed it fell short of what many businesses had hoped for.

“This isn’t the level of support many were hoping for,” he said, “but it is certainly much better than nothing.”

Draft Budget expected soon

The full tapered support scheme will be detailed in the Welsh Government draft Budget, expected within a fortnight.

Tourism and hospitality representatives have reserved final judgment until the figures are published, but many have expressed relief that some support will continue, following weeks of uncertainty.

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