For a century, Caerphilly has stood as an unshakeable Labour bastion in Welsh politics. But this October, the winds of change are howling through the valleys. On Thursday, October 23, 2025, voters in Caerphilly will head to the polls for a by-election that, by all accounts, could upend the status quo not just in this South Wales seat, but across the Senedd and even Westminster. Betting markets have Reform as the clear favourite, Plaid Cymru snapping at their heels, and Labour—remarkably—trailing in a distant third. The odds on Labour retaining the seat are a staggering 17.016/1, according to Betfair Exchange, a number that would have seemed unthinkable just a few years ago.
The implications of a Labour loss in Caerphilly extend far beyond local pride. Labour has won every Westminster and Senedd contest here for the last 100 years. Yet, as the party faces mounting challenges, the prospect of losing this stronghold is being seen as a harbinger of its waning influence not just in Wales, but throughout the UK. The party currently holds 30 of the Senedd’s 60 seats, but with the death of Caerphilly’s Hefin David, it’s a precarious minority government. Passing legislation already means cutting deals with other parties—losing Caerphilly would only deepen Labour’s reliance on rivals and complicate the already fraught process of governing.
At the heart of the current political drama is the Welsh government’s draft budget, a £27 billion blueprint for 2026-27, unveiled on Tuesday, October 7. Mark Drakeford, the Finance Secretary, knows he can’t pass this budget alone. With Labour lacking a majority, the government is forced to seek support from opposition benches, and the outcome of the Caerphilly by-election could tip the balance. The stakes are high: if the budget fails to pass by April 1, 2026, the government would be limited to spending just 75% of the previous year’s budget, a move that First Minister Eluned Morgan has warned would require "big cuts, leading to mass redundancies in the public sector," as reported by BBC Wales News.
The draft budget proposes modest increases—around 2%—for every department, with £380 million left unallocated. This pool is intended as a bargaining chip in negotiations with opposition parties. Health receives the lion’s share at £12.4 billion, while housing and local government are allocated £5.6 billion. Notably, the Welsh rates of income tax and thresholds for the land transaction tax (Wales’ version of stamp duty) are left unchanged, signaling continuity amid uncertainty.
This year, the Conservatives have surprised some by offering to hold talks on the budget, contingent on scrapping the land transaction tax for main home buyers. Darren Millar, the Welsh Conservative Senedd leader, told BBC Radio Wales Breakfast, "We want to see changes to the Welsh government's budget and that's why we're saying if they are prepared to have that conversation about scrapping stamp duty then we are prepared to sit down with them and explore whether a deal might be possible."
Eluned Morgan, for her part, has signaled a willingness to engage, stating, "When it comes to public services, I am very much open to a conversation." She went on to praise Millar’s "grown up politics" and emphasized, "Let's make sure that we do what is right for the people of Wales and not see a situation where our public sector is crashed." Still, as BBC Wales notes, Labour has never held an outright Senedd majority, so compromise is nothing new—but the stakes this time are higher than ever.
Plaid Cymru, meanwhile, is playing a pivotal role. The party is urging Caerphilly voters to abandon Labour in order to block Reform’s advance. Plaid’s leader, Rhun ap Iorwerth, has made it clear that the onus is on Labour to produce a budget with real ambition. Finance spokesperson Heledd Fychan was blunt: "They're not putting forward a budget that shows ambition for Wales." Plaid has not ruled out talks but remains firm that it’s Labour’s responsibility to lead.
Reform, riding high in the polls and betting markets, is throwing everything at Caerphilly. The party, which has five MPs in Westminster but no Senedd seats yet, sees this by-election as a chance to make a historic breakthrough. A win here would not only grant them their first Senedd seat but also signal that they’re serious contenders for the next UK general election, currently scheduled for 2029. The odds reflect this momentum: Reform is 1.9210/11 to win the most seats, with Labour trailing at 3.412/5. Nigel Farage, Reform’s most recognizable figure, is 4.84/1 to be the next UK prime minister.
The full list of Caerphilly by-election candidates reflects the diversity of Welsh politics: Steve Aicheler (Liberal Democrats), Anthony Cook (Gwlad), Gareth Hughes (Greens), Gareth Potter (Conservatives), Llyr Powell (Reform), Roger Quilliam (UKIP), Richard Tunnicliffe (Labour), and Lindsay Whittle (Plaid Cymru). BBC Wales is hosting a live debate with these candidates on October 15, underscoring the national attention focused on this contest.
For Labour, the risks are acute. If the by-election goes against them, their already fragile position in the Senedd becomes even more precarious. Should the budget fail to pass, the government would be forced to operate on reduced funds, with a spending cap of 75% of the current budget until July, after which it could rise to 95%. This scenario, as outlined by government officials and the Institute of Fiscal Studies, could mean "mass redundancies" and severe cuts to public services, particularly if ministers are unable to reallocate funds between departments.
David Phillips of the Institute for Fiscal Studies has warned that a budget rising only in line with inflation could be "dangerous" when costs in different services are escalating at different rates. If not adjusted, NHS organizations and councils "may feel the need to cut services and jobs." Phillips suggested that Drakeford’s "inflation only" draft might be a negotiating tactic, designed to force other parties to share responsibility for the tough choices ahead.
Reform, for its part, has indicated it will not support any budget that continues to fund the Nation of Sanctuary policy, drawing a clear line in the sand. Their stance, coupled with Plaid Cymru’s insistence on ambition and the Conservatives’ willingness to negotiate, means Labour faces a complex web of demands and potential alliances.
The next few weeks promise intense lobbying, scrutiny, and political maneuvering. With the UK Chancellor Rachel Reeves set to publish her own budget soon—most of Wales’ funding comes from Westminster—the Welsh government’s room for maneuver is limited. The outcome of the Caerphilly by-election could well determine not just the fate of Labour’s budget, but the direction of Welsh politics for years to come. As the candidates prepare to face off in debate and the parties sharpen their pitches, all eyes are on Caerphilly—a seat that may soon become the epicenter of a political earthquake.
In the end, what happens in Caerphilly won’t just stay in Caerphilly. The result will reverberate through Cardiff Bay, Westminster, and beyond, shaping the future of Wales at a moment when every vote, every alliance, and every decision counts.
