The political landscape in Wales has taken a dramatic turn as the Welsh Conservatives have offered to support the Labour government’s upcoming budget—on one condition: the scrapping of the Land Transaction Tax (LTT), the Welsh equivalent of stamp duty, for all primary residential properties. The move, announced on October 14, 2025, by opposition leader Darren Millar MS, comes at a time of heightened uncertainty in Cardiff Bay, with Labour’s grip on the Senedd more tenuous than ever and a crucial by-election in Caerphilly looming on the horizon.
Millar’s proposal, detailed in a letter to First Minister Eluned Morgan, places the abolition of LTT front and center in the Conservatives’ offer. “While the Welsh Conservatives fundamentally disagree with the Welsh Labour Government on many things, we are a responsible opposition that will always strive to put the people of Wales first,” Millar wrote, as reported by BBC News. He went on to emphasize, “Our ambition to scrap stamp duty in Wales as part of our plan to fix Wales will help people get onto the housing ladder, improve mobility in the housing market, and boost the economy. It will be central to any discussions which may now take place.”
The timing of this overture is no accident. The Welsh Government, led by Labour’s Eluned Morgan, is preparing to publish its draft budget for 2026-27, outlining more than £27 billion in spending plans for public services. The stakes are high: without a majority in the Senedd, Labour must secure support from at least one other party to pass its budget. The death of Labour MS Hefin David in August triggered a by-election in Caerphilly, scheduled for October 23, 2025—a seat Labour has held since the Senedd’s inception, but now faces strong challenges from Plaid Cymru and Reform UK.
Should Labour lose Caerphilly, the already delicate parliamentary arithmetic would become even more precarious, making cross-party deals not just desirable but essential. The last budget, passed in March 2025, scraped through only with the support of Liberal Democrat Jane Dodds, after both the Conservatives and Plaid Cymru refused to back it. The message from Millar is clear: the Conservatives are open to negotiation, but only if their flagship policy is adopted.
“You have repeatedly and publicly acknowledged that the parliamentary arithmetic in the Senedd poses a challenge to the passing of the Welsh Government’s budget in the Senedd, and have warned of potential consequences in the event that a budget is not agreed,” Millar wrote to Morgan, as cited by WalesOnline. “Should the government be prepared to consider some of our key Welsh Conservative priorities, such as the scrapping of Welsh Stamp Duty (Land Transaction Tax) for all primary residential properties, then I will be prepared to meet with you to explore whether a budget agreement may be possible.”
The focus on Land Transaction Tax is not just a matter of fiscal policy but of political symbolism. As one of the few tax-raising powers devolved to Cardiff Bay, LTT has become a battleground. Conservatives argue that abolishing the tax would lower the cost of buying homes, especially for first-time buyers, and inject new life into the property market. Labour, on the other hand, has historically defended LTT as a crucial source of revenue for public services—a stance that makes the Conservatives’ demand a particularly tough sell.
Adding fuel to the fire, Conservative leader Kemi Badenoch recently announced at the UK party conference that abolishing stamp duty is now an official election pledge for the party nationwide. This alignment between Welsh and UK Conservative priorities underscores the broader political strategy at play: by elevating the issue of stamp duty abolition, the Conservatives are not just negotiating over the budget—they are setting the terms of the debate in both Cardiff and Westminster.
First Minister Eluned Morgan responded to Millar’s letter with a measured openness. Speaking at First Minister’s Questions, she said, “Our intention as a Labour Government is to make sure we deliver public services that matter to the people in Wales. When it comes to public services, I am very much open to a conversation, I am very pleased that you have written to me today. I think this demonstrates grown-up politics, this demonstrates the fact that what we need is to pass a budget. I’m clearly not going to negotiate on the floor of the Senedd but our door is open and 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.”
Despite this public show of willingness to engage, most observers remain skeptical that Labour will accept the Conservatives’ central demand. Historically, Labour has preferred to seek support from Plaid Cymru or the Welsh Liberal Democrats, both of whom have previously struck budget agreements. As The National reports, “Most observers believe Labour is far more likely to seek support from Plaid Cymru or the Welsh Liberal Democrats—both of whom have previously struck budget agreements—than to enter into talks with the Conservatives.”
Indeed, the Conservatives and Labour have never before worked together on a budget deal in the Senedd. Last year, the Conservatives and Plaid Cymru both refused to support the budget, leaving Labour reliant on a single Liberal Democrat vote. This year, with the prospect of a lost seat in Caerphilly and warnings of “huge issues, including mass job losses in the public sector” should the budget fail, the pressure to find common ground—or at least a workable compromise—is mounting.
Yet, for all the talk of negotiation, some analysts see the Conservatives’ offer as more political maneuver than genuine olive branch. By placing the abolition of LTT at the heart of their proposal, the party is able to present itself as constructive and responsible—“a responsible opposition that will always strive to put the people of Wales first,” as Millar put it—while simultaneously advancing a core Conservative policy. Even if Labour rejects the offer, the Conservatives have succeeded in making stamp duty abolition a central issue in the budget debate and, by extension, the upcoming by-election.
As the draft budget is published and the Senedd prepares for a final vote in January 2026, the future of Wales’s public finances—and the political fortunes of its parties—hang in the balance. The next few weeks will reveal whether Labour can secure the support it needs, whether the Conservatives’ gambit pays off, and whether the people of Caerphilly will tip the scales in a contest that now feels as much about the direction of Welsh policy as about party politics.
With the stakes so high and the path forward anything but certain, all eyes in Wales are on Cardiff Bay, where the fate of the budget—and perhaps the government itself—will soon be decided.
