1. ITV Report

Two weeks until Welsh budget deal deadline

In exactly two weeks' time the Welsh Government will set out its spending plans for the coming financial year. Everyone's expecting it to be a difficult budget as the UK Government continues to put the brakes on the amount of funding flowing to Cardiff.

But there's an extra pressure and it's a political one.

With exactly half the seats in the Assembly, Labour needs at least one of the other parties to support its budget or abstain. Last year Carwyn Jones reached a deal with Plaid Cymru and the previous year it was with the Liberal Democrats.

This year those two parties have said they'll only negotiate jointly rather than allow themselves to be played off against each other.

There was a meeting yesterday between Plaid's leader Leanne Wood and the Lib Dem leader Kirsty Williams to discuss their budget aims. They were joined by their negotiators Jocelyn Davies and Peter Black who have been meeting Finance Minister Jane Hutt throughout the summer.

Neither the parties nor the Welsh Government will comment on those meetings other than to confirm that they happened and to describe them as 'constructive' and 'progressing well.' A Welsh Government source told me that the fact they've happened and more are planned is a sign of how well they've gone.

The Lib Dems and Plaid say they've stuck to their pledge not to negotiate separately even when the party leaders have met the First Minister over the summer. In fact one party source said they were pleasantly surprised the government has made no such attempt.

There's a potential fly in the ointment for their plans.

The Welsh Conservatives have been left out in the cold, both by the government and their fellow opposition parties.

However, Opposition Leader Andrew RT Davies pointed out in a recent interview that Plaid and the Lib Dems don't have the numbers to defeat the Welsh Government even if they band together. If the Conservatives simply abstained, it would mean Carwyn Jones wouldn't have to do a deal at all.

It's difficult to see what would be in it for either side, but stranger things have happened.

As for what could be in the budget and what any deal could deliver, all sides know there's less money to go around.

The Lib Dems want to see more money to plug the 'funding gap' in spending on schools; Plaid Cymru wants more to go on job creation. Both want more on health.

In fact I gather health spending is likely to be made the single biggest priority, whatever else changes. That in itself means massive pain, massive cuts for every other department.