6. Debate: The Draft Budget 2024-25

– in the Senedd at on 6 February 2024.

Alert me about debates like this


The following amendment has been selected: amendment 1 in the name of Darren Millar.

Photo of David Rees David Rees Labour 3:52, 6 February 2024


So, we'll move on to item 6: debate on the draft budget 2024-25. And I call on the Minister for Finance and Local Government to move the motion—Rebecca Evans


Motion NDM8473 Lesley Griffiths

To propose that the Senedd, in accordance with Standing Order 20.12:

Notes the Draft Budget for the financial year 2024-25 laid in the Table Office by the Minister for Finance and Local Government on 19 December 2023.


Motion moved.

Photo of Rebecca Evans Rebecca Evans Labour 3:52, 6 February 2024

Diolch. I'm pleased to open this afternoon's debate on the Welsh Government's draft budget for 2024-25. Since we had the first opportunity to debate the draft budget in the Senedd on 9 January, Senedd committees have been busy scrutinising our spending plans. I welcome the constructive sessions that I've had with the Finance Committee in my finance Minister role, and those that my ministerial colleagues and I have had with our respective subject committees. 

Before I provide some early reflections on the themes arising from scrutiny, it's important to put on record once again the very challenging climate in which we're setting the Welsh budget. Once again, the UK Government has sought to work against us rather than with us. We continue to see the ongoing impacts of high inflation, the impacts of which on households, businesses, public services and devolved Government have been downplayed by the UK Government. And while we have thankfully seen rates fall over the winter months, there is still a significant gap between where we are now and the Bank of England's 2 per cent target. This continues to have significant impacts on what we can deliver.

The Chancellor's very late autumn statement fell far short of the settlement needed to meet the challenges public services face, and there was no specific recognition of the issues facing Wales. The constrained funding settlement that we have means that we cannot go as far and as fast as we would like, but this draft budget seeks to prioritise the issues that people and communities across Wales hold the most important. I'll continue to call on the UK Government to properly fund public services and to recognise our particular calls for increased investment in rail and coal tip safety at the upcoming spring budget, which is due just a few days after we publish our final budget.

As the Cabinet developed this draft budget, we had to make some stark and painful choices, but we did so in the spirit of collaboration and transparency, putting people and communities first to support the services that matter most. We have radically reshaped our budgets in line with a set of guiding principles: to protect core front-line public services as far as possible, to deliver the greatest benefit to households that are hardest hit, to prioritise jobs wherever possible, and to work in partnership with other public sector bodies to face this financial storm together.

Photo of Rebecca Evans Rebecca Evans Labour 3:55, 6 February 2024

By taking this approach, we have focused funding to invest more in the NHS—£450 million in 2024-25, in addition to the £425 million that we made available in October for 2023-24. We’re protecting the core local government settlement. Alongside the 3.1 per cent increase that we promised last year, we are also providing an additional £1.3 million through the revenue support grant to provide a funding floor, ensuring that no authority has an increase in settlement of less than 2 per cent.

Following the UK Government’s announcement, which resulted in consequential funding, I’m also allocating a further £25 million to support the social care workforce and other pressures in the final budget. I’ll provide a written statement with more detail on this shortly, but I do need to stress that this is at risk, and the funding might well be offset by negative movements in the spring statement. So, I just need to bring that to colleagues’ attention.

While we’re protecting the funding that goes directly to schools, including the pupil development grant and continuing our successful COVID recovery programme to recruit, recover and raise standards, in doing so, and in protecting these areas, it has, though, meant making some really difficult decisions, such as refocusing spending away from other areas, including from non-devolved areas where we have traditionally stepped in to make up for UK Government shortcomings.

So, I’ll now turn to some of the key points that have been raised in committee scrutiny. There was a particular and welcome emphasis once again on preventative spend, and how this draft budget addresses this. Within the extremely challenging settlement that we currently have, we have had to act to protect core public services. This is a budget where it’s necessary to target our spending to those areas that are more acute areas of prevention. If we are to move towards greater primary prevention in the future, we must ensure that core public services are sustainable in the here and now, and able to weather this fresh storm of austerity imposed by the UK Government.

I don’t recognise that this budget is one that is defunding areas of primary prevention. That’s simply not the case. For example, by investing a further £450 million into the NHS, we aim to provide protection for everyone, including children, disabled people and older and vulnerable people. This, by its very nature, is preventative spend, in many ways. It is also worth recognising that local government and the NHS represent 90 per cent of employment in the public sector, and those are the areas where we've focused available funding, supporting many workers and communities across Wales. Prevention is also not solely about the amount of funding. It’s also about the way funding is spent. Defining the outcomes of spending from a prevention perspective is complex, particularly where there are multiple beneficiaries and multiple types of prevention occurring within a single investment. As such, we’re continuing to explore this area as part of the work of our budget improvement plan, alongside the actions that we will take on gender budgeting and reforming our approach to budget impact assessments.

On borrowing and reserve limits, I echo the Finance Committee’s calls for flexibility. Next year our limits will be worth almost a quarter less in real terms than when they were introduced in 2018-19. The UK Government should apply the changes that it has made to the Scottish fiscal framework in relation to reserve and borrowing limits to Wales, giving us the same additional budgetary flexibility. This would index our borrowing and reserve limits to inflation, and abolish limits on our reserve draw-down. I once again made this case during a meeting with the new Chief Secretary to the Treasury last month, emphasising that the changes made to the Scottish framework are equally applicable to us. They are pragmatic changes that could be made immediately.

The funding support package to Northern Ireland from the UK Government has recognised the costs of public sector services and pay pressures. These costs are not unique to Northern Ireland, and they should be recognised for all parts of the UK. Like Northern Ireland, we are seeking equal opportunity to address those pressures. 

I also highlighted the final report of the Independent Commission on the Constitutional Future of Wales, which argues that the financial flexibilities that we continue to seek are reasonable and that the Treasury should either accept them or explain why it will not.

This year, we have, again, received a request by the Finance Committee for more information to aid scrutiny. I wish to reiterate the messages from last year on the multi-year concept and how the information provided this year should be considered as an update to the circumstances and in addition to what's been provided in previous years. We have provided an enormous amount of information, been transparent in the approach that we're taking and engaged with the committee early. The volume and range of material that we produce is greater than many other Governments, so it leads me to consider whether this is an issue of more information, or whether the committee wants different information. In this respect, I do feel that the budget protocol could be used to better effect, to ensure that we're delivering what the Senedd expects to aid scrutiny. I appreciate the discussions that I've had thus far with the Chair of the Finance Committee regarding the protocol, and would welcome further discussions with a view to negotiating a revised version as we end this multi-year period.

There was no meaningful change in our general capital funding from the UK Government in the autumn statement. In fact, our capital budget in 2024-25 is now worth up to 10 per cent less in real terms than expected at the time of the spending review in 2021. We are simply not in a position to make any further general capital allocations within this budget. 

I have outlined some financial transactions capital allocations as part of the draft budget, and I'll be outlining further financial transactions capital allocations within our final budget, aligned to our priorities. I recognise that the Senedd would like to see all financial transactions capital allocations provided at draft budget, and, indeed, that would be our preference. The lateness of the UK Government's autumn statement, coupled with the complexity of these mechanisms, often requires additional due diligence before we can announce funding. It remains our intention to allocate FT capital at the draft budget going forward.

In closing, I'd like to reiterate my thanks to everyone who was involved in the preparations and the scrutiny of this draft budget. I appreciate the constructive conversations that I've had with the designated Member for Plaid Cymru, Siân Gwenllian, and the Liberal Democrat Member, Jane Dodds. Scrutiny is a critical part of the process, and, whilst I agree with many of the Finance Committee's recommendations, there are some that I would need to consider further in light of the limitations that I've set out today. I and my Cabinet colleagues will respond formally to the recommendations of all of the Senedd committee reports in advance of the vote on the final budget on 6 March. 

So, to conclude, there can be no underestimation in setting our 2024-25 draft budget that we have had to take incredibly difficult decisions—the starkest and most painful since devolution. However, we have worked hard with our colleagues, with our partners and our stakeholders to identify where funding would be best placed to deliver the services that people in Wales need most. I look forward to hearing the debate.

Photo of David Rees David Rees Labour 4:03, 6 February 2024


I call on the Chair of the Finance Committee, Peredur Owen Griffiths.

Photo of Peredur Owen Griffiths Peredur Owen Griffiths Plaid Cymru


Thank you, Dirprwy Lywydd. I am pleased to contribute to this key debate on the Welsh Government's draft budget for 2024-25.

Before I turn to specific areas within our report, I would like to thank at the outset those who engaged with the committee since we first held our sessions on this budget back in June last year. We received the highest amount of responses to our written consultation during the sixth Senedd to date, which demonstrates the strength of feeling and concern that exists within Wales regarding the implications of the funding decisions that we are making today and over the coming weeks. We welcome this level of engagement, which is fundamental in guiding the committee's considerations and informing our conclusions and recommendations. We hope, as a result, that our report does justice to the views expressed and the efforts taken by people and organisations across Wales to engage with us.

Photo of Peredur Owen Griffiths Peredur Owen Griffiths Plaid Cymru 4:04, 6 February 2024

Dirprwy Lywydd, I want to begin by acknowledging that this is not an easy budget for the Welsh Government to be making. However, we found weaknesses in several key areas of the draft budget, which casts doubt on whether it is fulfilling the Minister's main objectives.

Firstly, there are question marks over whether funding levels within the draft budget are sufficient to protect front-line services, which is one of the Welsh Government's guiding principles. The committee is particularly concerned with the funding shortfalls facing front-line services funded by local authorities, particularly education, housing and social care. When I spoke in this Chamber last July during the committee's debate on budget priorities I made it clear that local government needs sufficient funding to match the policy and service pressures that they are facing. Regrettably, things do not seem to have moved on since then. That is why we have asked the Minister to explain how this draft budget protects those core front-line services.

Photo of Peredur Owen Griffiths Peredur Owen Griffiths Plaid Cymru 4:05, 6 February 2024

The committee also has concerns regarding the Welsh Government's decision to increase NHS funding without a proportional increase in allocations for social care, especially as both are inextricably linked and that greater pressures on social care services could create additional pressures on the NHS.

We also had concerns regarding workforce matters within front-line services, particularly relating to recruitment and retention within the social care and health sectors. We were therefore disappointed that cuts had been made to the Social Care Wales workforce development grant, a scheme designed to address workforce pressures, and ask the Minister to explain why this decision has been made, given the significant financial pressures facing that sector.

I understand that similar concerns were expressed by the Local Government and Housing Committee and I'm glad there is common ground between the committees on that point. But I do welcome the comments this afternoon about the £25 million consequential that might be coming on that. So, I'll be looking forward to reading that statement later on, in the next couple of days.

We also looked at the impact of the Minister's decision to allocate additional funding to certain core service areas. Whilst the approach has merits, the committee felt that the Welsh Government has failed to set out how it will ensure effective in-year monitoring of outcomes against financial expenditure. As a result we've asked the Minister to provide this information in relation to the allocations made within the draft budget to NHS Wales and Transport for Wales.

Secondly, we're highly concerned by evidence that suggests that the Welsh Government's budgetary decisions are likely to have a disproportionate impact on the most vulnerable in society at a time when it is needed the most. The Minister claims that the draft budget will deliver the greatest benefit to the households that are hardest hit. But we heard evidence that called this into question. Stakeholders told us that decisions to fund front-line services have come at the expense of longer-term measures to mitigate the root causes of poverty and inequality, and that this will disproportionately impact women. We therefore want the Minister to assess the impact of her budgetary decisions on initiatives that protect people from hardship. This includes looking again at the impact of the budget on the discretionary assistance fund, the Welsh Government learning grant, the thresholds for free school meals in secondary schools, to see if it can be extended to children whose parents receive universal credit, the Warm Homes programme and affordable homes.

We are also astonished that the Welsh Government has decided to move £11 million of funding away from its childcare offer. Although we understand that this was because of a lack of demand, we are concerned that the way the scheme is designed and operated may be preventing parents from accessing support. We also asked the Minister to provide further information to explain the impact on other areas of the budget if the take-up of the offer improves.

In addition, although the committee was pleased to see the launch of the Welsh benefits charter last month, which will help deliver a coherent system of support for those most in need, more information is needed before we can assess whether it is successful or not. On a related matter, whilst we recognise with regret that the Welsh Government may need to increase charges for certain public services to plug funding shortfalls, we do not believe that this should impact on those most in need, and call on the Minister to ensure that the most vulnerable in society are protected should this policy be pursued.

A third area of concern for the committee is the absence of strategic thinking within the Welsh Government around the funding of its long-term preventative measures. And I thank the Minister for some of the context around this this afternoon. But we were not assured by the Minister's comments that prioritising core front-line public services is in itself an act of prevention, and feel there is very little evidence in the documentation published alongside the draft budget that shows how these decisions are balanced by strategic long-term objectives focused on prevention. This is why we have called on the Welsh Government to assess the impact of the decision to reprioritise funding from preventative measures, particularly on the long-term sustainability of services.

In terms of measuring impact, I'm glad to say that there are signs of progress, and we welcome the Minister’s decision to review both its budget improvement plan and strategic integrated impact assessment. However, there are still areas of the budget where more could be done to explain the impact of the Welsh Government’s decisions. This includes providing details of all the non-devolved areas where funding will be reprioritised, explaining why demand is less in certain areas and its budgetary impact, explaining how the well-being of future generations Act is considered when making budgetary decisions, publishing outcomes of the two remaining gender-budgeting pilots with a view to mainstreaming gender budgeting across Welsh Government, and explaining the impact of the erosion in value of the Welsh Government’s capital budgets on the projects that will need to be scaled back or cancelled altogether.

Dirprwy Lywydd, I would like to move to other areas of our report. The committee would like the Welsh Government to provide more information within the year that would enable the Senedd to understand its funding position and how it influences spending decisions. This includes exploring sharing data at regular intervals to provide an overview of how the Welsh Government is progressing against its spending profiles within the year, and providing greater clarity on the impact of inflation on devolved budgets.

Photo of Peredur Owen Griffiths Peredur Owen Griffiths Plaid Cymru 4:11, 6 February 2024


Finally, this committee has regularly criticised the amount of time available for Senedd committees to scrutinise the Welsh Government’s draft budget. We acknowledge that the timing of fiscal events at Westminster, which is set by the Treasury, largely influences the timing of the publication of the draft budget, but we have asked the Welsh Government to look at ways in which it can work with Senedd committees ahead of budget rounds in the future to maximise opportunities for people to have their say about the changes that affect them. I am also pleased that we have been able to continue the discussions on the budget protocol.

I am also aware, from speaking to colleagues on other committees, that there were issues with the quality and accuracy of supporting evidence that individual Ministers have provided in relation to their portfolio areas. This is clearly disappointing and shows that there is work to be done to improve the process of sharing evidence relating to the budget, and our aim is to continue our dialogue with committees on this issue.

To close, Dirprwy Lywydd, I would like to echo the sentiments expressed at the beginning of my contribution. I have always maintained, as Chair of the Finance Committee, that I will be guided by the views of those who have taken the time to engage with us. Doing so takes a great deal of time, expertise and effort. This year’s report is no different, and the powerful evidence that we have received from a range of individuals and organisations has been instrumental to our conclusions and recommendations.

There is no doubt that these are difficult times and that tough choices have to be made. We believe that the Minister has some way to go before this draft budget does what it says on the tin and protects the services that matter most to the people of Wales. We call on the Minister to take this report into account in order to ensure that the draft budget works for the people we serve. Thank you very much.

Photo of David Rees David Rees Labour 4:13, 6 February 2024


I have selected the amendment to the motion, and I call on Peter Fox to move amendment 1, tabled in the name of Darren Millar.


Amendment 1—Darren Millar

Add as new point at end of motion:

Believes that the Welsh Government’s Draft Budget 2024-25 fails to deliver on the priorities of the people of Wales.


Amendment 1 moved.

Photo of Peter Fox Peter Fox Conservative 4:13, 6 February 2024

Diolch, Dirprwy Lywydd, and thank you, Minister, for the statement. Firstly, I'd like to thank everybody who has contributed to the scrutiny of this draft budget, including all of the committees and, it has to be said, the first-class clerks for their invaluable work. It's so important that stakeholders and the people tell us what they feel and how the Government's decisions will affect them. We can see from the Finance Committee report that there are many concerns. 

Every week, we hear of people struggling to be seen by a general practitioner or waiting for treatment, or about the lack of social care packages or access to affordable childcare, or access to a home. We hear how businesses are closing their doors due to a lack of Welsh Government support, or how communities are becoming more isolated as a result of poor public transport. We hear fears from our farming and rural communities that their businesses, way of life and our food security are threatened by Government policy.

Welsh Government's stock answer to many of these things is that they don't have the money—it's the UK Government's fault. The fact is that there have been cash increases—hundreds of millions of pounds, year on year. And as every family knows, when times are hard, you have to cut your cloth accordingly, but how you choose to cut it is your decision. Government at all levels make choices and have to be accountable. Welsh Government has made its choices in this budget and can't keep blaming Westminster for its failings. This blame game is just a smokescreen to hide decades of poor strategic planning and Government choices and decisions. It's well rehearsed that Wales receives £1.20 for every £1 spent per person on health and education in England, but the Government has spent the extra on other things—we know that. If money had been spent where it should have been, our waiting lists would not have been so long, our health boards not under the same financial pressure, our education results would be better and our infrastructure wouldn't be in the state that it is.

Photo of Peter Fox Peter Fox Conservative 4:15, 6 February 2024

The budget narrative says that Government wants to focus on funding the services that matter most to the people of Wales, but it hasn't. Just look at the local government settlement at 3 per cent—a huge, real-terms cut that will mean that councils will struggle to deliver essential services. As the WLGA told the Finance Committee, the 3 per cent 

'only amounts to around a third of the pressure facing local services, so it will inevitably mean difficult choices, job losses and service cuts',  and, we know, huge council tax hikes. Let's be clear: the Welsh Government have passed the buck on to our councils, well knowing that council tax increases will follow and the people of Wales will pay the price. This is nothing but a stealth tax.

I do welcome the increased funding for healthcare this year. This is much needed and it's something we have been calling for for years. But the simple truth is that this funding should have been invested years ago, to fend off the systemic failures we now see that have reduced the resilience in our health service. The lack of long-term focus saw, in 2022-23, an astonishing £325 million being spent on agency staff across the NHS.

We know also that, currently, there are around 1,500 people waiting to be discharged from hospital due to capacity challenges in the social care sector. The budget doesn't recognise this. Indeed, the Finance Committee and stakeholders, as we've heard, are concerned that the Government has proposed an increase to NHS funding with no proportionate increases for social care. They believe that this lacks strategic thinking, as more pressure in social care leads to more pressure in the NHS. The Minister's announcement today of the £25 million for social care will be welcome, but it is only a drop in the ocean when we know that the social care pressures alone that local government are facing at the moment are some £260 million.

Clearly, if we are to see these health and social care issues addressed, we need institutional reform, including meaningful policies, such as our substantial workforce plan—something that the Welsh Conservatives have repeatedly called for to address chronic understaffing in the sector. We need a robust recovery strategy, one that the public can understand and that gives them some hope that things will improve. We need to make sure that our health service is adequately funded, and, crucially, that that funding is used well. Standards have to be driven up to ensure that the people of Wales get the healthcare they deserve.

Dirprwy Lywydd, Wales is also being held back by poor policies dampening economic growth, particularly when it comes to transport infrastructure. The Institution of Civil Engineers told the climate change committee that the lack of overview of the vulnerabilities of Wales's infrastructure networks has created gaps in our approach to defending critical infrastructure. They go on to highlight the growing problem on the M4 corridor and the A55. But instead of crucial investment focused on empowering our country and its economy, what we see is multiple road projects cancelled, a damaging default 20 mph speed limit, inadequate electric vehicle charging and a diminishing public transport network. Where's the coherent strategy for transport policy within this budget?

Looking wider at the economy, businesses in the retail, hospitality and leisure sectors will have to pay double the business rates that they would do in England, because this Government refuses to pass on the same relief, despite the funding being made available. It's the same situation in the childcare sector: £180 million-worth of consequentials were made available to support parents to get back into work by providing those 30 hours of free childcare for children over the age of nine months from September 2025, but Welsh Government has taken the active decision to not implement the same package of support here in Wales.

I will be asked how we will pay for this—I already have—for our thinking, rather. It's a question I used to put to my opposition as a council leader, knowing well they wouldn't have access to the resources and detailed budget lines they needed. Allow us to have access to your workings and your resources and we will robustly challenge spend areas, realign, re-prioritise and mobilise moneys to the key, immediate priorities and pressures, and really address the things that matter most to the people. Wales needs sound, strategic forward planning that encompasses a whole-Government approach to financial strategy, rather than a knee-jerk, disjointed departmental budgeting focus on pet projects. The country must see a plan to give back hope to the Welsh people, one that rebuilds and protects public services, supports businesses, creates and trains the workforce of the future and grows our economy; one that rebuilds our NHS, grows social care provision and funds schools properly.

Sadly, this Welsh Government lacks the vision needed, as evidenced by announcements such as the cutting of apprenticeships by 10,000, slicing funding to further education, or diverting money away from the childcare offer whilst parents are crying out for more provision, and nursery settings are struggling to survive. We cannot undo Labour's failings overnight, but we can build better and more resilient public services through long-term strategic planning with appropriate priorities. Dirprwy Lywydd, we believe this budget fails to deliver on the priority of the people of Wales, and I move the Welsh Conservative amendment.

Photo of Rhun ap Iorwerth Rhun ap Iorwerth Plaid Cymru 4:22, 6 February 2024


I welcome the opportunity to scrutinise the Government's draft budget, and much has happened since we agreed the previous budget, but one could argue that the context is very similar in many ways. Without doubt, this is a budget made in a difficult time for a difficult time. It reflects the restrictions of our funding settlement and we've seen

'the shocking mismanagement of public finances by the UK Government.'

Not my words, but the analysis of the Minister on 7 March last year when the last budget was agreed. And, again, today, we are in the same situation, rehearsing the same adjectives to reflect the unfairness of the financial settlement for Wales.

This is a Welsh Labour Government budget, and in that regard, they have to take ownership of and justify what we have before us today, but I fully recognise the challenges that face Welsh Ministers. The austerity agenda of the Conservative Government and their appalling mismanagement of the economy have meant that there is significantly less money available to be spent, although the pressure on maintaining services intensifies.

When it's politically convenient for the UK Government to open the public purse, the money seems to be available—we see that so very often. Now, I don't decry a penny of the additional £3 billion that's been provided to Northern Ireland, which has helped to unlock devolution in Northern Ireland, but it's entirely unacceptable that the needs of Wales aren't taken into account in the settlement from Westminster.

Photo of Rhun ap Iorwerth Rhun ap Iorwerth Plaid Cymru 4:24, 6 February 2024

Now, the real-world consequences of Wales's underfunding can't be overstated. The Office for Budget Responsibility has estimated that average household incomes in Wales will be £10,300 lower by 2027 than if pre-financial crisis trends had been sustained, and, as the chief economist's report sets out, average incomes in Wales during 2024 are projected to be more than 2 per cent below pre-pandemic levels. We need a fairer funding model for Wales.

As has been noted by the likes of the Holtham commission, the House of Lords Constitution Committee, the Independent Commission on the Constitutional Future of Wales, the Barnett formula for the Senedd, which is set without any input from Welsh Ministers, is simply not fit for purpose in addressing Wales's societal needs. Despite the range of policy areas over which the Senedd now has responsibility, its spending power is overwhelmingly based on a fixed grant that it cannot substantially alter due to the inherent limitations of its levers over taxation and borrowing. 

Photo of Rhun ap Iorwerth Rhun ap Iorwerth Plaid Cymru 4:25, 6 February 2024

When you think of specific injustices, just let it sink in that the consequentials from the high speed 2 line, which every Member in this Chamber agrees are owed to Wales, would not only make up for the cuts to the budget, but would also provide more than £2.5 billion in additional funding. Rishi Sunak can barely hide his disdain for Wales by not passing on the money, but Keir Starmer, if he wants to be Prime Minister before the end of this year, we need to see him finding his moral compass and promising to right that Tory wrong—and I know so many on the Labour benches here agree with me on that point.

While it's right that we call out the catastrophic failings of the UK Government in eroding the spending power of the Senedd, that doesn't mean that decisions here in Wales, made in Wales, will necessarily lead to optimal outcome, shall we say. Local authority budgets will still be squeezed even further, with residents forced to pay higher council tax whilst enduring a diminished standard of service—something no council leader wants to allow. Only last week, a report by MPs warned that the financial crisis facing England's councils is out of control, as they called on the Government to plug a £4 billion gap. Now, with Wales at the mercy of so many major financial decisions taken in Westminster, what hope do Welsh councils have of weathering this storm?

The Wales Governance Centre has estimated that the funding gap facing local authorities could reach £740 million by 2027-28, based on current trajectories. Now, whilst nearly all budgets are squeezed and every portfolio area has a legitimate claim on any additional money being available from the UK Government, I press upon you the urgent need to prioritise local authorities to safeguard as many front-line services as possible.

Our preference is that an increase overall in funding towards local government would include the raising of the funding floor from 2 per cent to at least 3 per cent, which would significantly benefit many local authorities—the ones hardest hit, particularly those in rural areas. But whatever the Minister does decide to do, I must say that it's regrettable that we still don't know, that we don't have the clarity, we don't have the certainty that we would want at this point in time, that local government can be given additional support or at what level the additional support will be, because we are getting very, very close to the point of the setting of budgets and the setting of council tax in some local authorities, and that clarity is needed with real urgency.

It's clear that the Government has made a conscious choice to prioritise health and social care and transport, which has necessarily resulted in funds being diverted from other portfolios. I know that these decisions will not have been taken lightly. I also fully recognise the reality that when it comes to distributing such a limited and fixed block of money, especially at times like these, a degree of prioritisation is going to be unavoidable, but what I'm less convinced of is that the prioritisation process has been as good as it can be, and we need to be holding Government to account for the prioritisations and decisions that it has already made and encourage changes.

On health and transport, we're seeing a repetition of re-allocations made previously: £425 million and £125 million respectively to health and transport announced in October at the expense of other portfolios, and now we're looking at a further allocation of £450 million for health, £111 million for transport, which have primarily been funded by even deeper cuts to other perennially underfunded policy areas.

My colleagues Mabon ap Gwynfor and Delyth Jewell will discuss the health and transport dimensions of the budget in greater detail, but suffice to say that this doesn't reflect well on the Government's ability for long-term budget planning. Such drastic re-prioritisations would, of course, be more tolerable if they were delivering substantive improvements in our health services and public transport, but as we learnt in the aftermath of the re-budgeting exercise in October, the additional money that's been earmarked for health and transport is simply being used to plug existing budgetary holes that have grown considerably over a period of many years under this Government. This is the unsustainability that we talk of so often.

In the case of health, a recent Audit Wales report revealed that six of the seven major health boards breached their statutory duty to break even during 2022-23, resulting in a combined deficit of over £150 million. Spending on agency staffing, referred to so often, also reached a record level of £325 million in 2022-23, which has primarily been caused by ever-widening vacancy gaps within the NHS workforce.

Meanwhile, the combined £236 million that's been ploughed exclusively into Transport for Wales rail services, with nothing to spare for the bus services that most of Wales depends on, is to address the vast shortfall that has emerged between predicted passenger numbers and actual ticket sales. This should be contextualised against the underwhelming record of Transport for Wales on customer satisfaction, their record on punctuality and on cancellations in recent years.

There are elements of the budget that are to be welcomed. Despite an overall cut to rural affairs, which is regrettable and something that my party has commented on widely, protecting the basic payment scheme is something my party was very pleased of being able to influence. That's worth £238 million, and goodness me that is money that a sector under pressure needs.

I recognise, Dirprwy Lywydd, that the Welsh Government must pass its budget, but it's our duty, our role on these benches, to scrutinise as carefully as we can where money is spent, to shine a light on where we think changes can and should be made, to send Ministers back to think again—and we do so consistently, but Ministers must look again at their spending plans—and ask the searching questions that provide the certainty that the most disadvantaged won't be losing out further, that business won't fall off a cliff as business rates increase, and that the futures of our young people aren't being held back due to cuts to apprenticeships.

Photo of Rhun ap Iorwerth Rhun ap Iorwerth Plaid Cymru 4:32, 6 February 2024


This, Dirprwy Lywydd, is a budget again for tough times, made tougher by decisions made by a Conservative Government that cares nothing for Wales. But the question for the Welsh Government is this: has it done everything within its ability to mitigate the unfair financial settlement, to balance the needs of all portfolios and to provide fairness and ambition at the heart of what it seeks to deliver? I have yet to be convinced, and I ask the Government to use the time it has between now and the final vote on the budget to reconsider those issues that I and my fellow Plaid Cymru Members will highlight this afternoon.

Photo of David Rees David Rees Labour 4:33, 6 February 2024


Chair of the Children, Young People and Education Committee, Jayne Bryant.

Photo of Jayne Bryant Jayne Bryant Labour

Diolch, Dirprwy Lywydd. Before I make my substantive remarks, I want to acknowledge that this is the most difficult budget since the start of devolution. As a committee, it was in this context that we approached our budget scrutiny. We acknowledge that the Welsh Government would be making some decisions that in a different financial climate it would not be making. Both our scrutiny sessions and our recommendations are framed within that context.

I would like to put on record my thanks and our committee's thanks to the relevant Ministers and officials for engaging with the committee's scrutiny sessions constructively. We also welcome the technical briefing from the officials on the approach to the single integrated impact assessment, and I'd also like to thank my fellow committee members for their positive engagement. We haven't got time today to talk about all the issues discussed in our report, for example the level of funding available to schools, which is a huge concern again this year. I will therefore focus by highlighting the importance of how we use the funding available to us in Wales in maximum support of our children and young people.

This year, spending on children has been affected in a number of policy areas. We have consistently advocated for more transparent spending on children, given, for example, that more than £10 billion of public funding is unhypothecated to health boards. So, today I'm highlighting our continued disappointment that there is no children's rights impact assessment to underpin the budget. A CRIA is essential for the Government, the Senedd, stakeholders and the wider public, to help us understand the impact of budgetary decisions on children and young people.

Last year, in this same debate, I highlighted that if no CRIA was published this year, it would be the tenth successive year Welsh Government has not done so, and this is despite setting out that producing and publishing such an impact assessment is how it complies with its legal duty to have due regard to the UN Convention on the Rights of the Child in all the decisions it makes. I'm very sorry again that I'm having to highlight this milestone in relation to what we spend on children, arguably the most important decision any government will make. The Welsh Government has said that the stark reality of these extraordinary financial circumstances meant that they needed a more fundamental approach. However, it's our view that when the public purse is tight, more than ever we must be rigorous in making sure children and young people's rights are not overshadowed by the situation for adults.

We do not agree with the Welsh Government's rationale that a separate CRIA is not needed. As I said at the start, we're very conscious of the challenges of the financial climate in which the Welsh Government has prepared this draft budget. As we have discussed in this Chamber a number of times in recent weeks, there are more children and young people living in poverty than any other age group, and the impacts of poverty cut across all aspects of their lives and continue to have an impact long after they've grown up. It's in this context we must be rigorous in ensuring that children and young people's rights are upheld, and it is why, in line with article 4 of the convention, there is a clear need for a fact-based assessment of what the maximum available resources that are spent on children are. We do not believe this is possible without a CRIA, and this is also the view of a range of children's charities led by Children in Wales.

Finally, I'd like to echo the views of the Finance Committee and other committees on the importance of effective monitoring of outcomes against financial expenditure. An increasing number of grants for children are being amalgamated across education and children's social care, including the children and communities grant, now worth £175 million. From next year, we can see that funding streams worth £379 million within the education and Welsh language main expenditure group have been amalgamated into a single local authority pre-16 education grant. Robust mechanisms to monitor outcomes for children must be put in place for these large grants, and for all Welsh Government expenditure, including increased NHS expenditure. This is most important, particularly in buoyant economic times, but becomes even more essential in the current financial storms. As we set out in recommendation 1 of our report, this must go beyond just monitoring, and should then result in reprioritising financial spend if the outcomes we want for our children are not being delivered by what we're spending on them. Diolch yn fawr.

Photo of David Rees David Rees Labour 4:37, 6 February 2024


Chair of the Economy, Trade and Rural Affairs Committee, Paul Davies.

Photo of Paul Davies Paul Davies Conservative 4:38, 6 February 2024

Diolch, Dirprwy Lywydd. I'm pleased to be able to take part in this debate as Chair of the Economy, Trade and Rural Affairs Committee, and I'd like to thank all members of the committee for the work that the committee has done on this draft budget.

This draft budget includes substantial real-terms reductions to agriculture and economy funding. The Minister for rural affairs told the committee that this was the most challenging budget round she had ever taken part in, and the economy Minister expressed a similar view. Whilst the committee acknowledges these challenges and the need to prioritise spending, we also have many concerns about the reductions proposed for the rural affairs and economy budgets.

I would like to draw out a few key issues raised in our report. First of all, I want to talk about the accumulative impact of these budget reductions. I will then go on to talk about specific concerns we have around the future of agricultural support, potential support for people being made redundant, and funding for apprenticeships. I will then finish with an overview of the report's key message. 

The committee is very concerned about the accumulative impacts of reductions to farming and business support. For example, a farmer who exports meat and sells to local hospitality businesses may be impacted by the reduction in agricultural support, the reduction in business support, the reduction in export support for their international sales, and the reduction in support for hospitality for their domestic sales. Everyone in this Chamber will be all too aware of how tough it is for businesses and farms in Wales right now, with many struggling in just keeping their heads above water. It is important the Welsh Government understands the accumulative impact of the reductions it is making to ensure that they are not the final straw for our businesses and farms, who may already be on the brink of closure.

Since Tata's announcement last month, the workers whose jobs are at risk and their communities have been at the forefront of the minds of not just everyone in this Chamber, but of people across Wales. We have explored the implications of Tata's announcement in this Chamber, and the committee will be hearing from Tata and the Minister for Economy on this matter tomorrow, so I will not go into the specifics now. However, the steelworkers are not alone in facing this risk of redundancy; there have been several high-profile business closures in other sectors in recent months. Whilst we all hope that redundancies can be avoided at Tata and that we don't see any other high-profile closures, it is absolutely vital that the Welsh Government prepare for the worst. The Minister for Economy and Minister for Finance and Local Government must work together to undertake contingency planning—planning that ensures the Welsh Government can provide a strong and swift response to support people facing redundancy, if needed, by increasing the resources available for programmes like ReAct+ and Communities for Work Plus.

Moving on to farming, Members will be aware that this is the first round of agricultural support post EU funding. This is the first time ever that the level of agricultural support has been set here in Wales, and it is the first time in many decades that agriculture has had to directly compete with other Government funding priorities. We have seen the outcome of that competition in this draft budget, with funding being moved from agriculture to support front-line services such as the NHS. Next year, the Welsh Government will be introducing the sustainable farming scheme. If the sustainable farming scheme is to be a success, it must be properly funded, so the Welsh Government must start discussing the scale of funding for the scheme with the UK Government immediately.

The apprenticeship budget has been reduced by 3.65 per cent, which is a 24 per cent cut to the contract value. Members are very concerned about the impact of this reduction on young people and on the economy. As apprenticeship providers will need to prioritise supporting people already enrolled on courses, the combination of the reduced budget and increased costs will fall on new starters. Whilst the committee was pleased the Minister committed to support the range of apprenticeship levels, Members are very concerned about the impact of this reduction, not just on young people's opportunities but also on the Welsh economy, as it will restrict Welsh citizens' ability to improve their skills.

And finally, we've heard from other speakers today about the importance of the Welsh Government monitoring spend and ensuring best value. In light of reductions across the rural affairs and economy budgets, our committee made a similar recommendation, so I would like to echo the other speakers' sentiments on that point.

I would like to finish, Dirprwy Lywydd, by summing up the overall message of the committee's report. Members acknowledge this was a very tough budget round for the Welsh Government. However, the committee is concerned about the reductions, so believes it is absolutely vital that the Welsh Government monitors the impact of all of these separate budget reductions and is prepared to respond and reprioritise funding if the reductions are seen to be having a greater impact than anticipated, and be ready to respond to developing challenges. With that, Dirprwy Lywydd, I look forward to continue hearing other Members' views on this draft budget. Diolch yn fawr iawn.

Photo of David Rees David Rees Labour 4:42, 6 February 2024


Chair of the Climate Change, Environment and Infrastructure Committee, Llyr Gruffydd.

Photo of Llyr Gruffydd Llyr Gruffydd Plaid Cymru


Thank you, Dirprwy Lywydd, for the opportunity to contribute as committee Chair. I just wans to begin by saying a few words about the committee’s experience of this year’s draft budget scrutiny process, and I will be brief.

Our ability to perform effective scrutiny is only as good as the information provided to us. The Minister and Deputy Minister’s written evidence to support our scrutiny of the draft budget fell short of the standard the committee expects. Key information that we requested in advance was missing, information said to be included was also missing, and figures were inaccurate. As well as preventing the committee from assessing the Government's spending plant, this lack of clarity reflects broader concerns about transparency in governance. While we have received apologies from the Minister and Deputy Minister since then, the committee is keen for lessons to be learned from this experience to avoid a similar situation arising in future.

As has been noted by many already, it’s only fair to acknowledge the financial challenges that the Welsh Government has faced in setting this draft budget. Having to decide where the cuts fall is not an enviable task, but that was inevitable, given the overall settlement. For the climate change portfolio, it means that the Minister has to rob Peter to pay Paul, cutting funding for key policy areas, including clean energy, waste, biodiversity and flooding, to bolster funding to maintain rail services.

What will these funding cuts mean? Well, scaling back of projects and programmes aimed at helping to deliver Wales's climate change targets and global biodiversity commitments. At a critical point in the fight against climate change and nature’s decline, these wider impacts are of obvious concern to the committee.

The decision to bolster funding to maintain rail services is understandable; rail is at the heart of the much-promised multimodal, sustainable transport system. But Transport for Wales cannot be given a blank cheque, and we need to see rapid progress towards a financially sustainable rail service. We as a committee need a clear, detailed plan for reducing that gap that exists between rail costs and the farebox revenue. We need to see an end to these huge handouts to Transport for Wales from one year to the next. 

Of course, an effective bus service is also critical to a sustainable transport system. It's reported that 10 per cent of bus routes were lost during 2023, which of course is alarming for us all. With a revenue budget that is broadly flat for 2024-25, it’s difficult to see how this situation will be reversed any time soon.

Moving on to home energy efficiency, fundamental questions remain about the level of investment needed to tackle fuel poverty and to decarbonise Wales’s existing housing stock. Current investment levels fall significantly short of recent estimates. The reworked Warm Homes programme rightly places greater emphasis on decarbonisation than its predecessor. But the cost of low carbon technologies means that the investment will not stretch as far. With funding remaining static, it's likely that fewer homes will benefit from the programme in 2024-25 than in this current financial year. Given the deepening fuel poverty crisis and the need to ramp up efforts to decarbonise existing homes, this again is concerning.

I’ve already touched upon our concerns about the impact of funding cuts for biodiversity. The fact is, even with a future increase in funding, public money alone will not be enough to ensure nature recovery. And private investment is critical, therefore, to address the nature funding gap. We've heard over recent years that work is ongoing on an innovative and sustainable finance model for biodiversity, incorporating the use of private investment. It seems, from the Minister’s evidence, that progress is being made at last. But we need to continue at pace. We expect the finance model to be finalised ahead of the next budget planning round, so that it can be used to inform future spending decisions.

Last, but by no means least, is marine policy. The budget reduction for 2024-25 is another blow for a policy area that has been under-resourced year after year. This ongoing lack of priority has led to delays in delivery, for example the project assessing Welsh fishing activities in marine protected areas, which was started in 2016 but has yet to be completed. The Minister has previously assured us that marine conservation zone designation is an ‘active priority’—in her words—and is given adequate resources. We’ve asked for an assurance that the latest budget allocations will not affect the progress on this work.

Dirprwy Lywydd, our report on the draft budget is both fair and measured. We acknowledge that the Welsh Government faces financial challenges. We acknowledge that the Minister has been pragmatic in approaching a shrinking budget. But we also acknowledge the need for the Welsh Government to remain resolved in tackling the climate and nature emergencies. These won't disappear because financial times are tough. We look forward to receiving the Minister’s response to our report ahead of the debate on the final budget. Thank you.

Photo of David Rees David Rees Labour 4:49, 6 February 2024


Chair of the Local Government and Housing Committee, John Griffiths. 

Photo of John Griffiths John Griffiths Labour

Diolch, Dirprwy Lywydd. I'll be speaking in my capacity as Chair of the Local Government and Housing Committee, as you state, and I'd like to thank the Welsh Local Government Association, the Minister for Finance and Local Government and the Minister for Climate Change for attending the committee's evidence sessions. 

Those reading our report may note that it reads similarly to last year's, with many of the same concerns raised and reiterated. At the time, we acknowledged that setting a draft budget while facing extreme financial pressures was a difficult challenge for the Welsh Government. The same is once again true this year, and local authorities in Wales, in turn, are facing one of the most challenging budget settlements in recent times. Our report explores a range of issues, including the local government settlement, spending pressures, capital funding, homelessness, housing supply, housing standards and building safety. I will highlight just a few of the areas that raise specific concerns for the committee, particularly in light of the comments we made during last year’s budget scrutiny.

We heard that local authorities are finding themselves in the position of not only making difficult decisions, but bad choices. The WLGA warned us that if there is no change in funding our public services, there are likely to be fewer public services being offered. This is a stark warning, and one that should not be ignored. It is worrying that, by having to direct resources at dealing with immediate pressures, authorities’ ability to fund longer term preventative work is restricted. We are particularly concerned about the financial resilience of local authorities. While we know that no Welsh local authority has yet found themselves in the position of having to consider issuing a section 114 notice, in effect declaring bankruptcy, we know that some are facing stretched budgets with limited reserves. We are pleased that the Minister is in regular contact with local authorities, and it is vital that that approach continues. We have recommended that the Welsh Government should develop a clear plan to provide early support to any local authority experiencing particular difficulties, with the aim of preventing the need to issue a section 114 notice.

We welcome the Minister’s use of a funding floor this year, as it is a crucial tool to ensure that all local authorities receive a minimum increase in funding. However, we would suggest that the Minister considers allocating any future consequential funding, in full or in part, to setting the floor at a higher level, thereby benefiting more local authorities.

Dirprwy Lywydd, social care accounts for 36 per cent of local government spending pressures in 2024-25, at £261 million. We are concerned that the reduction in the social care workforce grant would support a key statutory service delivered by local authorities will add to the existing pressures in the sector. Concerns that we expressed last year relating to the recruitment and retention of staff to work in the social care sector ring true once again this year. Additional pressures such as this in such a key sector could too easily form a tipping point for those local authorities in the more challenging financial situations.

We therefore endorse the Finance Committee’s recommendation that the Minister should explain why reductions have been made to the social care workforce grant, and for the Welsh Government’s assessment of the impact of this decision. We were alarmed to learn that, for the second year in a row, there has been no spend from the Gypsy/Traveller site capital grant. As we have noted previously, our work in this area has highlighted that some local authority sites are in urgent need of maintenance or refurbishment, so the lack of spend is particularly troubling. We acknowledge the Minister’s work in this area, but the lack of progress is very disappointing. As last year, we have made a joint recommendation with the Equality and Social Justice Committee, and recommend that the Welsh Government should set out the reasons for the lack of progress on use of the Gypsy and Traveller site capital grant as a matter of urgency, in addition to setting out how it plans to work with local authorities to ensure take-up of this important fund.

We noted in our report on the draft budget for this financial year that maintaining the housing support grant at £166.7 million actually results in a real-terms reduction. We are therefore deeply concerned that the draft allocation remains unchanged once again, which effectively means further reductions.

Photo of John Griffiths John Griffiths Labour

Diolch, Dirprwy Lywydd. To conclude, then, while we acknowledge the challenges faced by the Minister for Climate Change in setting this budget, we would urge the Welsh Government to explore all possible options for providing additional funding to that housing support grant, in considering all that it funds. Diolch yn fawr.

Photo of David Rees David Rees Labour 4:55, 6 February 2024


The Chair of the Health and Social Care Committee, Russell George.

Photo of Russell George Russell George Conservative

Diolch, Dirprwy Lywydd. I speak in my capacity as Chair of the Health and Social Care Committee, and I thank Members who took part in our report. To give some context from a health and social care perspective, health boards and local authorities, of course, continue to feel the effects of the pandemic. I recognise, of course, there's also inflation, and pressures on energy costs also need to be taken into account. Alongside this, they must also deal with an enormous and growing demand for services, as well as long-standing workforce issues.

In this draft budget, the Welsh Government has chosen to prioritise spending on health and social services. But, of course, despite this, health boards and local authorities are still facing hard decisions about how to plan and deliver services. All seven health boards find themselves in increased levels of escalation relating to their financial position, and it is unclear to us, as health and social care committee members, how they will be able to stabilise their finances, whilst also responding to unprecedented demand and delivering savings in line with the levels set in 2023-24. 

Now to talk about some of the issues around waiting times. The scale of the challenge remains daunting, and targets to reduce out-patient waits to below 52 weeks and to eliminate the number of people waiting longer than two years to start treatment have been missed. So, I do think the Minister needs to be clear about when she expects these targets to be achieved. She also needs to be clear about how the budget will contribute towards improved cancer outcomes, given that the most recent figures show us that 54 per cent of patient pathways complied with the single cancer pathway target.

Moving on to the social care workforce, I know I, as well as other members of the committee, continue to support the Welsh Government's commitment to the real living wage for social care workers, and we note that funding has been provided for this purpose within the revenue support grant. We believe that social care workers must remain a priority for investment and improvement by the Welsh Government, so we were concerned to hear that more than a quarter of that workforce are likely to leave the sector by the end of this year, and 44 per cent in the next five years. Given the existing workforce shortages and rising demand for services, the Deputy Minister I do think needs to set out what the Welsh Government is doing to retain these staff. This is one of the recommendations within our report.

We recognise that significant financial challenges have driven the Welsh Government's decision to reprioritise its resources in support of front-line services, but it is concerning to hear from various bodies that the NHS will be unsustainable without an explicit shift of resources towards prevention and early intervention. So, we have called on the Minister to set out how the Welsh Government's decision to reprioritise resources towards the front line will impact, longer term, on population health, and when she expects to be in a position to direct more resources into long-term prevention.

And finally, digitalisation: as a committee, we have heard repeatedly that improving digital services and infrastructure is a priority for the Welsh Government. But in this draft budget, funding for the digital strategy for health and social care has been reprioritised, and there has also been a cut to the digital inclusion budget. We have called on the Minister to provide an assessment of the implications of these cuts.

Dirprwy Lywydd, these are just some of the issues that were raised in our report, which was tabled yesterday. We look forward to receiving the Minister's response to all our recommendations ahead of the final budget debate.

Photo of David Rees David Rees Labour 4:59, 6 February 2024


The final Chair to speak, the Chair of the Legislation, Justice and Constitution Committee, Huw Irranca-Davies.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour 5:00, 6 February 2024

Diolch, Dirprwy Lywydd, and I'm very glad, in my capacity as Chair of the Legislation, Justice and Constitution Committee, to contribute to this debate, following the contributions by other Members and indeed by other committee Chairs as well.

I thank, as always, my committee colleagues and our clerks and the support team as well. And we do note the challenging backdrop in all the contributions this afternoon, and indeed in our scrutiny, to these budget deliberations.

So, our scrutiny of the Welsh Government’s draft budget proposals for the year ahead, 2024-25, focused on planned spending on justice-related activity. However, we also considered planned spending on improvements to the accessibility of the law, and also on activity arising from the report of the Independent Commission on the Constitutional Future of Wales. So, we're very grateful to the Counsel General for providing us with written evidence to inform that scrutiny.

As with our scrutiny of spending on justice-related activity in previous budget years, we examined how the proposed spend on such activity could be identified within this draft budget. Not surprisingly, once again, we found that such information is still not easily accessible. However, we do acknowledge the difficulties—as the Counsel General explained to us—in disaggregating the spending on justice-related activity within the Welsh Government’s draft budget in the absence of a Minister for justice-related matters or a dedicated portion of the budget for those specific matters. They are spread across budget headings. It is quite difficult. 

Now, as the Counsel General told the Senedd last week, the Welsh Government will shortly be publishing a progress report on its 'Delivering Justice for Wales' programme. Now, as a committee, we had hoped, ideally, to be able to consider this report ahead of the budget scrutiny, so that we could take into account the Welsh Government’s progress in the area, and to identify priority areas for future spending.

So, instead, we've therefore asked the Counsel General to tell us when the report will be laid. When it is laid we sincerely hope and, indeed, expect to see, if we can, as much detail as possible on the previous expenditure on justice-related activity and the outcomes delivered as a result. That would be helpful, because, if we find that the detail isn't sufficient, we'll have to consider then conducting in-year budget scrutiny of the spending on this activity. So, we just invite the Counsel General and colleagues to assist the committee with as much detail as possible in the progress report.

The Welsh Government, in this current economic climate, has decided—and has been quite explicit in this—to prioritise funding for areas that are fully devolved. So, in this area that we looked at, this has resulted in reduced funding for police community support officers and the withdrawal of funding for the Wales police schools programme, which many of us will know, as Senedd Members. Now whilst we accept that difficult choices need to be made, we, of course, are concerned at the potential impact of these cuts in the budget areas, and we believe that the Welsh Government could help us by providing as much detail as possible to Senedd committees on the impacts of these cuts.

In our report we also noted evidence provided to the Finance Committee highlighting the acute pressures faced by voluntary sector organisations working on criminal justice in Wales. We believe that the Welsh Government should engage fully with these organisations when considering proposed spending, as to have limited engagement with them risks the loss of opportunities for the Welsh Government to optimise the impacts of the funding available.

Our scrutiny also touched upon the Welsh Government’s proposals to reform the Welsh tribunals. We are keen to know the costs of this reform and how it will be funded. So, we recommended within our report that the Welsh Government should provide an initial assessment of the expected costs alongside a draft version of the Bill that will provide for the reform of the Welsh tribunals. So, we look forward to seeing that. 

The final recommendation in our report, Dirprwy Lywydd, relates to the allocation within the draft budget to fund future work arising from the findings of the constitutional commission. The Counsel General told us that the Welsh Government is now considering the commission’s report, and it will set out its plans for taking it forward in due course. So, we recommended that, when it is able to, the Welsh Government should provide the Senedd with detailed information on how the funding allocation will be used. 

So, my thanks again, Dirprwy Lywydd, to my committee colleagues, the members of the committee and the clerks and the support team for their work in producing our report. Diolch yn fawr. 

Photo of Mabon ap Gwynfor Mabon ap Gwynfor Plaid Cymru 5:04, 6 February 2024


In discussing MEGs and capital and revenue, there is a danger that we lose focus on the important things, namely people. The people who have elected us to be here, the people whom we have the privilege of representing—they are the ones who will be affected, either directly by losing jobs or losing contracts, or else by failing to receive a service that could have saved their life or kept them safe.

This is particularly true when looking at health expenditure. Although, superficially, it appears that more is being given to health, the question is whether it is being directed to the right places. It is of grave concern that there is a shift away from funding preventive programmes seen in this year's budget—programmes such as obesity prevention or smoking prevention. This will create a vicious cycle, with more and more money being absorbed over time by front-line services, thereby limiting more effective methods of preventing disease in the first place.

The cut of £10 million in the grant to the social care workforce, together with the restriction on funding the real living wage in the social care sector, is extremely dangerous as well, and will lead to more problems in our hospitals and ambulances.

Photo of Mabon ap Gwynfor Mabon ap Gwynfor Plaid Cymru 5:06, 6 February 2024

As we’ve mentioned before, the proportion of the health budget devoted to general practice has also sunk well below its historic level of 8.7 per cent, which has resulted in the erosion of GP services across Wales. The Government’s ambition for a community-focused approach to the provision of healthcare is destined to remain unfulfilled, based on the current trajectory of its spending plans.         

Health funding cannot be aligned solely to the needs of the front line; it should be allocated in a holistic manner that reflects the close interaction between social care, primary care and secondary care. Without a clear plan from the Government to place health finances on a sustainable footing, therefore, ever-increasing proportions of the Welsh budget are going to be thrown towards short-term sticking-plaster solutions, while pressures on front-line services continue to mount.  

Finally with regard to health, there needs to be far greater emphasis on retention strategies to address long-standing gaps in the workforce, and a recognition that our NHS is nothing without its legions of dedicated staff. This must include the Government following through on its pledge for wage restoration in the sector, reversing the devastating real-terms erosion of NHS pay that has happened over the past decade.     

At the start of my contribution, I referenced the impact of this budget on people. The most stark example that comes to my mind is the impact on people who face homelessness or violence at home—those who will have to live through unknown suffering because of the failure to increase the housing support grant. This week is Sexual Abuse and Sexual Violence Awareness Week, so this is my small contribution to that awareness raising. The housing support grant is more than a grant to advise people threatened with homelessness; it funds front-line services that deal with domestic abuse at a time when we are seeing a significant rise in abuse and assault. In Gwynedd and Môn alone, those organisations that work on the front line with domestic abuse victims have seen a 78 per cent increase in the number of people whom they are assisting. This money literally saves lives.

Coupled with over 11,000 people in temporary accommodation and the tens of thousands who are at threat of homelessness, then it’s clear that decisions made here have a real-life impact and can change people’s lives, for better or for worse. Diolch.

Photo of Jane Dodds Jane Dodds Liberal Democrat 5:09, 6 February 2024

I'm sure that all of us here in the Siambr are really clear that this is a very challenging year for the Welsh Government in terms of its budget, but I just really wanted to concentrate on three key areas, if I may. Firstly, childcare—we've heard about the concern around the cuts to the childcare budget, and many of us who are on the Equality and Social Justice Committee are really concerned about childcare and the impact on child poverty. 

We know that the draft budget includes a further £11.2 million in cuts to childcare, on top of the £16 million cut announced in October. This really isn't acceptable when Welsh families are facing some of the highest childcare costs in the world and really lack straightforward and equitable access to high-quality care. The lack of uptake, as we've heard, is not an excuse, and it doesn't translate into a lack of need. It should really be plainly obvious, from the two petitions and the reports we've heard from various committees, that affordable and high-quality and accessible childcare remains critical to all Welsh families, particularly when we're looking at trying to reduce child poverty. What the lack of uptake demonstrates is a mismatch between what families need and what is available. There are significant gaps, for example, for those children who need childcare who are ages three and four, for parents who work atypical hours, and for disabled children and those in rural areas. Instead of reprioritising this funding, can I suggest that we redesign the offer's operation to ensure availability for those with the highest need?

Secondly, I want to focus, as we've heard again from people in the Siambr, on local government. I and many others welcomed the Welsh Government protecting the core settlement. We all understand, however, that this protection is nowhere near enough to properly safeguard front-line services. We know that they face a devastating wave of redundancies and cuts to all non-statutory services, which is a tragedy for local communities. According to the WLGA, the uplift in funding only amounts to around a third of the escalating cost pressures that they are facing, with local authorities arguing that they need, as we've heard, £800 million in extra funding for sustainability across our 22 local authorities. The Welsh Government may claim that it has been generous in securing the £170 million it has to date, yet the bigger picture shows that overall funding for local government has, in fact, dropped by 12 per cent since 2009. What we need is to create a better funding framework—one that provides sustainable and fair funding and that allows councils to meet their needs more flexibly.

Finally, as, again, we've heard from many contributors in the Siambr, I want to focus on rural Wales and the priorities for rural communities. At a time of major transition and uncertainty, with the agriculture industry assailed by fresh bureaucracy loaded on top of more bureaucracy, it needs to move to a sustainable future that is fair. Our villages and farming communities are the heartbeat of Wales. They face challenges, from lack of digital connectivity to worries over school closures and transport links. Last week, I was at a meeting of 500 farmers in Brecon, all of whom expressed severe concerns at the funding arrangements in the sustainable farming scheme. I realise that this is open to consultation at the moment and I look forward, hopefully, to it being changed considerably. I really do hope that we are able to look at a better, fairer, less burdensome way of supporting our vital farmers. 

Finally, Wales needs to use all its levers to address child poverty in particular. We need to increase childcare and ensure that our local authority services receive the funding that they need. And, for the rural communities that I represent, we need to ensure that our farmers and those working in agriculture get the fair funding that they deserve to produce our food. Diolch yn fawr iawn, Dirprwy Lywydd.

Photo of Mike Hedges Mike Hedges Labour 5:14, 6 February 2024

For former MPs and former councillors, treating the budget as an ordinary debate must seem extraordinary. Two hours to discuss the draft Welsh budget for next year: I have attended council budget meetings significantly longer than this.

I'm disappointed that neither the Conservatives nor Plaid Cymru have produced an alternative budget. This doesn't need a line-by-line analysis, but a decision on relative priorities. The supplementary budget showed that. The opposition parties are exceptionally good at finding areas to spend money or to reduce income, but less good at areas to save revenue expenditure. So far, the Conservatives have only suggested a saving next year of £1 million on Senedd reform. They've also suggested that Cardiff Airport is sold, which would raise a large sum of money if sold for housing. It is unsaleable as an airport without a substantial and ongoing dowry. We either wish to have an airport in Wales, or we do not.

Looking at the economic forecast, we see very slow growth in the UK economy and public spending with real gross domestic product expected to increase by only 0.7 per cent in 2024 and 1.5 per cent on average between 2025 and 2028. Inflation is expected to continue to fall to around 3 per cent by the end of 2024, still above the Bank of England's 2 per cent, and dependent on commodity prices such as oil not going up. Our inflation has been driven by commodity prices and that's why interest rate rises haven't worked. Stubborn rates of inflation have also significantly reduced the purchasing power of the 2024-25 spending plans compared with when originally set, and interest rates are expected to fall at a slower rate than inflation. Despite real-term wage growth expected in 2024-25, real household disposable income is expected to fall, a key factor being that boosts to savings incomes are outweighed by the rise in interest payments—ask anybody paying a mortgage.

Wales is underfunded by approximately £1.3 billion. Northern Ireland is treated differently. The UK Government has set aside £600 million to settle public sector pay claims as part of a £3.3 billion financial package to support the return of devolution in Northern Ireland. This, as far as I can see, is outside the Barnett formula. What the Barnett formula sets is the minimum allocation, under the formula, to be provided, but you can provide more. This is not the first time this has been done. In 2011-12, in addition to a £200 million limit on reinvestment and reform initiative borrowing, there was permission for an additional £175 million borrowing for the Presbyterian Mutual Society. This was an additional special provision and did not impact on the usual £200 million a year limit, even though it was almost equal to that.

The problem with the Welsh Government budget is there are so many areas that cannot be questioned. I suggested previously that the basic payments should be abolished. The Farmers Union of Wales are in favour of capping the basic farm payments, and I would urge the Minister to engage with them on setting a cap. In England, they're already starting to cut direct support for farmers—you know, the Conservative Government that is so wonderful there—and elements of environment and land management schemes. Can I ask the Minister to monitor as to how these changes are impacting in England and to report the Barnett consequentials of this change in England, because if they're cutting funding for farmers in England, it's going to have an effect on Wales?

Further questions for the Welsh Government are: what discussion has the Welsh Government had with the Treasury to give them the same borrowing and use of reserves as local authorities? I've said this many times, and I'll just say it again: it is ridiculous that Swansea Council can go and borrow money, can take any money out of the reserves they've got, but the Welsh Government cannot. It doesn't make any sense.

Commenting on the pressures facing the NHS, the Institute for Fiscal Studies stated there is still at least somewhat of an underlying productivity issue in the NHS, and I think we all would agree on that. How many hip replacements or cataract operations are expected next year? Does anybody know? How many have we had this year? Does anybody know? How are we going to see if it's improving if we haven't got numbers? I support preventative measures, and I'll commend Designed to Smile and its effect on reducing tooth decay in children, but we need more preventative expenditure.

The Finance Committee was told that, on rail, given the planned subsidy levels for 2024-25 and the likely passenger numbers in that year, the subsidy per passenger journey for Transport for Wales is up to £13 or £14 per journey. What does the Welsh Government think is acceptable? How are they going to reduce it, and how much of this cost is due to using replacement taxis?

Finally, we need to examine business subsidies. If a business cannot borrow to expand, why does the Welsh Government provide support? If it was commercially viable, they could borrow. If we need to bribe companies to bring branch activity, they do not want to come and may leave at the earliest possible opportunity when they don't have to make any clawback. Palo Alto doesn't have to bribe companies to go there, they're queueing up. Cambridge doesn't have to bribe companies, they're queueing up. Why haven't we got people queueing up here rather than trying to bribe them?

Photo of Janet Finch-Saunders Janet Finch-Saunders Conservative 5:19, 6 February 2024

During a period of climate unpredictability, energy insecurity and environmental apprehension, it is imperative to allocate investments towards sectors such as biodiversity, marine welfare, waste management, decarbonisation, renewables and flood protection. However, the draft budget the Welsh Government has put forward fails completely in this. Each sector is going to suffer vast neglect, facing millions in budget cuts. We're going to see—and this is despite this Government announcing a climate emergency five years ago, and a nature emergency two years ago—biodiversity down 11 per cent; marine environment, 13 per cent; waste management, 8 per cent; residential decarbonisation down 37 per cent; clean energy resource down 73 per cent; and flood protection down 63 per cent.

Now, specifically where housing is concerned, as I noted in my question to the First Minister, increasing homelessness is costing Wales £60 million annually. It is the embodiment of the last 30 years almost of fiscal mismanagement by Welsh Labour Government, and, in every single term, propped up by Plaid Cymru, other than the one term where you actually were in Government. So, you know—. Yes.

[Inaudible.]—budget remains static. Climate Cymru have highlighted to me that it would currently take 400 years to lift the 600,000 homes in Wales out of fuel poverty. And you can all smile, but, you know, we are innocent in all this, because we—[Laughter.]

Photo of David Rees David Rees Labour 5:21, 6 February 2024

I would like to hear the contribution from the Member, please.

Photo of Janet Finch-Saunders Janet Finch-Saunders Conservative

We've not had the levers, we certainly haven't had the budget, and we've not been in Government. So, the last 25 to 30 years are a sad indictment of everybody here except us.

Numerous projects and programmes essential for conservation—[Interruption.]—well-being have been severely affected by these budget cuts, reaching a point of dormancy. At a time when the Welsh Government should be pushing themselves on the climate front, I'm afraid you are retreating into hibernation.

This seems to stem from two causes: fiscal negligence and lack of transparency. In this budget, TfW is being re-allocated a staggering £150 million due to a £100 million deficit. Why? Why is TfW facing a £100 million shortfall? It is because of your lack of foresight to understand that post-COVID passenger numbers would go down and TfW would face a significant drop in revenue. As the Minister explained, additional funding has been essential for the continuation of rail services. That, actually, in business speak, is fiscal negligence. Topping up TfW to combat inflated revenue projections with climate change funding is a disgrace and now means that an additional £116 million is going to be reallocated away from pressing climate change projects and programmes.

As our committee has pointed out, there is deep concern about the impact that the reallocation of funds has had across the climate change portfolio. It seems that cuts are not due to a lack of funds; it's more how you've managed the funding that you've received from the UK Government—remember, the £1.20 that you're provided with here for every £1 spent in England.

Throughout the committee's report, it notes that the written evidence we received fell short of the standard we expect, with key information missing without acknowledgment or explanation—and that's talking about the draft budget in my portfolio. For example, it is unclear how much funding has been allocated to support the delivery of the biodiversity deep-dive, and with the biannual report missing, how is delivery progressing?

This lack of transparency not only makes it impossible for anybody to assess the budget, but also hinders many politicians from doing their job. How can we be expected to work together towards a brighter future for the people in Wales, when the Government is omitting important information to us, who are elected to scrutinise and challenge this Government? The Welsh people should be able to trust, they should be able to see how their taxpayers' money is being used. This is crucial now, more than ever before. Every single penny must be allocated with careful consideration and clarity, otherwise we face the possibility of cultivating public mistrust.

Now, more than ever, we need investment in climate change, not in more expensive vanity projects, like adding another 36 Members to this Senedd.

Photo of Delyth Jewell Delyth Jewell Plaid Cymru 5:24, 6 February 2024


In stark contrast to most of the contributors to the debate this afternoon, I want to talk about a part of the budget that's getting more money, namely Transport for Wales. I'm a firm believer in the principle of public ownership when it comes to public transport. The private model has obviously failed. I still strongly believe in and support that principle. But there is no escaping, regrettably, the failures that we've seen with TfW. It is not on improvements in services that the £110 million earmarked for TfW will be spent, but, as has been mentioned, on filling the huge funding holes that exist in its books. 

Photo of Delyth Jewell Delyth Jewell Plaid Cymru 5:25, 6 February 2024

And those millions spent to shore up this operator mean painful cuts must be found elsewhere. We're hearing in this debate, Dirprwy Lywydd, about just how painful the bite of these cuts will be: job losses, worsening quality of life, stripped back services, and desperately limited resources. So, the combined sum of £235 million that TfW has received since last October demands scrutiny.

I appreciate fully the unprecedented effects felt from the pandemic on passenger numbers. I'm also grateful that the Minister had explained some of the other mitigating factors at our committee scrutiny session recently, particularly the high added cost of replacing tracks on a dilapidated Victorian network that has seen a woeful lack of investment by Westminster for decades. Let's just keep in mind in this debate where we get the funding from as a Government and who ultimately is keeping Wales impoverished. Yes, there are major questions to be asked about how this money is being spent, but to claim that there is any kind of innocence from the Conservative Party really does—. Well, it goes beyond satire, I'm afraid.

Photo of Janet Finch-Saunders Janet Finch-Saunders Conservative

Okay. How can we get the blame when it's you taking all the decisions, making all the policy, and voting them through every single time together, as part of your co-operation agreement? Yes, it is called a 'co-operation agreement'. I was going to say 'coalition'.

Photo of Delyth Jewell Delyth Jewell Plaid Cymru 5:27, 6 February 2024

Diolch, Janet. As I was just setting out, I think that there are major questions that need to be asked about how that money is spent, but it's a smaller pie because that pie that was put into the oven was put there by the Westminster Government. We should be getting a bigger pie. We should be baking the pie ourselves, frankly, but there we are. This Government, of course, does—[Interruption.] I'm not going to continue that metaphor. I think it could get overbaked very quickly. [Members of the Senedd: 'Oh.'] Oh, I know.

This Government, though, as I was about to say, does bear responsibility for relying on the ambitious and, in hindsight, unrealistic revenue projections that were provided by the KeolisAmey bid for the TfW franchise in 2018, which has completely derailed a sustainable and consistent funding framework for TfW over the past few years. Now, as I've mentioned previously, it is in the public interest that the Welsh Government publishes that information that underpinned the bid projections in 2018. I'm sure the bid was put forward and believed in good faith, but lessons surely have to be learned for the future, so that we can have a well-functioning public rail network that represents value for money. We also surely need clear contingency plans to prevent future disruptions to passenger numbers having such a destabilising influence on Welsh public finances.

And all the while, of course, bus services, which account for three quarters of all public transport journeys undertaken in Wales, are being starved of funding. There does seem to be a double standard here, or at least a disconnect, because whereas the vast expanse of investment in rail has primarily been justified by the ongoing fallout from the pandemic, the withdrawal of the bus emergency scheme suggests that bus operators are not being granted that same leeway.

It was interesting and concerning to note the Minister's assertion that we would have seen closures of rail services without this substantial outlay for TfW, and that is of course exactly what's happening already to bus routes across Wales. Around 10 per cent of Wales's bus routes were reduced or withdrawn during the summer of last year due to a lack of funding. The Confederation of Passenger Transport estimates that a further 15 to 25 per cent will be at risk over the coming year. The communities across the length and breadth of Wales who don't have access to the rail network risk becoming even more disconnected, even more isolated, as a result of the spending plans.

All the points I've raised underline, I believe, the gravity of the injustice surrounding Westminster's continued denial to Wales of HS2 consequential funding. The billions of pounds rightfully owed to us could have paid for this shortfall in TfW's finances several times over, with plenty of money to spare to reverse the devastating cuts that have been imposed elsewhere in the budget. The continued silence—and, I'm afraid, indifference, it seems—from both the Tory Government and the Labour Government in waiting in Westminster on this matter shows how little hope we have of things changing.

I'm aware of the time, Dirprwy Lywydd. We cannot wait for Westminster to grow a conscience; they treat us with contempt. I would urge Labour and Conservative Members to demand better from their UK party leaders, because if we don't stand up for what is right for Wales, we're destined to return to the same disastrous position of combing through the ruinous consequences of Westminster's perennial neglect.

Photo of David Rees David Rees Labour 5:30, 6 February 2024

Just to remind Members, we have nine speakers still on the list, plus the Minister to respond, and half an hour left for the allocated time, so please keep yourselves to your time.

Photo of Jenny Rathbone Jenny Rathbone Labour

I want to emphasise the risks we're taking by reducing preventative spend. This is something that the future generations commissioner has warned us. Reducing preventative spend will have the potential to increase demand on services in future years, and nowhere is that clearer than on the health budget.

It is astonishing that primary care is seeing 1.5 million people every month, which represents half the population of Wales, which indicates that we have a great deal more to do in terms of promoting a healthier nation that is less dependent on ill-health services. That's very, very difficult to do in the context of all the challenges that communities are facing around shortages of money and the rise in the cost of living, but it's something that we have to be keeping an eye on all the time.

I just wanted to take issue with the opening remarks from the finance Minister that it wasn't possible to invest more in primary prevention until we have better resourced core services. I think that's a chicken-and-egg argument, and one I don't think we can afford to go on using. Because at the end of the day, failure to prevent problems happening turns them into much more expensive problems further down the line. For example, we face further junior doctor strikes, which will undoubtedly lead to more cancelled operations and less efficient use of expensive capital equipment, and much more administrative costs in trying to ensure that we avert disasters whilst the junior doctors are on strike. I appreciate that we can't do what Scotland is doing and spend money we don't have yet. Until the Treasury is clear on what money we're going to be getting, it's impossible to know whether we're able to meet the demands of people who are suffering from a huge reduction in their incomes.

I think we have some serious challenges here. In the Minister's response, I wondered if she could tell us how successful we are being on eliminating unnecessary bureaucracy and duplication of effort. I fully appreciate the efforts by the education Minister to consolidate 25 grants into four, which I'm sure has saved a lot of time for headteachers, but unfortunately it doesn't mean that the amount of money that is going to be in schools' budgets doesn't paint a very challenging future for how we're going to be supporting young people with additional learning needs.

Similarly, I can see why in the climate change budget we're investing a huge amount of additional money in homelessness; it's gone up from £46 million in the current year to £215 million in the forthcoming year. That's very welcome, because preventing homelessness is also a way of not causing people to become seriously unwell, both mentally and physically. But nevertheless, it has meant cutbacks in the ambition of the Warm Homes programme, slowing down the Warm Homes programme, which obviously means less money in people's pockets when they're having to shell out for expensive fossil fuels to heat their homes.

I think we need more of the sort of example shown by Lynne Neagle in driving up the uptake of Healthy Start vouchers by having mandatory training for health visitors and midwives, which has ensured, as we now know from the First Minister this afternoon, that it has gone up to 78 per cent of those who are eligible now receiving that benefit, which obviously means more money in the pockets of pregnant women and mothers with children under four years old.

That's the sort of thing that we need to ensure that all Government departments are thinking about: how can we actually increase the amount of money we've got coming into Wales through the uptake of grants that are available, not just in the inadequate core budget that the UK Government is serving up for us. It also means that we are getting more money into people's pockets by all other means as well, and we take really seriously the impending storm of problems that we may be creating for ourselves through reducing money on prevention. 

Photo of Darren Millar Darren Millar Conservative 5:36, 6 February 2024

I want to speak just briefly, if I can, on the situation facing children and young people as a result of today's budget. Our children really are our future and we have a duty in this Chamber to act in the best interests of future generations. That's why an Act was passed in this Senedd a number of years ago. And yet what we see in this particular budget are cuts to education spending and cuts to apprenticeships, both of which will have an impact on young people. Those decisions have been made, as has already been said in this Chamber, without any children's rights impact assessment at all, in spite of the duty upon Welsh Ministers to ensure that the decisions that they make have regard to the UN Convention on the Rights of the Child.

I find it, frankly, astonishing, because we do know that, if you don't have a decent education, then it affects everything in the future. It affects your earning potential, it means you're more likely to end up in poverty, and poverty affects your health outcomes. It affects the investment that comes into your nation. And it is a matter of shame, I think, that this Welsh Government has seen our international rankings in the PISA results, the independent tests that are conducted every few years, which give us the accolade of being the worst education system in the United Kingdom. We've gone backwards in maths, backwards in science, backwards in our reading scores and, worse than that, we are the only part of the United Kingdom—Wales is the only part of the United Kingdom—in the bottom half of the international league tables. So, given that record, you would expect to see a Government that wanted to prioritise spending on education in order to make sure that that situation was turned around for the future. But, as I say, that is not what we're seeing in this particular budget. 

The Welsh Government will of course bleat that there's insufficient cash coming from the UK Government in order to invest in our education system. But we know that, in England, the fact of the matter is that spending on schools has gone up. So, if spending on schools has gone up in England, it means there's an opportunity to put spending up here in Wales, because we know that, for every £1 that's spent in a devolved area, including on pupils in our schools, in England, then Wales gets £1.20 to spend. So, there's absolutely no excuse whatsoever for the reduction in school spending here in Wales.

I appreciate the other excuse that the Government might have is that it devolves, effectively, responsibility for education spending to local authorities and it's up to them to decide how to carve up the cash that they are given. But we know that the funding formula is grossly unfair and inadequate. It's grossly unfair particularly to north Wales authorities and to authorities in rural parts of Wales as well. That's why we have called consistently now, for a number of years, for an independent review—no-one's got anything to fear from an independent review—of the funding formula to make sure that every part of Wales gets its fair share of investment. That has not been the case from this Welsh Government or predecessor Welsh Governments either, and we need to address that matter.

It's because of that that, in places like Conwy and Denbighshire, council tax payers are going to have to pay a 10 per cent increase in their council tax while still seeing a reduction in the public services that those local authorities are able to provide, including the investment that they can put in to things like schools, libraries and other important public services for the future. So, I would like to see, Minister, some change of direction in your budget, a shift of resources from things that, frankly, the people of Wales do not regard as priorities—things like increasing the number of politicians, things like the investment that you put in to a nationalised airport that didn't need to be nationalised, the millions of pounds that we spend on mini embassies around the world, which no doubt do wonderful and valuable work, but, frankly, are a luxury we cannot afford to keep going, the money that you keep bunging to the unions with the Wales union learning fund on an annual basis. Let's see some fairness in the way that you carve up the cash, so that local authorities, particularly in north Wales, in places like Conwy and Denbighshire that I represent, have a fair settlement.

It is a disgrace, frankly, that Newport and Cardiff, year in, year out, get increases of more than double the rate of increase in the grant going to Conwy this year in the revenue support grant. So, let's see some fairness, let's see future generations protected from this barrage of cuts, so that we can have some generational fairness in the way that the budget is spent in the future. [Interruption.] I am out of time, but I'll happily take an intervention.

Photo of Heledd Fychan Heledd Fychan Plaid Cymru


Could I start by associating myself with the comments made by Jayne Bryant as Chair of the Children, Young People and Education Committee? I'm obviously a member of the committee, so it's no surprise that I agree. But those points were very important—some of them were echoed by Darren Millar. But certainly, we have to think seriously. If we're serious about the Well-being of Future Generations (Wales) Act 2015, there are things that we truly need to focus on.

I'm very pleased that Mabon ap Gwynfor also reminded us, in the same context, that the importance of these decision is the impact on people. After all, it's people that have been contacting us to express their disappointment about the various cuts. People contact us to tell us about the impact of these cuts and what they'll mean, not only for them, but their children and also future generations. So, there is a responsibility on us. It's easy to come here and have rhetoric and point the finger, but I hope that, in a year of a general election, we could agree that there is a need for whoever will be leading the UK Government following that election to look seriously at the funding that we do receive here, because it isn't adequate. We have to unify to fight for what Wales deserves, but more importantly, our communities and the people of Wales.

We all understand the severity of the current situation in terms of the Welsh Government's budget, but there are things that we have to draw attention to, of course. As was mentioned, children and young people, and the significant cuts to the education budget, are something that causes us concern. We know about the current challenges in terms of recruitment and retention in education, ensuring additional learning needs provision that meets the needs of learners in their chosen language, wherever they live in Wales, and the attainment gap and the link with inequality, as highlighted in the PISA results. I'd like to ask, therefore, as others have, what assessment has been made by the Government of the impact of these proposed cuts on children and young people specifically.

In terms of teacher pay, could you confirm whether the Government will fully fund its share of the 5 per cent pay rise for teachers that was agreed last October? The local government settlement is not sufficient to be able to pay this in full. I would therefore like to ask the Government to consider restoring the regular funding model agreed for the previous pay award to ease the extreme financial pressure on local government. Furthermore, the Welsh Government should also seek clarification from the UK Treasury, as a matter of urgency, on funding for teachers' pension contributions. 

Another area that has filled my inbox is culture and the arts, where there are significant cuts. You'll be aware that serious concerns have been raised about the security of the national collections—not in terms of being stolen, but rather their safety within the buildings themselves from water and unsuitable conditions. I'm sure that we all remember the terrifying fire that destroyed Brazil's national museum in 2018, with 92.5 per cent of the collections being lost forever. Following the fire, the deputy director of the museum said that the fire was the fault of politicians, saying that the curators, and I'm quoting here,

Photo of Heledd Fychan Heledd Fychan Plaid Cymru 5:45, 6 February 2024

'fought with different governments to get adequate resources to preserve what is now completely destroyed'.

Photo of Heledd Fychan Heledd Fychan Plaid Cymru


Heaven help us if the same thing happened here, and I would like to know today what discussions the Minister has had with the Deputy Minister with responsibility for culture regarding this matter, and what assurances she can give us that the cuts will not endanger our national collections. Could you also provide further assurances that the policy of free entry to our national museums, which has been so successful, is one that the Government remains committed to? 

Furthermore, I'd like to understand why the royal commission is facing a cut of 22 per cent, which will have a detrimental impact on a body that achieves so much on a very small budget. A cut of 22 per cent would mean a possible reduction of almost a third of the workforce of 28. Have there been talks to discuss reducing the cut to something that will be less harmful? And how does the Government respond to other concerns expressed by the arts council and the books council, and their supporters? These are sectors that do so much in terms of the health and well-being of people in our communities, but also in terms of the Welsh economy as employers, but also in terms of tourism. They are an integral part of our identity as a nation, and the Government must do more to invest in them as part of ensuring economic growth. So, it is vital that we are told today how the Government will ensure that.  


The Llywydd took the Chair.

Photo of Carolyn Thomas Carolyn Thomas Labour 5:46, 6 February 2024

A decade of UK Government austerity, a botched Brexit and Liz Truss have brought the UK to its knees: people unable to pay mortgages and public sector wages stagnating while expecting them to be more productive. Taxes are the highest since the 1940s, but the public services we all rely on have been starved of cash. Any extra over the last three years has fallen into a black hole of inflationary pressures, and yet the Welsh Conservatives come forward with a shopping list and hypocrisy. On top of Welsh Government's budget being £1.3 billion worse off than when it was set in 2020-21, the settlement doesn't replace lost European funding for Wales's national projects, for agricultural payments, apprenticeships, highway infrastructure or public transport—some of the shopping list that you come with. 

In the autumn statement, Jeremy Hunt continued with austerity, saying that public—[Interruption.] Yes, I will. 

Photo of Andrew RT Davies Andrew RT Davies Conservative 5:47, 6 February 2024

I'm really grateful for the Member taking an intervention. Could you name me another country that hasn't faced an explosion in public sector expenditure because of COVID, or not had to put up interest rates and faced inflationary pressures because of the war in Ukraine? Just one country, please. 

Photo of Carolyn Thomas Carolyn Thomas Labour 5:48, 6 February 2024

The UK Government is suffering more—the economy—than many other countries. In the autumn statement, Jeremy Hunt continued with austerity, saying that public services had to be yet more efficient. Yet, one in five councils in England are facing bankruptcy. I don't know what world he lives in. And the Prime Minister wants to attack benefits yet again. 

At the Local Government and Housing Committee, Councillor Jane Gebbie warned that decisions would need to be made between what constitutes statutory and non-statutory services, meaning important work such as early intervention and prevention may be at risk, as has been discussed earlier. Homelessness is on the increase: 81 per cent of service providers funded by the housing support grant have seen increased demand in their services over the last year, yet the local housing allowance is stagnating all the time, which should be coming from the UK Government. Seventy-five per cent of providers are running on a deficit, using reserves to top up, which is not sustainable, and those that work in the service themselves are struggling to pay the bills

Yesterday I met with End Youth Homelessness Cymru. They described the horrendous choices facing those as young as 14 or 15 as the cost-of-living crisis, benefit cuts and family breakdowns make staying in the family home increasingly difficult. Some young people are placed inappropriately in temporary accommodation with no proper support. We need more funding to go into the housing support grant, and I ask that if there's any movement of funds, it goes there. Homelessness is increasing and will continue to do so because of choices made by the Tory UK Government. 

I heard the leader of Conwy County Borough Council say, 'I don't mind making difficult choices, but we're actually being made to make bad choices—choices that will be having an impact in the long term.' North Wales MSs are receiving e-mails from parents extremely concerned regarding ongoing cuts to education and early years funding. But I need to say that Conwy, going back years, used its reserves up in the past rather than put council tax up. It outsourced services so that it has no resilience left to deal now with what’s happening.

More than 40 Conservative—[Interruption.] I need to carry on because I’m going to run out of time. More than 40 Conservative MPs threatened to vote against the budget as the realisation hit, but last-minute funding of £600 million was suddenly made available by Gove. There was talk of £25 million of consequentials for Wales, but we don’t know if that’s really coming forward. I’d like the Minister to respond with that. If it does, I ask that it is passported to councils and that the funding floor is increased to help those most at risk. At the Local Government and Housing Committee, Councillor Lis Burnett advocated the use of a floor more often. She said:

'I think the one thing that we all agree on is that we need to use the floor more regularly, because there are situations where...a local authority is adrift of everybody else in terms of funding, and so that needs to be part of the process to make sure that they are not at a level below which they can sustainably deliver services.'

But I am sceptical that it will reach Wales, because time and time again money keeps being found down the back of the sofa for England, and without consequentials for Wales. There needs to be greater transparency, such as funding for doctors’ pay.

I hear we need to grow the economy, but to be able to fund public services—you can’t fix the economy if you can’t have nature. It’s not a choice. Nature underpins the economy. Public funding is needed to make interventions and support. We should not be fighting over the crumbs of the budget for public services, which is too small to start with. We should be fighting for an end to 14 years of austerity and an end to cuts in public services.

Photo of Gareth Davies Gareth Davies Conservative 5:52, 6 February 2024

It's a pleasure to take part in this debate, and as ever, I'll provide a voice of reason to this discussion this afternoon. I have made my objections to this draft budget known in previous debates, and as usual, the more pushback the Welsh Government receives, the more steadfast they are in their commitment to poor decisions and blaming the UK Government, like Carolyn Thomas before me. 

Everyone understands that spending in certain areas must be cut, but the Welsh Government seems insistent on cutting assistance to the productive bit of the economy in order to fund the unproductive bit. If this continues we will be in a considerably worse position in 2025 than we are in now, and I would like to lodge my objections on behalf of my constituents, who are seeing their high streets dying, vital services cut, and councils scrambling around for cash due to the £646 million social services funding gap, with their council tax raised by an unreasonable 9.34 per cent by the Labour-run Denbighshire County Council.

This budget is a real blow to the small and medium-sized businesses that are the backbone of the Welsh economy, and as I’ve referred to many times, it’s 99.3 per cent of all enterprises in Wales. And it’s funny that the only businesses on the average Welsh high street that appear to be thriving unimpeded by the Welsh Government these days are pop-up barber shops, unsightly vaping and e-cig outlets, and cash-only hand car washes, amongst a variety of other potential money laundering fronts. This, I’m afraid, is a depressing indictment—[Interruption.] It’s true. It’s true. It’s an indictment of the state of small enterprise in Wales.

One in six shops in Wales are empty, with more closures being announced this week. Cutting business rate relief to 40 per cent will be—[Interruption.] Yes.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour 5:54, 6 February 2024

I just want to clarify—we're all extremely concerned about things such as human trafficking and money laundering. You've just categorised, you've just specified, a series of business sectors, entrepreneurs, some of them, and classified them all as fraudulent. Could you just clarify that that is what you meant when you went through those, that these are fronts for illegal operations—all of them? [Interruption.] Money laundering—you specifically said money laundering. 

Photo of Gareth Davies Gareth Davies Conservative

Okay, I get your point, Huw. I'll give you one example as one to go from. Take Prestatyn High Street—you've probably never been there in your life, but we had probably two barber shops 15 years ago, but there are probably about 15 now, all of a similar theme. And that's not the point I'm making. It's the point that we've seen different—[Interruption.] No, no.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour 5:55, 6 February 2024

Would you give the evidence—[Inaudible.]

Photo of Gareth Davies Gareth Davies Conservative

I'm not taking an intervention. [Interruption.] I'm not taking an intervention.

Photo of Elin Jones Elin Jones Plaid Cymru

The Member is not giving way, and wants to carry on.

Photo of Gareth Davies Gareth Davies Conservative

Yes. Cutting business rate relief to 40 per cent will be a fatal blow to many small high-street businesses, but rest assured, this will help out the large online retailers and large multinational co-operations who do not have to pay this tax. Facing this dismal year ahead, perhaps people can raise their spirits—

Photo of Elin Jones Elin Jones Plaid Cymru

There's a lot of discussion happening now in this Chamber. I think we need to hear the rest of the contribution by the Member.

Photo of Gareth Davies Gareth Davies Conservative

Thank you. Facing this dismal year ahead, perhaps people can raise their spirits and remedy all of this negativity with a theatre production, or going to see the mid-Wales orchestra, but I'm afraid these have all been completely defunded too.

And what are people actually concerned about here in Wales? Let's ask that question. Opinion polling from September last year shows that the economy is the issue people are most worried about, followed closely by the NHS. These issues that people don't care about are the trendy socialist UBI schemes, bank-rolling 36 new politicians and spending £34 million on the 20 mph roll-out. This budget presents an increase of £22.5 million for funding the free-school meals programme—the Welsh Government demonstrating that they are more concerned with honouring Plaid than improving the curriculum in schools and the quality of teaching, because education, overall, has been cut in this budget. Parents in the Vale of Clwyd would prefer to be in a position where they can easily afford to pay for their own child's meals, rather than living on state subsidy. 

To close, the irresponsible allocation of funds into schemes that no-one asked for will lead to increasing resentment towards the Welsh Government, unless they are prepared to rethink their spending commitments. Thank you.

Photo of Elin Jones Elin Jones Plaid Cymru 5:57, 6 February 2024

Before I call Luke Fletcher, then, I just need to make Members aware that we're well over time, and I have one speaker left from each political group, after Luke Fletcher. I'll ask those three speakers—I'll call them—if they're able to do, as Joyce Watson is shouting from the back, a two-minute contribution. Please be brief. We have a lot of other business to get through this afternoon, and we're all already over time. So, I should move on as well—Luke Fletcher.

Photo of Luke Fletcher Luke Fletcher Plaid Cymru

Diolch, Llywydd. I have no doubt that this has been a difficult budget process for the Government and, let's be honest, it's only been amplified, of course, by the economic incompetence we see at Westminster.

If I could start with business rates. Last week I raised the potential for varying the multiplier based on type of business and, of course, it's welcome that there is space in the Local Government Finance (Wales) Bill for that. Of course, that is some time off, and I'm wondering if the power to vary the multiplier relies on that Bill, or if the Minister has the power to do that already. Because the reality is stark, particularly for the hospitality sector. If something isn't done now, then places in my region, like Zia Nina, like Ristorante Vecchio, like Beat, would be hit with yet another cost.

Adam Price raised on 9 January a number of ways in which we could raise additional finance. In the context of business rates, I would ask the Minister to consider one of his suggestions, that being a public health supplement on the business rates of large supermarkets who sell alcohol and tobacco. The Scottish Government has already done this, and it has the potential to raise another £23 million here in Wales, which could then be used to mitigate this cut to business rates, alongside, then, looking again at varying the multiplier. So, some reflection on that would be very welcome from the Minister. 

I'll come to the apprenticeship budget. As the Minister knows, it's National Apprenticeship Week—and, by the way, both myself and Huw Irranca-Davies are launching the cross-party group on apprenticeships at 7.00 p.m., and a number of Members have raised the apprenticeship cuts, so I hope to see a number of Members there. We've discussed this already at length in the Chamber, but this cut does stand at 24 per cent. This when, of course, the sector, pre-publication of the draft budget, was told to expect a cut of 3 per cent. Now, I can't press on the Government enough of how important the apprenticeship budget is for the future development of the Welsh economy, with Tata and the proposals there underlying the need for good-quality apprenticeships going forward. But we're not just talking about apprenticeships in high-tech sectors or the green sector. They also play a role in health and social care. If the cut remains, we would see 5,500 fewer apprenticeships in health and social care, clinical healthcare, dental nursing, and children's care and learning and development. This, of course, would then have a long-term impact not just in the economy, but across all sectors.

Now, I mentioned the sector had already modelled for cuts. I think it's fair to say that the sector, especially given the impact of the loss of EU funding, doesn't expect at this point a full reversal of proposed cuts. So, my question is whether or not there is room to reduce the size of the cuts in an attempt to meet the sector halfway. You've heard from the Minister for the Economy in his leadership pledges that he plans to increase the number of apprenticeships, when, at present, the cuts to the budget are within his own department. There's also a policy statement scheduled for 27 February on apprenticeships, so it does make me wonder if there is room for manoeuvre.

Another suggestion on funding when it comes to apprenticeships: why not look again at charitable relief for private hospitals and schools? Now, it won't raise enough to reverse the cuts in their entirety but it might provide some wiggle room. So, whilst I understand the challenges faced by the Government in this budget are stark, and I appreciate that everyone will be asking for more cash, some reflections from the Minister on the points I raised would be very welcome.

Photo of Rhianon Passmore Rhianon Passmore Labour 6:01, 6 February 2024

Wales, today, faces the worst financial situation since devolution began and whilst the UK fiscal and constitutional processes are being eroded. So, let's be clear, Wales as a devolved legislature within the UK is not a minor department of state to be told at the last minute that expected consequentials do not suddenly exist for Wales. And as the majority of Welsh Government funding comes directly from the UK Tory Government as a block grant, Wales is directly exposed to UK external fiscal policy and inflationary pressures, but without the agile, flexible levers and borrowing powers needed to respect Welsh need, or to align us with English consequentials or even Irish consequentials for that matter—welcome, though, that would be for them.

For 14 long years, Wales and the rest of the UK has been misgoverned by too many Prime Ministers of the UK of Tory policy, and too many Chancellors. The Tory UK Government has persuaded and prosecuted and pursued for over a decade and a half an ideological dogma subjecting Wales and the rest of the UK to something called austerity, or, simply put, underinvestment—a starvation of investment against the people and children of Wales and the United Kingdom who deserve better—[Interruption.] No, I won't.

So, can we just be honest, in the time that I have available, with the people of Wales? Let us just say it as it is: Wales is strategically underinvested in after years of infrastructural and wider underinvestment and the truly pathetic £100 million capital budget this year—still no electrification for Wales. Today, the Welsh Government budget is £1.3 billion less, some say £1.5 billion less. Therefore, incredibly difficult and incredibly hard decisions have had to be made, so I will be supporting this budget. Diolch.

Photo of Mark Isherwood Mark Isherwood Conservative 6:03, 6 February 2024

At the time of the Labour UK Government's March 2010 UK budget, the then Labour Chancellor admitted that Labour's planned cuts in public spending would be, quote, 'deeper and tougher' than in the 1980s, which followed economic meltdown under Wilson, Callaghan and Healey. Austerity was therefore inherited, and failure to reduce the deficit risked imposed cuts that would have resulted in far higher public spending reductions further down the line. Those that deny that would now be managing far smaller budgets than they've had otherwise.

Given the statement by the World Economic Forum that the soaring cost of food and energy is affecting people across the globe and that inflation is currently higher in 19 European countries, and interest rates are currently higher in 11 European countries and 10 other G20 countries than in the UK, only an extremely silly billy would claim that the cost-of-living crisis was made in Westminster. All Governments, including the UK Government, are having to operate within this global inflationary environment.

The Welsh Government's draft budget cuts social justice funding by £11.6 million—more in real terms. Although the Welsh Government has announced a new child poverty strategy for Wales, Barnardo's Cymru has expressed disappointment that the Welsh Government has not listened to numerous recommendations on the need for targets and an action plan attached to the strategy so that progress can be 'transparently and regularly monitored'. The Children's Commissioner for Wales stated that the lack of detail on actions, timescales and deliverables means that there was no way of holding the Welsh Government to account—25 years of this.

This Welsh Government has launched a new Welsh benefits charter, but far from being the integrated Welsh benefits system for all the means-tested benefits that the Welsh Government is responsible for, which the sector has been calling for for almost a decade, it is still only about developing one, and, again, without targets and timescales.

Similarly, the Welsh Government has dodged all calls for interim targets and timescales for their 'Tackling fuel poverty 2021 to 2035' plan, despite statutory obligations and the sector stating that interim targets would ensure that the Welsh Government is accountable for progress—goodness me, what a funny thought.

The voluntary sector has long been emphasising that although they provide a fence at the top of the hill rather an ambulance at the bottom, delivering services that save the public sector millions, they lack sustainable statutory funding. Many poverty-fighting services delivered by the voluntary sector are also funded by the housing support grant. In its 2024-25 draft budget document, the Welsh Government claims that they have,

'protected front-line support services, including the housing support grant.'

However, in its response to the draft budget, Cymorth Cymru, the representative body for housing-related support in Wales, stated,

'The Welsh Government has not increased the Housing Support Grant in the Draft Budget', that, in real terms, it's £24 million less than in 2012, and that

'three quarters of support providers told us they would need to reduce service capacity.'

By removing early intervention and prevention services, such false economies only increase pressure on the NHS, accident and emergency departments and blue-light services, as well as housing services, when the Welsh Government should instead be removing the tens of millions of pounds of added cost pressure on statutory services that they cause. I've only been saying this for over two decades, but they still don't get it.

Photo of Sioned Williams Sioned Williams Plaid Cymru 6:07, 6 February 2024

The social justice budget is facing the largest cut, in proportional terms, of all of the Welsh Government's spending areas, which will inevitably compromise this Government's ability to address the deep-rooted inequalities in our society and their effects on our citizens. Of course, we must remember that 14 years of Tory austerity, which, it seems, will continue, if Labour's shadow chancellor's recent statements on tax and welfare are anything to go by, have had a disproportionate impact on the most disadvantaged—low-income households, disabled people, black, Asian and minority ethnic peoples, women, older people and children.

There are some statistics that must be highlighted as we debate the priorities of this budget, and the economic and political context in which Wales finds itself is a situation—a financial situation—where it cannot adequately support the needs of its most vulnerable citizens and forge the fairer future they deserve, because, for the first time ever last year, half of the requests for support from Citizens Advice Cymru were from those in a negative budgeting situation, where household bills outstrip income. Twenty-eight per cent of children in Wales are living in poverty. And this is the fact that we must all keep in the front of our minds, as it's the most appalling, most shameful, most heartbreaking statistic, which should underline all budget decisions: the child mortality rate in Wales is 70 per cent higher for children in the most deprived groups than for the least deprived children.

In my work with the Equality and Social Justice Committee scrutinising the cuts to the social justice budget, it was clear that although the Minister told us that substantial savings from this small portfolio had been guided by several principles, including protecting front-line services and avoiding decisions that widen inequalities, the upshot from our scrutiny is that this is not the reality of the effect of this budget. If creating fairness by prioritising anti-poverty and poverty-mitigation measures is at the heart of this Government's approach to the budget, then the fact that the social justice budget has received the deepest cuts must, therefore, be completely non-strategic.

Spending should follow strategy; delivery should follow spending. Plaid Cymru has drawn attention time and again to the need for urgency to deliver on plans such as the Welsh benefits system to ensure that support reaches the right pockets quickly and simply. The work has just started—we've had the launch of a non-statutory charter. The Warm Homes programme—meant to be operational last year, still being procured. And we've got the new child poverty strategy, midway into this Senedd term—how much of a priority can it be—roundly criticised, as we've heard, for its lack of clear targets. Measures that work not included in this budget, or, in the case of the baby bundles scheme, cut back. How can we afford to cut £11 million to childcare provision when we know that investing in childcare—UNICEF say this—is one of the single most effective ways to tackle inequality? There's a reason that a demand-led childcare offer, which is desperately needed to tackle inequality, isn't working as it should.

If the Government maintains that the draft budget has been shaped by the principles of the Well-being of Future Generations (Wales) Act 2015, including the principle of prevention, how does it justify a 50 per cent reduction in funding for Digital Communities Wales, for example, which includes programmes to combat digital exclusion? Cwmpas has noted that marginalised groups are more likely to be digitally excluded and that recent trends, such as the rising cost of living, risk widening the digital exclusion gap even further. And by the way, tackling digital exclusion is key to objective 1 of the child poverty strategy—perhaps the finance Minister should read it. As that horrific and shameful statistic that I quoted earlier demonstrated, inequality has a proven link to adverse health outcomes, so while the Welsh Government has prioritised front-line NHS services in this budget, it must admit that neglecting initiatives to address societal inequalities will invariably blunt the efficacy of their healthcare spending.

The report of the Equality and Social Justice Committee makes clear that, and I quote:

'Despite a rhetorical commitment to prevention, previous experience suggests that preventative spending measures are being diluted in this Draft Budget', and Plaid Cymru endorses that view in the strongest possible terms. There cannot be any greater priority than investing in the potential of the people of Wales, through reducing poverty and inequality through strategic and sustained spending. It must be better reflected in this Government's budget.

Photo of Elin Jones Elin Jones Plaid Cymru 6:12, 6 February 2024


The Minister for finance to reply to the debate—Rebecca Evans.

Photo of Rebecca Evans Rebecca Evans Labour

Great. Thank you very much, Llywydd. And thank you to all of those colleagues who've made thoughtful and constructive contributions in the debate today, and also particularly to the committee Chairs. And I know that they've passed on the thanks to those stakeholders who, I know, spent an awful lot of time preparing their evidence for committees as well. So, I'm very grateful to all of those.

I think it's important just to remind ourselves of the context that we're facing. Economic growth has stagnated under the 13 years of UK Governments, and they have played fast and loose with public finances. We've got a decade of austerity behind us and a botched Brexit, which has left public services across the UK absolutely creaking and unable to further withstand any more shocks. And, of course, living standards next year will be 3.5 per cent lower in 2024-25 than they were pre pandemic, and that would be the largest reduction in living standards since records began in the 1950s. We've seen consumer prices increase by 22 per cent since the pandemic, and, if inflation had been on target, prices would be up by—I say 'just'—8 per cent. And the UK's tax burden, of course, is forecast to increase to a post-war high, with millions of people dragged into paying higher rates of income tax. So, that's the context and the difficult situation that we find ourselves in.

The UK Government had the opportunity to address this at the autumn statement, but there was absolutely no targeted support for the most vulnerable people, nothing new or meaningful for Wales, and it was an absolute disaster for public services across the UK, which are being starved of necessary funding. The Chancellor's failure to recognise the pressures on public services means that we are facing real-terms cuts here in Wales, and we're facing a really difficult set of decisions ahead of us. I think that's been really reflected in the contributions that we've heard this afternoon. People are absolutely passionate about the things that we do in all walks of life here in Wales, and we've had some exploration of the kinds of really tough trade-offs that we've had to be making here in Wales. We were invited, at the very start of the debate, to ask ourselves the searching questions. Well, my goodness, we've been asking ourselves those searching questions for months on end to make those really, really tough choices that we've had to make, and, in the end, we've put people right at the heart of the decisions that we're making, prioritising the NHS, which we know is the absolute top priority for people in Wales, alongside those public services provided by local government.

Photo of Rebecca Evans Rebecca Evans Labour 6:15, 6 February 2024

And I will be honest, we have had some contributions this afternoon that have just been a long list of things, telling the Welsh Government what it must do to make things better for people in Wales. Absolutely nothing from many of those people making contributions about where they would make the cuts from. We've also not had any real objection to the overall strategic approach of our budget, looking at protecting the NHS, protecting local services in local government. We haven't seen any objection to that either. So, what is the alternative that people want us to do?

I will say I have listened really carefully to the contributions, and we're considering carefully the responses that committees are providing as well. If there is any change in the situation, as we move towards the end of the financial year, I might be able to make some small allocations at the final budget. So, we are listening carefully to the representations that are being made. I will say, just weeks, now, from the end of the financial year, we still have no confirmation of the supplementary estimates, so we still don't know what our budget is for this year while we still haven't yet had the opportunity to have the final debate on our budget for next year. I think that that, again, speaks to the lack of clarity that we have from the UK Government.

We will respond positively, wherever we can, of course, to committees' recommendations, and we've already tried to do that today in relation to the additional £25 million of funding that came as a result of further funding for local government in the UK, which UK Government recently announced following letters from numerous current and former MPs to the UK Government, talking about the lack of investment in local services there. So, we're pleased with that additional £25 million. It is the intention now to reverse that cut to the social care workforce grant, that was just over £10 million, and to use the remainder of the funding to put through the RSG to local government. I think that does respond quite positively to at least a recommendation from the Finance Committee and the Local Government and Housing Committee, and I know Carolyn Thomas was making that representation again here this afternoon. So, I'm pleased that we've been able to do that.

I know that there was some debate as to whether that funding should go to lift the floor within the RSG, but I think, on reflection, we have to understand that the RSG does represent need, and were we to lift the floor higher, rather than recognise the need that exists in social care across Wales in all local authorities, then I think we would have been doing a disservice to the fact that the formula does recognise need within it, and I think we had to be just playing fair with all authorities in that space. And, of course, raising the floor—the floor actually is there to be a floor under which no authority will fall, rather than a floor under which no authority will have less of an increase. It will cause problems for future years if we take that approach as well. So, I think that, on balance, we have made the right choice.

I don't underestimate, though, how tough things are going to be for local government. They are in a much better position than their colleagues across the border, of course, because, at the start of the spending review period, we increased their budget by more than 9 per cent. That was baselined. This financial year, more than 7 per cent, again baselined, and we've kept our promise to increase it by 3.1 per cent for next year, which was the best that we could possibly do under the circumstances. I should say that the additional funding that we've announced today through that £25 million will, again, help ease some of those pressures, particularly around the living wage, but also teachers' pay, because we do recognise the pressures there. We have been able to support local authorities in previous years by directing some underspends across Government to help with that, but, at the end of the day, it is part of the RSG. Welsh Government plays no part in the negotiations of teachers' pay—those things are settled outside of the Welsh Government—but, if we can help, we have done in previous years, and, hopefully, this allocation will help too.

The availability of funding, of course, is really important, and I couldn't help but just think about the impact of Brexit now on our budget. We are really seeing the chickens coming home to roost now, aren't we? I was reminded of an article that I wrote back in 2015, which I Googled during Paul Davies's contribution today, and it said

'Rebecca Evans said losing EU funding worth £240m a year with no guarantee the UK government will replace it would be hugely damaging.'

And I said that leaving the EU would be catastrophic for Welsh farming. Well, was that project fear or was it just reflecting on a fact? Because we have continued now to feel the impact of decisions taken by the UK Government; we have £243 million in replacement EU funding lost to Wales now. But, even so, the Minister has been able to protect the basic payment scheme budget of £238 million for 2024. And I will say that this, beyond the NHS and beyond local government, is one of the biggest areas of spend for the Welsh Government and it would have been very easy to target that particular budget to look for some reductions to make. But the Minister was very clear that this was her absolute priority—she'd listened to farmers and this is very much what they were calling for. So, we were able to protect that budget, but it wasn't easy, by any stretch of the imagination, to do. 

And apprenticeships—I think that's been one of the really key areas that has come through in the debate this afternoon. And despite the backdrop of significant economic challenge and uncertainty, exacerbated by the loss of those EU funds, we do still remain committed to delivering a really successful and high-quality apprenticeship programme. We’ve benefited from more than two decades of funding towards the apprenticeship programmes from the European Union, helping to lower unemployment, boost skills and grow businesses, but now, of course, we have to make other provisions for that. And not a single penny of those funds now is available to us in our budget for next year. We are now at least £375 million worse off every year as a direct result of the UK Government’s levelling-up process. That is absolutely ironic, isn’t it? And that’s in addition to the fact that the overall budget is worth £1.3 billion less. So, I just want to impress upon colleagues the difficult situation there that we face as a result of some of the choices that have been made in recent years.

We’re keen, of course, to see what more we can do to present the budget in a way that colleagues find useful. So, we’ve had numerous innovations in recent years. We introduced the budget improvement plan in 2019-20, and since then I think every year we’ve been trying to innovate. We’ve had our gender budgeting pilot, we’ve had our distributional impact assessments, our carbon impact assessments, and we have a new Wales infrastructure investment strategy, and finance plans that sit below that as well. So, if there is more that we can be doing to present our budgets in a way that colleagues find useful, we’re very keen to explore that. And I do that through the work that I’ll be doing with the Chair of the Finance Committee in relation to the budget protocol, which I continue to look forward to making some progress on, as we move towards the final budget and beyond to the spending review period. The work on that will start in April of this year. So, we’ve got plenty more to look forward to.

Photo of Elin Jones Elin Jones Plaid Cymru 6:22, 6 February 2024


Thank you, Minister. The proposal is to agree the amendment. Does any Member object? [Objection.] There are objections. We will therefore defer voting under this item until voting time.


Voting deferred until voting time.