1. Questions to the Cabinet Secretary for Finance and Welsh Language – in the Senedd at 1:43 pm on 9 October 2024.
Questions from the party spokespeople next. The Conservatives spokesperson, Peter Fox.
Diolch, Llywydd. Can I also welcome you formally, Cabinet Secretary, to your new role, even though we've spoken before? And can I thank you also for the engagement you've extended so far? That bodes well for us to have a constructive relationship, moving forward.
Cabinet Secretary, the issue of HS2 spending in Wales seems to be a contentious one amongst many of your colleagues. Now, my colleagues and I have been clear—I believe that Wales should get its fair share of funding from HS2, as many of your benches used to shout regularly from here to us. Now, last year, it seemed like the shadow Secretary of State for Wales agreed with me, saying that the Conservative Government in Westminster, and I quote, 'should cough up billions'. Now that she has had her promotion and is in a Labour Government in power, it seems those calls have been abandoned. Likewise, the First Minister seems to want to distance herself from previous Labour calls for billions of pounds of investment, and will now settle for some £350 million, I believe. Now, your party has clearly changed its tune when it comes to this investment. Why has the Government done such a u-turn on its expectations from HS2? Isn't this short-changing the people of Wales?
I thank Peter Fox for the question, of course, and look forward to these monthly exchanges that we will have, and look forward to continuing to be able to deal directly with spokespeople from other parties on emerging issues in relation to the budget and to finance.
I think the difference in the figures is very easily explained, and it’s certainly not that the Welsh Government has stood away from the long-held belief that HS2 spending was wrongly classified by the last Government and Wales ought to have had a consequential of rail funding in England. The £350 million is a figure that reflects what we believe that share would be of the money already spent and committed. The HS2 prospectus goes well beyond the current spending review, and if there is to be more money spent in the future, then our view is that it too should generate money that would come to Wales, and depending on how much is spent, that figure will be significantly higher than the £350 million. The £350 million is what we think we should have had already, because that’s money that’s already been committed and has already been spent. There will be money spent in the future and that explains some of the difference in the figures.
But just to be clear, and as the First Minister said yesterday, there is no difference in our basic approach to this. HS2 was wrongly classified as an England-and-Wales project, when all the expenditure and all the benefit went to England. We should have had a consequential of that funding. I look forward to further discussions with our UK colleagues as to how that can be put right.
Thank you, Cabinet Secretary. So many times we’ve heard colleagues on those benches over there saying that there was £6 billion underfunded, and Jo Stevens has said the same in the Westminster Chamber, that we should cough up billions, so you can understand why people are quite confused when we banter about these large figures of £5 billion or £6 billion and then we’re down to £350 million.
Wales is not only being deprived of money, but there is also an opportunity cost to giving up the fight for more money. Because every £1 not drawn down from the UK Government on HS2 consequentials is money that is not being invested in our own infrastructure. We all know that Welsh infrastructure is creaking and the figure of around £4 billion that has been bandied about and thrown about by your party would go a long way to improving things. So, what assessment have you made of the opportunity cost of not pursuing all that Wales deserves, because it’s so fundamental that we get that money sooner rather than later? We understand there is more money already being thought about that’s being spent on HS2 in a different direction—what are we doing to lobby to get that money to us?
Llywydd, the money that is needed to invest in the rail infrastructure in Wales includes HS2 but is beyond it. Our discussions with the current UK Government will not simply look at HS2—we will look at investment that needs to come to Wales to sustain the core Valleys lines, given their transfer to Wales. We will want to look at Network Rail’s plans for investment across the United Kingdom, to make sure that, in future, and it was certainly not true in the past, Wales gets a fair share out of that. So, in this sense, I agree with Peter Fox, there is a great deal of ground that needs to be made up, given the neglect of Wales over the last 14 years. I look forward to working with Labour colleagues to do that.
Thank you, Cabinet Secretary. I’m going to move on to another area that I think deserves some clarification. Yesterday my colleague Sam Kurtz raised a question in here about the legitimacy of spending £16,000 on a St David’s Day event in New York, which served expensive, we heard, lobsters and various things—none of which strikes me as particularly Welsh or value for money. On the face of it, this seems completely unreasonable, especially considering the financial difficulty that we are all likely to face. I firmly believe we need to be showing off Wales to the world, and this could come at a cost—I accept that—but we need to make sure that the money is spent appropriately and delivers benefits to the people of Wales that we can see—tangible benefit. So, this isn’t the only major spend that was paid for by Welsh Government procurement cards; there are several purchases that beg questions. There probably are very great explanations around these, but the fact that there isn’t clarity in the public domain drives this fear. Now that you are Cabinet Secretary for finance, Cabinet Secretary, will you be looking into an internal audit of this and what is perceived by the general public, perhaps, as reckless spending of taxpayers' money?
Llywydd, the figures are only available because of the internal audit processes of the Welsh Government. That's how those figures come to be identified and to be put into the public domain. So, I don't think there's any lack of clarity there. Look, Peter Fox made the fundamental point: these were expenditures not simply around St David's Day, but they were around the game played between Wales and the United States of America during the football world cup. There was no greater opportunity to showcase Wales to the United States of America than when our two football teams were playing together on that stage. And he knows he would never have invited a group of investors to Monmouth and said to them, 'Come and see everything that Monmouth has to offer, and when you arrive, I'll offer you a cup of warm water in a plastic beaker', because you know that when you are trying to interest major investors and major companies and to show what Wales has to offer, you do have to make sure that you are showing the very best that Wales can have to offer and to use those opportunities. That was what was happening when those events were taking place. We have published the direct benefit that has come to Wales as a result of the expenditure we incurred around the world cup, and I'm very happy that those figures are there in the public domain for anyone to see.
Plaid Cymru spokesperson, Heledd Fychan.
Thank you, Llywydd. I also welcome the Cabinet Secretary to his role. I am very grateful for the engagement that has already happened and I look forward to working constructively. I have to say, the hypocrisy of the Conservatives is very striking, but it is important that we do, as a Senedd, express a united voice in fighting Wales’s corner, and demanding our fair share from Westminster for our nation. We need robust and strong voices to demand that, and with the authority and experience that you have, as the former leader of our nation, you are, without doubt, in a unique position to do so.
Last July you asserted in this Chamber that the election of a Labour Government at Westminster would lead to Wales getting
‘the investment that we need in our public services.’
However, given that it appears that Labour’s spending plans will leave areas of the Welsh budget that are not ring-fenced facing a £683 million shortfall in real terms by 2028-29, and that one of the most notable actions of the Labour Government in Westminster, so far, has been to withdraw the winter fuel allowance from thousands of vulnerable pensioners, which will, of course, ramp up pressures and costs on our NHS, do you regret your previous confidence in the ability of Keir Starmer to restore Wales’s public finances?
Well, what I can say, Llywydd, of course, is that I will have opportunities, as will the First Minister have opportunities, to have conversations with the new Government in Westminster and to speak to them about those issues that are important to us here in Wales, and to do that in a way where the Government in Westminster recognises those issues that are important to us and want to work with us in a constructive manner.14
As I said in my response to the first question from Sioned Williams, the funding won't be made available to us immediately here in Wales, nor across the whole of the UK, because the economic situation of the UK isn't healthy enough for us to do that. But the ambition of the Government in Westminster is to grow the economy, and in so doing to have more funding to invest in public services and those other things that are important to us here in Wales.
Diolch, Ysgrifennydd Cabinet. But I'm sure that you agree with me that people in Wales are yearning for the rhetoric of the partnership of power to match up with the reality. They were promised so much. And how can it be a true partnership if one side steadfastly ignores the other on issues such as the devolution of the Crown Estate, HS2 consequentials and, most importantly, fair funding for Wales?
Last week, as you referenced earlier, the first meeting of the Finance: Interministerial Standing Committee since the general election was held in Belfast. Was the issue of replacing the Barnett formula with a needs-based funding model for Wales discussed? And if so, what was the response of the UK Government representatives?
Well, Llywydd, there is a stark contrast, it seems to me, between what Plaid Cymru were saying before the election and what they are saying to me now. I remember many, many questions from the leader of Plaid Cymru about where was the ambition of Labour for Wales, why was Sir Keir Starmer so unwilling to commit to expenditures and things? What Sir Keir Starmer was doing was explaining the challenges that an incoming Labour Government would face and the time that it would take to put right everything that had gone wrong over the previous 14 years. So, I don’t agree, of course, with the Member when she says that the list of things that she outlined have been ignored. Those things are there to be worked on and they're not all going to be solved in the first three months.
So, to come to her specific question, I did attend the FISC in Belfast last week. The Barnett formula was not discussed in the FISC itself and that is because our Scottish colleagues will never agree to the sort of reform that we advance here in Wales, and that is a four-nation forum. I have raised the Barnett formula with colleagues in London, of course, because there is a particular Welsh interest in it. But if you think that the FISC is a good place to make progress on it, then, I'm afraid, if you were around the table, you would see that it's absolutely not the context where you're likely to make any progress.
Well, Plaid Cymru will never apologise for taking every possible opportunity to stand up for Wales and call out for fair funding. That is hugely disappointing for many people who would expect Welsh Government to be taking every possible opportunity.
There are signs that Keir Starmer’s administration are following in the footsteps of their predecessors in terms of their belief that Westminster knows better than this Senedd. We should be able to decide here how our own money is spent. For example, the UK Chancellor is currently considering a sweeping range of reforms to pension investment funds that could see the eight regional local government pension funds in Wales, alongside the Wales Pension Partnership, being amalgamated within a single fund for England and Wales. Without doubt, this is an area ripe for reform, but the fact that only 3.3 per cent of the assets held by the Clwyd Pension Fund are in the UK is a damning indictment of how our investment structures are often poorly aligned to serve domestic interests.
But, certainly, the solution is not to strip away local oversight of such funds and centralise a decision-making authority in London. The chronic failures of the levelling-up agenda should serve as a warning in this respect. Have you been consulted by your colleagues in Westminster regarding this potential reform, and do you believe that an amalgamated pension fund for England and Wales represents the best model for ensuring that Welsh money is reinvested effectively and consistently for the benefit of our own communities?
Well, Llywydd, the Plaid Cymru spokesperson's original remarks were her audition for leadership of the light brigade, weren't they? She doesn't care about the context in which she would be advancing Wales's case, she's willing to do it everywhere, whether that case would be guaranteed to fail or not. To advance—[Interruption.] No, no. To advance the cause of Wales, it is not enough simply to think that a soapbox and a megaphone will always be the right answer. You have to be sensitive to the context you're in and advance the case where it has the greatest sense of success.
Nor do I share a nationalist approach to pension funds. I want pension funds to work for the people who contribute to them, and that means there is a very direct interest for Welsh people whose money is in those pension funds to see that money being used for long-term investment here in Wales. Does that mean that I wouldn't be willing for money invested in an English pension fund to be spent here in Wales? Of course it doesn't. I want that money to be used to the best possible use and if that means that we will co-operate with pension funds on the other side of the border, because it is to Wales's advantage to do so, then I've no difficulty with that at all.