Wales: a clear way forward despite austerity

25 Jan 16

The Labour-led Welsh Government was quick to set out its spending plans, aiming to provide clarity and protect services despite financial pressure

The UK government’s ‘smoke and mirrors’ Spending Review left unanswered questions and missed opportunities for Wales. It was yet another example of the chancellor’s sleight-of-hand approach, seemingly giving with one hand but taking away far more with the other.

We have always pressed the case for fair funding for Wales. While the Spending Review gave a commitment to a funding floor for Wales, the devil was very much in the detail – or the lack of it. The review fell far short of delivering fair funding over the long term, with the floor set only for the course of this parliament. All parties in the Assembly are dissatisfied with this and I will continue to push the UK government for an inter-government agreement with greater clarity.

One issue the review did make clear was that austerity is far from over. Austerity is a choice, not an economic necessity, and Wales will pay a disproportionate price for the UK government’s welfare reform.

Once again, it was a challenging settlement for Wales. Behind the headlines of increased spending on the NHS in England, we saw a further 3.6% real terms cut to our budget over the next four years. This comes after five years of cuts. Put starkly, our budget by the end of the decade will be 11% lower in real terms than it was in 2010. Against this backdrop, we prepared our draft Budget for 2016/17. Despite the late timing of the Spending Review, we were determined to produce our draft as soon as possible after knowing our settlement to provide clarity to our partners. We worked fl at out and published our plans within two weeks on 8 December. Our draft Budget, entitled Fairer, Better Wales – Investing for the Future, aims to protect our valued public services.

At the heart of our plans is an investment of nearly £300m for the Welsh NHS. This additional spend includes:

● £200m to support core NHS services.

● An extra £30m for health services for older people and mental health services. ● A capital boost of £33.5m for new equipment, infrastructure and maintenance of NHS buildings.

● Protection of our funding for public health services.

Our investment acknowledges the wide range of services that affect health. We have increased the Intermediate Care Fund from £20m to £50m; this operates at the interface between health and social services, supporting older and vulnerable people to be independent at home, prevent hospital admission and help early discharge with support at home. We are also providing an additional £21m to social services. We understand the role of local authorities in delivering local services and, where possible, have directed funding through the local government revenue support grant.

School funding will continue to grow by 1% more than changes to the Welsh budget overall – almost £40m extra for next year. Nearly £35m of this will support schools spending through councils. Th e investment in schools and social services gives an important boost to local government and, once again, local authorities in Wales have a more favourable financial settlement than those in England.

We are also protecting further education in this Budget with a further £5m to create 2,500 apprenticeships. An additional £10m will ensure no Welsh student at university will have to pay more for their degree than if they had been students in 2010/11.

Over £230m will also be allocated next year to public service infrastructure, including transport schemes and flood defences.

We’ve always been clear about the need to invest to boost jobs and economic growth. The rise in our capital budget in the spending review shows the chancellor now agrees with us – although this will not reverse the cuts to capital budgets since 2010.

Our Budget aims to protect the services that matter most to people. However, we do not underestimate the impact of our decisions on other areas.

We are proud of our record in delivering despite financial pressures. We will continue to do all we can to lever in additional resources and innovate to mitigate the impact of continued austerity.

  • Jane Hutt - image: National Assembly for Wales
    Jane Hutt

    Jane Hutt AM is finance minister in the Welsh Government and an honorary CIPFA member

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