So, the next item is the debate on the first supplementary budget of 2016-17. I call on the Cabinet Secretary for Finance and Local Government to move the motion—Mark Drakeford.

Motion NDM60646 Jane Hutt

To propose that the Assembly, in accordance with Standing Order 20.30, approves the First Supplementary Budget for the financial year 2016-17 laid in the Table Office and emailed to Assembly Members on Tuesday, 21 June 2016.

Motion moved.

Thank you very much, Llywydd. This first supplementary budget is the first opportunity to amend the budgetary plans for the current financial year. The plans were published and approved by the previous Assembly in March. I would like to take this opportunity to thank the new Finance Committee for its scrutiny work on this budget. Before too long, I will be responding to the Chair with additional information that was requested following my appearance before the committee.

The main purpose of this budget is to restructure the final budget of 2016-17 so that it corresponds to the new Government portfolios. This is crucially important in order to ensure the accountability of the Cabinet and to manage the Welsh block effectively. These changes have no net impact on the budget as a whole. The budget also allows us to demonstrate a few minor changes to the budget that arise from decisions made during the period of the previous administration.

Lywydd, mae’r addasiadau hyn yn cynnwys dyraniadau refeniw a gyhoeddwyd yn gynharach yn y flwyddyn, sef £10 miliwn mewn cyllid atodol i Gyngor Cyllido Addysg Uwch Cymru, £2.3 miliwn o gyllid ar gyfer rheoli llifogydd, £1.3 miliwn o gymorth rhyddhad ardrethi busnes ar gyfer busnesau yn ardal fenter Port Talbot, a £7.7 miliwn ar gyfer costau etholiadau Cynulliad Cymru. Mae'r gyllideb yn cynnwys dyraniadau ar gyfer cyhoeddiadau cyllid cyfalaf o filiwn o bunnoedd ar gyfer y cynllun lliniaru llifogydd yn Nhalybont, £5 miliwn ar gyfer ein cynllun rheoli perygl llifogydd ac arfordiroedd, £2.5 miliwn ar gyfer gwaith atgyweirio i gamlas Aberhonddu a Sir Fynwy, a £0.5 miliwn ar gyfer gwelliannau draenio ar yr A55.

Gwnaed ymrwymiadau hefyd gan y Llywodraeth flaenorol o ran cyllid a dderbyniwyd gan Lywodraeth y DU ar gyfer cytundeb dinas- ranbarth Caerdydd a phrosiect Gweithredu dros Blant Cymdeithas Byw’n Annibynnol Abertawe (SAIL). Nid yw’r prosiectau hyn wedi eu hadlewyrchu yn y gyllideb hon, gan nad oedd cynlluniau wedi’u datblygu’n ddigonol i ganiatáu dyraniad. Bydd unrhyw ddyraniadau a wneir yn ystod gweddill y flwyddyn ariannol hon yn cael eu hadlewyrchu yn ddiweddarach yn y flwyddyn yn yr ail gyllideb atodol a gynllunir.

Mae'r gyllideb atodol hon hefyd yn adlewyrchu addasiadau i derfyn gwariant adrannol Cymru a wneir gan Lywodraeth y DU, megis symiau canlyniadol Barnett. Ers cymeradwyo'r gyllideb derfynol ym mis Mawrth, rydym wedi cael addasiadau cyllid canlyniadol gwerth cyfanswm o £73.8 miliwn mewn arian refeniw a gwerth £12.6 miliwn mewn arian cyfalaf. Mae'r addasiadau hyn wedi eu hychwanegu at ein cronfeydd wrth gefn, o ystyried y cyfnod cythryblus ac ansicr yr ydym yn ei wynebu. Mae lefel y cronfeydd wrth gefn, o ganlyniad, yn uwch na'r arfer ar yr adeg hon o’r flwyddyn, ond mae'n ddoeth, yn fy marn i, i gynnal cronfeydd wrth gefn ar lefel sy'n ein galluogi i ymateb i straen pellach posibl ar y gyllideb. Bydd unrhyw ddyraniadau o'r cronfeydd wrth gefn yn cael eu hadlewyrchu yn yr ail gyllideb atodol, y byddaf yn ei chyflwyno yn y ffordd arferol, tuag at ddiwedd y flwyddyn ariannol hon.

Lywydd, mae'r cynlluniau diwygiedig a amlinellir yn y gyllideb hon, ar y cyfan, yn weinyddol eu natur, ond maent yn fan cychwyn cyllidebol angenrheidiol ar gyfer Llywodraeth newydd ac er mwyn rhoi eglurder i Aelodau'r Cynulliad. Bydd yr heriau ariannol y byddwn yn eu hwynebu yn y dyfodol yn cael sylw yn ein cyllideb ddrafft ar gyfer 2017-18, y byddaf yn ei chyflwyno yn y ffordd arferol ar ôl y toriad. A gaf i ddiolch i'r Pwyllgor Cyllid unwaith eto am graffu ar y gyllideb atodol hon, a gofynnaf i'r Aelodau ei chefnogi?

I call on the Chair of the Finance Committee, Simon Thomas.

Thank you, Presiding Officer, and thank you to the Minister for outlining this supplementary budget. The Finance Committee agree that the main purpose of this supplementary budget was restructuring following the changes in ministerial portfolios after the election. Despite that, we would like to draw the Assembly’s attention to the report that we’ve put together and to three things stemming from the more political decisions, as it were, of the Government.

First of all, some of you present at the previous Assembly will remember the disagreement regarding the significant cut to the funding for the Higher Education Funding Council. A promise was made at that point to provide a further £10 million of funding to the HEFCW budget and the supplementary budget reflects that, with an additional £5 million for part-time study provision and £5 million for research. As the Cabinet Secretary has also noted, there is an allocation of £7.7 million for the Assembly’s electoral costs. In scrutinising the budget, the Finance Committee ensured that all efforts were made to save those costs by holding the police and crime commissioners’ elections on the same day. It’s the Home Office’s responsibility to hold those. If we have a general election quickly, then it’ll be the responsibility of the UK Government to cover those costs. But in looking at the future, we do want to keep the costs as low as possible, and we look forward to additional work by the Cabinet Secretary, especially from the point of view of the wages of some of the officials who are responsible for elections in Wales.

The final point mentioned is that the committee has noted that £1.5 million has been allocated in the budget for the business rates relief scheme in the Port Talbot waterfront enterprise zone. We’re all aware of the reason for that decision—the threat to the Tata steelworks in that town—but we were of the opinion that we should seek greater evidence to set out the rationale behind allocations of this kind, and we hope that the Cabinet Secretary will be able to provide that information that we asked for in the committee meeting in due course. We think that that will help Assembly Members and the people of Wales to scrutinise programmes of this kind in terms of their success and value for money.

So, even though the committee had gathered at short notice to consider the supplementary budget, we appreciated the opportunity to discuss it and we feel that the budget does follow the budget protocol agreed between the Finance Minister and the previous Finance Committee. So, we note the budget and we note that it’s a technical budget following portfolio changes.

The technical nature of this supplementary budget has already been noted—thank you; that’s what I call collaboration—and, as we heard, it’s a budget that reflects ministerial changes and portfolio changes within Government and applies the allocations in that regard. So, we in Plaid Cymru will support the motion. I think we’ve had enough political drama over the past few days, so I don’t want to add to that by blocking this supplementary budget.

I will just note, in passing—and this was raised in the committee that I was a member of for a short period of time—that it is slightly strange that a policy has been inherited from a previous Assembly. Technically, of course, it’s not possible to bind one Assembly to the decision of another. I wouldn’t take it for granted—if I can couch it in those terms—that the sixth Assembly will be of the same political hue in terms of the Government. Therefore, although I understand the rationale that the Minister mentioned—because of a shortage of time in implementing the desires of the previous Assembly—I think we should avoid such a situation arising again where one Assembly is expected to implement the political decisions of a previous Assembly. That’s not how democracy works, or there would be no point in having elections at all.

Now, I do think that the recommendations made by the committee are most sensible. I would endorse the call for transparency, and there is, of course, this question as to the evidence base for policies. I think that is part of scrutiny, isn’t it? It does take us in the direction of programme budgeting where you see greater detail than just the general allocations. You then see, right down to the very fine programme detail and individual project detail, where those resources are allocated and what the aim of that expenditure is, because, at the end of the day, that’s where the focus should be. Therefore, moving more in that direction in the future would assist us all as Assembly Members to scrutinise budgetary decisions taken by Government.

I would also welcome the same transparency in terms of reserves. There was some discussion of that in committee—the rationale behind the decisions in terms of reserves; I think that is just as important as the decisions taken on expenditure.

I would like to raise one further minor point with the finance Secretary. I understand that this is a debate rather than a statement, but there was some debate in the previous Assembly about the weakness of the budgetary exchange mechanism, mainly that the closing date for the declaration of underspend to the Treasury and to decide whether any sums needed to be transferred from one year to the other fell so early in the budgetary year. Now, it is important that the Welsh Government does have some flexibility in this regard, and therefore I would like to know if the Welsh Government has had any discussions with the Treasury on the possibility of shifting that deadline to a later date in the financial year.

I wasn’t expecting to hear ‘supplementary budget’ and ‘high political drama’ in the same sentence there, Adam Price, but you managed it. Can I thank the finance Cabinet Secretary for his earlier opening contribution? We agree with you, finance Cabinet Secretary, that this first supplementary budget is largely technical and administrative due to changes through the transition from the last Assembly.

If I can just touch on a couple of the recommendations that the Finance Committee made that previous Members have alluded to. Recommendation 1 relates to the cost of the recent Assembly election and this is clearly a cost that has to be borne by this place whether we like it or not—democracy does have a cost and we know from previous elections roughly what that’s going to be. It’s clearly important that that cost is kept to a minimum and that elections that this place is involved in are efficient. So, I think it’s reasonable to ask the Cabinet Secretary how we’re going to ensure this now and in future. I understand that a large part of this cost is an estimate based on the 2011 Assembly election cost and figures—around £4 million, I think, of Royal Mail delivery costs. Can you tell us, in rounding up, when we will get a final decision on what the actual cost was so that we can gauge that and compare it with previous elections?

Recommendation 2 of the Finance Committee report calls for greater evidence setting out the rationale behind supplementary budget allocations mentioned by the Chair of the Finance Committee earlier, including details of anticipated economic impact. I think, as we’ve made clear in the Finance Committee and in discussions in the last Assembly, it’s very important, as we move towards greater tax devolution in 2018, that we get this aspect of the Welsh Government budget setting process right and the scrutiny side of it right. So, Minister, how do you intend to improve—? I keep calling you ‘Minister’. Cabinet Secretary, how do you intend to improve forecasting for future budgets? Indeed, you mentioned the draft budget that’s coming up later, in the near future—the main draft budget—so, how do you intend to improve the forecasting side of what the Assembly does with the new Welsh Treasury and indeed to develop the capacity of Government to gauge the economic impact of the decisions that we take here? That’s going to be increasingly important over the months and years to come.

Finally, on recommendation 3 of the supplementary budget report by the Finance Committee, we return to this issue in every Assembly and in nearly every finance debate—we need to better track the allocation from department to department over an Assembly term. We are, as has been pointed out now, at the start of the fifth Assembly—the sixth Assembly is still some way away, Adam Price, but you alluded to that in your comments. At the end of the fifth Assembly, I really hope that we can look back and say that the budget setting process and the scrutiny process that we undertook, as all of us here—new Members and old Members alike—were done better in the fifth Assembly term than in previous terms. I’m sure that we would all like to achieve that. So, Cabinet Secretary, how do you intend to set us along the right path in this regard and make all-important comparisons possible, not only in the draft budget that’s up and coming, but in future draft budgets and final budgets over the next five years?

We do not propose to object to this budget and we are grateful to the Cabinet Secretary for the participative approach taken with the Finance Committee, and beyond, on it.

I would like to raise just a few points around the capital allocations: the £2.5 million for the Brecon and Monmouthshire canal, which I welcomed in my question to the First Minister earlier. I just wonder whether this is still intended to have the Crindau marina proposal connecting the southern end of the canal to the Usk. I know that there have been retail development proposals around that. There was £75,000 of previous funding from the Assembly for that—is that still a live proposal that we expect to take place?

On the £5 million flood and coastal risk management schemes, and the £985,000 for the Tal-y-bont flood alleviation scheme, is the position of the Welsh Government that these are climate change projects responding to actual or prospective changes in sea level, or are they overdue investment in necessary schemes that are needed in any event? And also clarify the £500,000 for the drainage improvements on the A55; I note it is in the economy and infrastructure budget rather than environment and rural affairs. So, does that confirm it’s not actually a climate change project, as I think may have been suggested by the First Minister during the Assembly election, but instead remedial work for a poorly designed or potentially constructed-overly-cheaply road?

On the student finances, I was quite struck outside this place by how the Government’s going to slash £41.1 million from higher education. We were then told that £21.1 million of that was just a technical reclassification. I think we all welcome the £10 million that’s now been put back in, half for part-time and half for research, and the £8.2 million that we see in the increased revenue within the AME cost of the student loans. The Diamond report on the interim basis, my reading of that was there was an £11.9 million gap between what the Welsh Government was provisioning for money that was likely not to be paid back on student loan and what Diamond felt might be required. Is the £8.2 million a contribution to closing to closing that gap or separately? But, I welcome the supplementary budget and the process by which it’s been taken forward.

This is a very simple supplementary budget that involves two major financial changes. As the Cabinet Secretary said earlier, the main purpose of this supplementary budget is to restructure to reflect the ministerial portfolio changes of the new Welsh Government. It also sets out details of the additional allocations, most of which have been previously committed in policy statements in this place.

As a matter of general principle, however minor the changes are in a supplementary budget, it is important that the Finance Committee, at the very minimum, takes evidence from the finance Minister and produces a report to be considered at an Assembly meeting. To aid transparency, the committee has recommended that the Cabinet Secretary presents information to ensure it is possible to track allocations to departments and major projects over the course of this Assembly term. This should include enabling comparisons to be made when the portfolios of Cabinet Secretaries change. We are provided with the expenditure at ministerial level, but the provision of budgets by functional area would enable a more detailed scrutiny of the budget and the ability to follow the money. Whilst the Assembly would approve the budget and supplementary budgets at the ministerial level, there would then be an understanding of how this is made up and when portfolios change—and just a quick guess, I think during this term portfolios will change at least once—[Interruption.] That is just a quick prediction; I don’t know if anybody is prepared to disagree with that. Over the next five years, there will be at least one change. We will be able to follow the money and identify movement between the functional areas. Also, details of major capital projects and their cost changes over the life of the project would aid the scrutiny of capital projects to see if they are actually coming in on the amount of money we’re expecting.

On 28 June, the Chancellor of the Exchequer expressed the view there was a need for the new Prime Minister to implement both tax rises and further spending cuts. Consequently, the committee has recommended that the Cabinet Secretary keeps the committee informed of discussions with the UK Treasury on any decisions that may result in changes to the Welsh Government’s budget in the coming months. I hope from this debate and from the scrutiny of the supplementary budget by the Finance Committee that the Cabinet Secretary for finance will find the Finance Committee both a critical friend and an aid in budget setting.

Can I just take one point up with Adam Price? I don’t believe in the budget exchange mechanism. I support the policy of the previous Finance Committee that the Welsh Government should be able to carry forward any underspend whatsoever from year to year without having to go begging to the Treasury to ask what they could or could not take forward. I think it’s the date by which it is done—. But, if a local authority can carry money forward year on year, I think it’s fundamentally wrong that the National Assembly for Wales cannot do the same.

I call on the Cabinet Secretary to reply to the debate.

Thank you, Presiding Officer, and thank you to everyone who has contributed to the debate. May I start by thanking the Chair of the Finance Committee once again for the report and for the recommendations? He’s highlighted a number of things in the report and I look forward to formally responding to the recommendations. I’d also like to thank Adam Price for telling us that Plaid Cymru will support this supplementary budget this afternoon. It is difficult, and I do understand it’s difficult, that as we move from one Assembly to another, there are some decisions that have been scrutinised in the previous Assembly, but it is, of course, up to this Assembly to decide whether they are content to proceed with the ideas considered by the previous Assembly. That’s why I brought this supplementary budget forward today.

Ystyriais bwynt Adam Price fel un nad oedd o angenrheidrwydd yn cefnogi'r system bresennol o ran cyfnewid cyllidebau, ond yn syml fel mater o awgrymu, gan mai dyma’r system sydd gennym a dyma’r system yr ydym yn gweithredu oddi mewn iddi, yna rydym yn awyddus iddi weithio mor effeithiol â phosibl i Gymru. Rydym wedi dechrau cyfres llawer cynharach o drafodaethau gyda'r Trysorlys eleni, yn rhannol oherwydd, dan yr amgylchiadau o ansicrwydd yr ydym ynddynt, ein bod yn awyddus i gael y posibilrwydd gorau o drosglwyddo arian y gallai fod modd ei drosglwyddo i'r flwyddyn nesaf, gan ddefnyddio'r mecanwaith diffygiol, fel y nododd Mike Hedges, yr ydym ar hyn o bryd yn gweithredu oddi mewn iddo.

Cododd Nick Ramsay gyfres o bwyntiau a oedd yn adroddiad y Pwyllgor Cyllid. Rydym yn sicr yn awyddus i wneud yn siŵr ein bod mor effeithlon â phosibl wrth leihau cost yr etholiadau. Rydym yn disgwyl i’r £7.7 miliwn yr ydym wedi’i neilltuo fod yn ddigonol ar gyfer y dasg. Mae'r rhan fwyaf o hynny—y bil gwerth £4 miliwn gan Swyddfa'r Post—yn gost sefydlog. Rydym yn gwybod hynny. Os na chedwir at y £7.7 miliwn yr ydym yn ei ddisgwyl yn y gyllideb atodol hon, byddwn yn sicr yn adrodd amdano yn yr ail gyllideb atodol.

Bydd gennym broses newydd ar gyfer craffu ar y gyllideb yr wyf yn gobeithio y gallwn gytuno arni gyda'r Pwyllgor Cyllid. Byddwn yn diweddaru'r protocol sydd gennym gyda’r pwyllgor hwnnw i adlewyrchu'r cyfrifoldebau newydd y bydd y Cynulliad hwn yn eu cyflawni ar ôl i ni ddod yn gorff sy’n codi trethi, yn ogystal â chorff sy’n eu gwario, o 1 Ebrill 2018 ymlaen. Os byddwn yn gallu cytuno ar y broses newydd honno, bydd yn dechrau yn ystod hydref y flwyddyn nesaf a bydd yn ateb rhai o'r pwyntiau a gododd Nick Ramsay.

O ran olrhain dyraniadau yn well yn ystod y pumed Cynulliad, wel, yr egwyddor yw honno a amlinellwyd gan Mike Hedges. Rydym wedi cychwyn ar y llwybr hwnnw trwy gyflwyno’r gyllideb atodol gyntaf hon. Roeddwn i'n awyddus bod holl Aelodau'r Cynulliad, a'r rhai hynny y tu allan i'r Cynulliad sydd â diddordeb yn y materion hyn, yn gweld cyn gynted ag y bo modd y cyfochri newydd rhwng y cyllidebau a chyfrifoldebau portffolio. Pe byddai cyfrifoldebau yn newid o gwbl yn ystod pum mlynedd y Cynulliad hwn, yna byddwn yn gwneud ein gorau i weithredu’r cyfochri newydd hwnnw mewn ffordd sydd mor rhwydd â phosib i Aelodau ac i eraill weld sut y mae gwariant yn cael ei olrhain dros dymor y Cynulliad .

Gan droi at gwestiynau Mark Reckless, mae'r £2.5 miliwn ar gyfer camlas Aberhonddu a Sir Fynwy yn gydnabyddiaeth fod angen am atgyweiriadau ail-leinio a gwelliannau i'r gamlas. Y rhan fordwyol yng ngogledd y gamlas yw eisoes yr atyniad mwyaf poblogaidd ym mharc cenedlaethol Bannau Brycheiniog. Nid yw'r rhan ddeheuol yn fordwyol ar hyn o bryd, ond dyna'r hyn y disgwylir i’r arian hwn yn rhannol fynd i'r afael ag ef. Nid wyf yn cydnabod y ffordd ddeuaidd yr awgrymodd yr Aelod bod arian ar gyfer llifogydd naill ai oherwydd newid yn yr hinsawdd neu oherwydd diffygion yn y ddarpariaeth bresennol. Byddwn yn sicrhau bod y £1.9 miliwn sydd wedi ei roi i ni i ymdrin â'r llifogydd difrifol a ddigwyddodd ym mis Rhagfyr 2015 yn cael ei ddefnyddio'n dda, fel y byddwn yn gwneud gyda gweddill y gwariant cyfalaf a amlinellwyd yn y gyllideb atodol hon ar gyfer gwaith atal llifogydd.

Cyn belled ag y mae Diamond yn y cwestiwn, nid yw hwnnw'n fater sydd wedi dylanwadu ar y gyllideb atodol hon, ond byddwn yn gweithio'n galed dros yr haf i feddwl sut y bydd y darn pwysig iawn hwnnw o waith yn cael ei ddatblygu, ac Ysgrifennydd y Cabinet dros Addysg, wrth gwrs, fydd yn arwain hynny.

Yn olaf, dim ond i orffen drwy gytuno â Mike Hedges, er mai cyllideb atodol ar gyfer cymhennu yw hon, mewn nifer o ffyrdd, , mae ei phwysigrwydd yn ymwneud â sicrhau bod prosesau'r Cynulliad yn gweithio'n iawn cyn toriad yr haf, a sicrhau bod y Pwyllgor Cyllid yn cael y cyfle y mae wedi ei gael i graffu ar gynigion y Llywodraeth yn y maes hwn, ac edrychaf ymlaen at weithio gydag ef ac aelodau eraill o'r Pwyllgor Cyllid mewn ysbryd tebyg yn ystod gweddill y flwyddyn ariannol hon.

The proposal is to agree the motion. Does any Member object? No. So, the motion is therefore agreed in accordance with Standing Order 12.36 and today’s proceedings come to an end.

Motion agreed in accordance with Standing Order 12.36.

The meeting ended at 19:11.