I now call for questions from the party spokespeople to the Cabinet Secretary. First of all, Plaid Cymru spokesperson, Sian Gwenllian.

First of all, I wish to thank the Cabinet Secretary for presenting the draft budget yesterday. It was good to see a number of the Plaid Cymru priorities being reflected in it, including an additional £25 million for local authorities. As you know, local authorities across Wales have suffered serious cuts to their funding over the years with their resource budgets being reduced by £461 million in real terms between 2010 and 2014-15. So, it is very good to see that the additional funding that has been received, as a result of the agreement between Plaid Cymru and the Welsh Government, and that there will be additional funding for the non-domestic rates and it does mean that this is the first year since 2013-14 for the finances and funding for local authorities to increase in nominal terms, although it will still be a reduction in actual terms.

Our attention now turns, of course, to the local government settlement for 2017-18. I would like to ask you about the formula used to allocate funding between the various local authorities. I read in your statement—

A question, please, Sian Gwenllian.

I see that the formula has been revised. Could you elaborate, please, on how exactly that has been done?

I thank Sian Gwenllian for her initial comments on funding for local authorities in the next financial year. Of course, I recognise the fact that there is £25 million in that budget following the agreement made between the Government and Plaid Cymru.

O ran y fformiwla, rwyf wedi dilyn y confensiwn a ddilynwyd gan Weinidogion llywodraeth leol ers llawer iawn o flynyddoedd yn y Cynulliad hwn. Rwy’n cymryd cyngor y grŵp arbenigol a sefydlwyd i roi cyngor i ni ar y fformiwla. Mae’r grŵp hwnnw’n cynnwys cynrychiolwyr—mae arweinydd Gwynedd yn aelod o’r grŵp hwnnw, ac arweinwyr cynghorau eraill—ynghyd ag arbenigwyr yn y maes. Ac rwyf wedi dilyn cyngor y grŵp hwnnw. Felly, dyma dair ffordd y cafodd y fformiwla ei newid eleni: o ganlyniad i’w cyngor, mae wedi’i diweddaru i ystyried yr amcangyfrifon poblogaeth diweddaraf, mae wedi’i diweddaru i ystyried y wybodaeth ddiweddaraf mewn perthynas â disgyblion sy’n mynychu ysgolion, ac mae wedi dechrau ystyried y cyngor diweddaraf mewn perthynas â gwariant ar wasanaethau cymdeithasol. Mae’r ffordd y câi gwariant gwasanaethau cymdeithasol ei negodi drwy’r fformiwla wedi’i diwygio’n helaeth. Cyngor yr is-grŵp oedd gweithredu hynny dros gyfnod o ddwy flynedd. Rwyf wedi cymryd y cyngor hwnnw. Bydd yn cael ei roi ar waith a’i gyflwyno’n raddol yn y ffordd honno.

Thank you. As a former member of Gwynedd Council’s cabinet with responsibility for finance, I’m very pleased to see that you have now started to amend the formula and that the rural element of social services expenditure can vary and be an additional pressure, of course, on councils covering rural areas.

There are many other ways of amending the formula, and several groups, including the Welsh Local Government Association and the Federation of Small Businesses, have been calling on the Government to amend the formula, referring in particular to the use of old data, derived from previous censuses. What steps has the Welsh Government taken for next year’s settlement to ensure that the data used is more current and reflects today’s conditions better? Do you think that it is now time to revise the formula in that manner too?

Of course I agree that the formula should rely on the most up-to-date data possible. That’s why I was pleased to agree the recommendations in relation to population numbers and school pupil numbers. I think every effort is made, both by local authority partners and those who advise them, to make sure that the formula does depend on the most reliable data available. During my visits around Wales, meeting all 22 local authority leaders, every one of them had something to say about the way the formula applied in their own localities.

What I’ve agreed with the members of the group that advises the Government is that we will begin the next year’s round of consideration of the formula with a more open seminar, in which we will look at the way the formula currently operates and think of whether there are better ways in which we might be able to reform it for the future, and we’ll do that in an open-minded way with our partners.

Thank you very much. In the narrative on the budget that was announced yesterday, you allude to the fact that the Government will take further steps to reduce the administrative burden on local authorities, by combining grants and viring funding from specific grants to unhypothecated funds, through the revenue support grant. What steps have already been taken to do this?

Well, we will continue with that intention in the next financial year. I’ve spoken to all Cabinet members and they have all placed some grants into the RSG for next year. That is part of the pattern that we, as a Government, have drawn up over the past few years. I am eager to proceed in the same way for next year, where we can provide greater flexibility for local authorities to use the funding available to them. I agree with them that that is the best way of using those funds in future.

The Welsh Conservatives’ spokesperson, Nick Ramsay.

Diolch, Lywydd. Cabinet Secretary, as Sian Gwenllian said, your budget agreement, announced yesterday, features £25 million additional funding for local authorities, but this does come in the wake of the £761 million real-terms reduction in aggregate external finance, as has been identified by the Wales Audit Office. That’s between 2011 and 2016-17. How are you going to ensure that this extra money that is going to be received by local authorities this year is distributed evenly and fairly across those authorities?

I’ll do that in exactly the way I explained a moment or two ago. We have a funding formula. It is an agreed formula. It is revised every year. It’s been revised again this year. It involves political voices and expert voices in it, and I take the advice of that expert group. We will use that formula as recommended to me and then we will distribute the quantum that we are able to make available to local authorities through the formula that has been updated for next year.

Thank you. This is clearly a very important area for local authorities across Wales, financially. The programme for government commits to a floor for future local government settlements. This is particularly important for rural authorities that have consistently received poorer deals, for whatever reason—you and I might have different views on the reasons for that. But, for whatever reason, they have consistently received poorer deals than their urban counterparts across Wales. That’s a fact. But when do you anticipate the new floor kicking in? And can you confirm it’ll be fully operational this year and at what level?

Well, Llywydd, I have to be a bit careful not to anticipate the detail of the statement that will not be released until later this afternoon. What I think I can say at this point to the Member is that I do intend to use a floor mechanism for next year’s distribution to local authorities and that will be reflected in the settlement that I will lay before the Assembly later today.

I did anticipate that this is probably in advance of your statement later today, Cabinet Secretary, but, as I said, it’s a very important issue for local authorities, so it does need airing at the earliest opportunity. I hear what you just said. A funding floor, I’m sure you will agree, is all well and good, but, as we know from the Barnett experience, a funding floor can be seen as a quick fix that doesn’t deal with the underlying structural problems over the longer term.

The previous Finance Committee recommended that the Welsh Government commit to a fundamental review of the funding formula. This has been mentioned by Plaid Cymru in the earlier questions. Why have you rejected a fundamental, far-reaching review? I hear what you say about listening to experts across local government and within the WLGA, but why aren’t you considering at least an initial commitment to a future review of the mechanisms for funding local government in Wales? Because, surely, over the long term, a full, structural review that addresses the issues affecting local authorities across the modern Wales will be far better than the continual, piecemeal, annual modification of the existing formula, which is past its sell-by date.

I think there are two different ways in which it’s important to explore this issue in Wales. First of all, I am keen to set in motion work that will look at the whole way in which we raise local taxation in Wales and to see whether the system we currently have is the one that best reflects future needs. However, whatever methods you use for raising money, there will always be a need to find a way of distributing that money across Wales. The current formula copes with all sorts of different variations: urban needs, rural needs, age-related needs, economic arguments, needs arguments and so on. In the end, there is a fixed quantum, and, however you distribute it, the quantum remains the same. I sometimes think that the best advice to those who urge me, rather emphatically, to tear up the formula and devise a new one is that they might worry about what they wish for, because there is no way of knowing where such a fundamental reform of the formula might lead—to winners and losers, and they may not always be where people might anticipate them.

UKIP spokesperson, Mark Reckless.

Diolch, Lywydd. Cabinet Secretary, you told the Finance Committee this morning that there was £10 million in the budget for the coming year for pilot schemes for the Government’s childcare plans. The overall budget, I think you said, when it’s fully operational, will be £84 million. Can we therefore assume that around one in eight areas will benefit from a pilot, and when will we be hearing where they are?

Well, those really are questions for the Cabinet Secretary with responsibility for the childcare policy area. I know that he’s working very actively with officials and partners beyond the Assembly, informing the pilot schemes, and I’m sure that he’ll make an announcement to Assembly Members as soon as he’s in a position to do so.

To speak more about the financing, as a father of a two-year-old and a four-year-old I’ve experienced both the Welsh and the English systems for childcare. It’s clear that the provision in Wales, largely, in schools is good in quality, but the inflexibility of five 2.5-hour sessions means that it’s very difficult for many working parents to take advantage of it, and the rate at which female participation in the labour market, in particular, is lower in Wales. Is that something that the Government intends to change through its new childcare system? Is the intention greatly to boost participation in the labour market? If so, and despite the independent research, is the Cabinet Secretary really confident that £84 million is enough to provide for the likely change in behaviour, when this comprehensive system comes in?

Well, our approach to childcare in Wales has always been predicated on the links between affordable, available and good-quality childcare on participation in the labour market. We’ve always wanted to make sure that childcare is there in sufficient quantity to make sure that women, in particular, are able to pursue careers in the jobs market in the way that they would wish. The Member makes an important point about flexibility because that is exactly why the Cabinet Secretary has decided to proceed on a pilot basis, in order to make sure that we design the extra supply of childcare that will be needed to meet the pledge in a way that is able to meet the working patterns that families who will want to take advantage of the new service will need. So, it is an important consideration, and already there as part of the pilot approach. We carried out some serious work in advance of the election to draw up the figures that we have published that show what we think this scheme will need, but we will learn from the pilots in relation to the quantum, no doubt, as well.

I commend the Cabinet Secretary and the Government, on the whole, on the system that is proposed. It doubtless will provide much more flexibility and support for working parents, but I disagree with his assertion that that flexibility and support for working parents has previously been part of the Welsh system. Five 2.5-hour sessions without flexibility makes it far harder for two parents to go out to work. I think it’s likely that there will be a very significant increase in the participation rate, and I would question whether that’s been allowed for in the finances of the £84 million.

The Cabinet Secretary also said this morning to Finance Committee that he will have to ramp up spending gradually because of a lack of capacity. Certainly, in my personal experience, it’s incredibly difficult to get a childcare place at a good nursery in the south-east of England. It is far easier in Cardiff and south-east Wales to find capacity and find a number of really good-quality nurseries that can quickly take a child in the private sector. Given that, will the Government look at greater use of private sector nurseries, as well as state provision, particularly taking into account that, when you ramp it up from 38 hours to 48 hours a week, that may fit the school timetable and provision less easily and lead to greater average costs for school provision than has been the case to date?

Well, Llywydd, I’m happy to confirm what I said to the Finance Committee, that if you want to design a system that has the active participation of parents within it and learns from what they tell us about the sort of childcare they will need for the future, we need to calibrate the programme to take account of those views, and that will mean a build-up over time in the capacity that we will be developing. I’m quite sure that the Cabinet Secretary responsible will look at the contributions of the different sectors that already exist for childcare in Wales, and will look to make sure that we align those in the way that best meets the needs of parents, including the need for flexibility.