1. What assessment has the Cabinet Secretary made of the findings in the Institute for Fiscal Studies’ recent annual Green Budget? OAQ(5)0090(FLG)

Llywydd, the IFS green budget shows that the UK Government’s self-imposed austerity policy is not working, and that people in Wales face the immediate prospect of tax rises and spending cuts, with a longer term prospect of these failed policies extending into the next decade.

Thanks, Cabinet Secretary. You are right, the green budget talks about tax rises or cuts that we face, and a very difficult future in Wales. But one thing we could do to help would be to stop money leaving Wales. I’ll give an example. In Cardiff West, the Earl of Plymouth is about to make roughly £1.4 billion from land sales that will destroy the countryside there. So, the question is: why don’t you legislate, so that Cardiff council, and other councils like it, can quickly reclassify land as agricultural land? The Welsh Government could then buy it—in this instance, for roughly £7 million. And, in this case, you could stop £1 billion leaving Wales, whilst securing the asset.

Llywydd, there is nothing in the Institute for Fiscal Studies’ green budget that provides advice on that matter.

The IFS green budget report shows the wide variation of incapacity benefit claimant rates across the UK, with south Wales consistently conceding 8 per cent, along with other places like the north-east of England, and Merseyside, and the west of Scotland, whereas in much of the south of England, the claimant rate is below 4 per cent. So, does he agree that any changes of policies in this area that the Chancellor were to make would have a disproportionate effect on south Wales in particular and would need significant extra resources to deliver?

Well, Llywydd, Julie Morgan is absolutely right to point to the disproportionate impact on Wales of the UK Government’s welfare reform policies. And, as a Government, and, indeed, across many parts of this Assembly, we have consistently called on the UK Government to change its course in that regard. It’s sometimes said in a shorthand way, Llywydd, isn’t it—that Wales is older, sicker, and poorer than other parts of the United Kingdom? And all those three dimensions have a direct impact on those people who would wish to be able to claim benefits to help them with sickness and incapacity problems that are well beyond their own control.

Andrew R.T. Davies.

Thank you, Presiding Officer. I’m grateful you’ve called me. It seems that the principal questioner has left the Chamber.

It has been noted.

I would ask the finance Secretary about the report that came out yesterday, in relation to the fiscal framework that has been brought forward by yourself, and the UK Government, that potentially has the ability to deliver an extra £600 million to the Welsh Government over the coming years. Do you recognise that figure, and the benefit that the fiscal framework will bring to the Welsh Government, in meeting some of the objectives that are contained within the IFS’s green budget? Because that is a significant figure that, ultimately, could meet some of those goals.

I agree with Andrew R.T. Davies that you’ve got to take the fiscal framework alongside the IFS green budget, because the one does have some potential to mitigate the other. The £600 million figure in the report produced by the IFS and the Wales Governance Centre is within the range of £500 million to £1 billion that we set out in our estimate of what the fiscal framework would bring to Wales. It’s there, Llywydd, to be balanced against some of the risks that we are taking on as part of the fiscal framework. Nevertheless, our estimate is close to that of yesterday’s report, but shows that, even when those risks are taken into account, the fiscal framework will bring additional revenue to Wales, and we will want to put it to work to mitigate some of the cuts that the green budget demonstrates are coming our way.

Cabinet Secretary, I’m sure you’d agree with me that austerity never works. From President Hoover in the United States to Greece today, all austerity has done is make matters worse. We know that when the Institute for Fiscal Studies published its green budget, its director said that the next few years would be defined by the spending cuts announced by George Osborne. What effects will these proposed spending cuts have on the people of Wales?

Let me begin by agreeing with what Mike Hedges said. The policy of austerity is a self-defeating policy. It makes things worse rather than better, and that’s demonstrated from the practical impact that we see elsewhere. On the direct impacts of the spending cuts set out in the IFS’s green budget, what we know is coming the way of Wales is a reduction in our revenue of 8 per cent between the years 2009 and 2019, and a cut of 21 per cent in our capital budget between 2009 and 2019, and this is without the cuts of £3.5 billion that the UK Government continues to say it will impose in budgets in 2019-20. I met the Chief Secretary to the Treasury yesterday, with finance Ministers from Scotland and Northern Ireland. Together, we pressed on the chief secretary the need for the UK Government to abandon its plans for those very damaging cuts and the impacts that they would have on devolved administrations right across the United Kingdom.