2. What assessment has the First Minister made of the impact that the UK Government's austerity programme has had in Wales? OAQ51268

With over £1 billion less to spend on public services in Wales, clearly there is a great deal of pressure. Of course, we have called on the UK Government to end this period of austerity and that, I hope, is a message that will be heard by the Chancellor of the Exchequer at the end of this month.

Diolch, First Minister. The UK Tory Government's Chancellor, Philip Hammond, will deliver his budget on 22 November in the House of Commons chamber. Recently, the Welsh and Scottish finance Ministers jointly met with Treasury officials at the finance quadrilateral meeting in London. At that meeting, the Welsh and Scottish finance Ministers delivered a clear and unambiguous call for the UK Tory Government to set out plans to lift the public sector pay cap and reverse the planned further £3.5 billion of unallocated cuts in expenditure in 2019-20. What message does the First Minister have for the Chancellor of the Exchequer in advance of the budget for the need for the Tory Government to abandon its ideological obsession with austerity, considering the Welsh Government has seen its budget cut by 7 per cent in real terms since 2010?

First of all, it's hugely important that the £3.5 billion of unallocated cuts are disposed of, to make sure that we are able to be in a position where we do not bear the extent of those cuts. Secondly, it's hugely important now, I believe, for the economy to have more money pumped into it, to make sure there's more money for investment, to make sure that jobs can be created as a result, and, of course, to enable the Welsh Government and indeed the Scottish Government to be able to invest in the infrastructure that Wales and Scotland need. 

First Minister, you described your approach to the public finances on 23 April, when you were asked,

'The Shadow Chancellor John McDonnell said £500bn more borrowing is in order to give the economy a bit of a boost—you’d go along with that then would you?'

You answered, 'Yes, I would'. Do you still think borrowing £500 billion—10 times the current UK deficit—would be sensible, and how would it be repaid? 

I do believe that it's hugely important that, at a time when borrowing has never been, well, not quite as cheap as it was a week or so ago—but borrowing is historically cheap—it is reasonable and responsible for Governments to borrow money in order to pump that money into the economy. He will disagree; he's a monetarist, I'm sure. I'm not; I adhere to Keynesianism and I take the view that now is the time for Government to borrow that money, inject the money into the economy, create the jobs that we need, and then, of course, create the tax receipts that will pay that loan back.

If that is the case—and I agree with you, First Minister, because of the historic low interest rates that we're still facing, notwithstanding the recent decision to have a slight increase—why aren't we borrowing at the full amount available to us? I mean, we are not actually even drawing down over the next three financial years the full £425 million that we could borrow. We're £50 million short of that, and we could be doing more through the mutual investment model as well. Why aren't we using the borrowing powers that we have to the full effect? 

Well, the answer to that is that we are. We have to balance, of course, the power we have to borrow money against the need to pay that money back and the pressures that will be on the revenue budget in years to come. We're moving ahead with the mutual investment model, as the Member has said, and we will explore all models of prudent financial borrowing in order to deliver for the people of Wales.