4. Will the Cabinet Secretary make a statement on the budget allocation to the health and social services portfolio for the coming year? OAQ51620

I thank the Member for that question. The budget allocation for the health and social services portfolio next year stands at record levels, with £7.3 billion-worth of revenue and £294 million in capital.

Thank you for that answer, Cabinet Secretary. I'm actually seeking clarity on the process that you use to determine budget allocations. I listened to your previous answer to the spokesman for Plaid Cymru. I'm not so interested in how you measure the outcomes that the Cabinet Secretary for health is so obviously responsible for, but rather how you yourself will actually determine the percentage of the Government's overall budget. What assumptions do you use? For example, do you simply say, 'Last year, you had x billion pounds; I'm going to add in an inflationary percentage and that's what you get', or do you look at the business case that has been built financially from the ground up and then assess on that balance? And, if you do, are those assumptions in the public domain?

Llywydd, the way in which allocations are determined across the Government begins with a series of bilateral discussions between me and all other Cabinet colleagues where colleagues make proposals to show how the key priorities of the Government can be met and what the financial implications of doing so would be. It's then my job through those discussions to try and make the sum of money we have, which as the Member will well know on this side of the Chamber we regard as insufficient to meet the needs of the Welsh population—how we can make the very best of the money that we have. Specifically in the health and social services field, we look to meet the commitments that we have made as a Government. That's why we have a new treatments fund; the Cabinet Secretary was able to explain the success of that fund earlier this week. That's why there is £7 million in the budget next year to press on with our determination to lift the capital ceiling in relation to residential care to £50,000.

And in the general health budget, we look to meet what we call the Nuffield gap. The Member will be familiar with the report that was published in the last Assembly that demonstrated that, provided the health service itself went on making the efficiency gains we have to ask of it, there would still be a need, because of demographic pressures and the fact that new treatments become available, for a £200 million additional investment from the Welsh Government. We will have met that in every year of this Assembly term and have gone well beyond it.

Cabinet Secretary, can you confirm that the PFI debt in Wales is around a fifth of the cost per head of the UK as a whole? And would you agree that the Welsh Government decision to use our public capital programme to invest in health and social care over the last 18 years has been a principled and responsible way forward for the building of new hospitals in Wales, including Ysbyty Ystrad Fawr, Ysbyty Aneurin Bevan, Ysbyty Cwm Cynon, Ysbyty Cwm Rhondda and Ysbyty Alltwen in Tremadog, and can you again indicate your preferred way forward for funding the health and social care estate in Wales?

I thank the Member for the question. She is, of course, absolutely right that we have a far smaller exposure to PFI schemes in Wales than any other part of the United Kingdom. The average annual cost per head of PFI schemes in Wales is well under £40 per head, and that's around a fifth of the cost per head for the UK as a whole. Where administrations took a different view, there is, inevitably, a consequence that they have to make provision for. In Wales, the annual charge for PFI liabilities is below 1 per cent of our budget. In Scotland, my colleague the finance Minister has to find 5 per cent of his budget annually to meet PFI liabilities. I well remember, Llywydd, in the very early days of the Assembly the difficult decisions that my colleague Jane Hutt had to make in the PFI field as a result of inheriting schemes when the Assembly was very first established.

I've explained to the Finance Committee previously that I have a hierarchy in mind always in capital expenditure. My first recourse, always, is to use public capital, because that is the cheapest money that we will ever have, and I will always use that first. There are then other means that we are able to deploy—borrowing powers that we now have, funding local authorities and housing associations to borrow in the way that Jane Hutt established, and then, beyond that, the mutual investment model. But, as far as possible, we use public capital in the health field as our first resort, and where we are unable to meet all the needs that we know are there in Wales, as, for example, in our determination to create a new cancer centre at Velindre, then we will use other means to ensure that people in Wales get the services they need.

Question 5 [OAQ51629] is withdrawn. Question 6—David Melding.