The next item, therefore, is the statement by the Cabinet Secretary for Finance, and it's a statement on the draft budget for 2019-20. I call on the Cabinet Secretary, Mark Drakeford.

Diolch, Llywydd. Today I lay the Welsh Government’s draft budget before the National Assembly. 

In 2010, the then Chancellor of the Exchequer introduced an emergency budget in which he said that what he called necessary sacrifices would lead to debt falling and a balanced budget by the end of Parliament in 2015. The sacrifices, Llywydd, go on, but the sunny uplands of economic success have moved to 2025 and beyond. Never has the need for a UK Government to abandon the failed polices of austerity been more urgent as the darkening shadow of Brexit looms over this draft budget. The chief economist’s analysis, also published today, shows that Brexit already costs every person in Wales and the United Kingdom up to £400. This Welsh Government’s unremitting efforts to protect front-line services are carried out against those headwinds and those of shrinking budgets and escalating demand.

Llywydd, if the funding available to Wales had simply stood still at its 2010 value, not rising by a single penny, the budget before Members today would have £800 million more to care for older people, to help children get the best possible start in life, to protect our environment and to invest in the future of our economy. If the budget had grown in line with the economy since 2010, simply taking a static share of the national cake, today’s budget would have £4 billion more to invest. And if it had moved in line with the growth in public expenditure, something achieved over the 50 years prior to 2010, the budget in front of Members would be £6 billion higher for those essential purposes. Little wonder, then, that this has been the most difficult budget round yet. As well as the dual challenges of rising costs and spending constraints, our hard-pressed public services face the challenges of rising inflation, unfunded pay pressures and the UK Government’s unilateral decision to change public sector pension funding, transferring a further £300 million of unplanned costs on to Welsh public services.

Llywydd, the failure of the present Chancellor of the Exchequer to initiate a comprehensive spending review means that I have no budget with which I can plan beyond 2019-20. As a result, today, I am able only to publish a one-year revenue plan, for 2019-20 only, and capital plans for only the next two financial years. 

Now, in line with the new procedures introduced last year by the National Assembly, I set out today the major building blocks of the budget—where the money comes from and how it will be allocated to Government departments. Later this month, the Welsh Government will publish detailed spending plans, explaining how individual portfolio Ministers intend to deploy the resources available to them.

This draft budget, Llywydd, builds on the plans we published last year and reflects the second year of the two-year budget agreement between the Government and Plaid Cymru. I would like to thank Steffan Lewis for the constructive discussions, which have continued since the agreement was reached. Building on the measures previously agreed, we will now provide additional capital of £2.75 million to upgrade the Urdd camps at Glan-llyn and Llangrannog. The draft budget also includes £5 million in capital to take forward the results of feasibility studies agreed in earlier discussions. I look forward to joint consideration of those reports between our two parties as they become available.

Llywydd, I now turn to the major building blocks of this budget, beginning with the fiscal decisions that are now made in Wales. I said last year that I intended to raise landfill disposals tax in line with inflation. As a result, the rates for 2019-20 will stand at £91.35 per tonne for the standard rate, £2.90 for the lower rate, while the unauthorised rate rises to £137.

In last year’s budget, I set the rates and bands for land transaction tax, making it the most progressive tax for people buying and selling property anywhere in the United Kingdom. I said then that I had heard and understood the calls for stability from the sector. With that in mind, and because of the deep uncertainty surrounding Brexit, I have decided to leave rates and band unchanged for 2019-20. As was the case last year, however, should the Chancellor of the Exchequer make changes to stamp duty land tax in the UK autumn budget, I will review the position here in Wales. 

Llywydd, this is the first ever budget in which a Welsh finance Minister has responsibility for setting the Welsh rates of income tax. Under the terms of the fiscal framework, 2019‑20 will be a transition year in which Her Majesty's Revenue and Customs undertakes important new administrative responsibilities for Wales. My party made a commitment in our 2016 manifesto not to raise income tax rates in Wales during this Assembly term. We did so, Llywydd, because we are acutely aware of the impact that austerity has had on so many Welsh families. I confirm today that the Welsh Government will not increase income tax rates in Wales in 2019-20, fulfilling that commitment and contributing to an orderly implementation of the new responsibilities that are now discharged here in Wales.

The careful management of our tax powers requires accurate forecasting. I thank the Bangor Business School for its important work in independently scrutinising and assuring the forecasts produced by the Welsh Government. In 2019-20, Welsh rates of income tax are forecast to contribute over £2 billion to the Welsh budget. Landfill disposals tax is expected to raise £40 million and land transaction tax £285 million. The significant rise in forecast revenues from landfill disposals tax is best attributed to the accurate collection now possible as a result of having our own Welsh Revenue Authority. In its first six months, the WRA has collected more than £100 million to support Welsh public services and has made, I believe, an outstandingly successful start as an important institution here in a devolved Wales.

Following close consultation with the Finance Committee, I announced in July the longer term forecasting arrangements to which we are committed by the terms of the fiscal framework. Starting next year, with the 2020-21 budget, the Office for Budget Responsibility will produce independent forecasts of revenues from the devolved taxes for the Welsh Government's budget process, and these forecasts will of course be shared with Assembly Members. 

Llywydd, I turn now to another important devolved revenue stream: non-domestic rates. We consulted over the summer on proposals to reduce the amount of non-domestic rates revenue lost every year through avoidance. It cannot be right that the efforts of the considerable majority, who abide by the rules and make their contribution, are undercut by a minority intent on exploiting or abusing the system. On 16 October, I will announce the outcome of the consultation and the actions we will take to reduce rates avoidance in Wales in time to be in place for next year's budget.

Llywydd, I also to intend to consult over the next 12 monthson proposals to remove charitable rate relief from independent schools and private hospitals in Wales, placing them on an equal footing with their public sector counterparts in respect of the payment of those rates. State schools and hospitals pay non-domestic rates on properties they occupy, as do a wide range of other public sector organisations. That makes an important contribution to the cost of vital local services delivered in our communities. Others should do the same.

I also intend to consult, Llywydd, in order to bring forward measures as soon as possible to exempt care leavers in Wales from paying council tax until they are 25. Many local authorities already do this, using discretionary powers. I believe that this should apply right across Wales and intend to legislate accordingly.

Now, Members will be aware that the fiscal framework that was agreed in December 2016 included a commitment that a 105 per cent multiplier should be applied to all Barnett consequentials. That has resulted already in an extra £90 million for Wales, and £71 million of that is reflected in this budget.

Finally in this section dealing with how revenue is raised for the budget, I turn to the use of reserves. I explained to the Assembly last year that I intended to make maximum possible use of the new Wales reserve. Thanks to the close co-operation of my ministerial colleagues, I was able to take that reserve into the current financial year at very near its maximum of £350 million. As a result, I have been able to increase the planned draw-down from the reserve in 2019-20 from £75 million, as originally intended, to £125 million, releasing an additional £50 million for public services here in Wales.

Llywydd, protecting front-line services from the worst impacts of austerity continues to be at the heart of the budget of this Labour Government, and that includes, of course, the national health service. In July, the Prime Minister announced additional funding for the NHS in England to mark the seventieth anniversary of the health service. The headline claimed substantial extra funding for Wales. But, as we have learnt, it was always necessary to look beyond those headlines. We still do not know, Llywydd—the Treasury is still unable to tell us—exactly how much extra money Wales will receive. 

But this we do know: that almost half the money has already been spent by the UK Government before it even reached our borders. It must fund pay awards and pension changes—decisions made in Westminster and not in Wales. Nevertheless, taken together with the increase already planned, this draft budget now provides more than £0.5 billion additional for the health and social care system, to provide services for Welsh citizens and to support our long-term plan for a healthier Wales.

Llywydd, this Government recognises the pressures local authorities are facing, and we continue to do all we can to shield them from the worst effects of austerity. At the time of the final budget passed by this National Assembly in January this year, local authorities were facing a 1 per cent cash reduction in funding in the revenue support grant for next year—equivalent to a £43 million reduction. We have worked hard during the preparation of this budget to reduce that gap by more than £28 million, so that it now stands at less than £15 million in 2019-20.

At the same time, we have been able to restore funding to a number of grants and have made a series of other funding decisions from which local government will benefit, which together add up to £84 million. This approach is exemplified through the £13.4 million this budget restores to the early intervention, prevention and support grant. We have also listened carefully to stakeholders about the future of the grant and I can confirm this afternoon that it will appear in this budget as two grants, separating the housing-related elements from the remainder. Further details about these new arrangements will be available to Members tomorrow.

Llywydd, addressing child poverty is a key commitment across this Government. This budget contains a package of £12.5 million to tackle child poverty in Wales. This includes £2 million additional funding to expand the discretionary assistance fund, which is struggling to meet demand, largely as a result of the UK Government’s draconian programme of welfare cuts. That is money that goes directly to the poorest families here in Wales. It also contains more than £3 million to maintain and double the pupil development grant access scheme to help parents meet the everyday costs associated with sending their children to school. Here in Wales, we will provide £7 million additional funding as we move to provide thousands more children with free school meals.

Llywydd, I turn now to capital expenditure. The draft budget before Members today includes both revenue and capital additions to each departmental expenditure limit for 2019-20, including allocations over and above those announced in May of this year alongside the Wales infrastructure investment plan. I now set out the departmental expenditure limits across the Welsh Government.

As a result of today's draft budget, the total health and social services main expenditure group now stands at £8.2 billion, an increase of £330 million on previously published plans, including an additional £287 million for the health and social care system, and an extra £41 million in capital to support NHS improvements and the modernisation of the ambulance fleet.

The total local government and public services MEG stands at £5.4 billion, an increase of £123 million, including an additional £35 million in capital in support of the social housing grant, and £20 million for a local authority road refurbishment programme as part of £60 million over three years to repair the damage associated with a harsh winter and this year's hot summer.

The economy and transport MEG stands at £1.3 billion, an increase of £129 million, including capital funding of £26 million next year as part of a £78 million package for the local transport fund, and £10 million next year for the Tech Valleys programme.

The education MEG stands at £1.9 billion, an increase of £68 million, including more than £30 million additional funding for schools and a doubling of investment, as I said, in the PDG access fund.

The energy, planning and rural affairs MEG stands at £364 million, an increase of £34 million, including an extra £17 million in our waste programme, through a combination of both revenue and capital, and it will allow the Cabinet Secretary concerned to maintain funding for national park authorities across Wales.

Llywydd, as we move through these uncertain times and as the financial difficulties deepen, this Government remains committed to do everything we can to help our public services meet the very real challenges they face today. This is a bread-and-butter budget, focused on sustaining the fabric of Welsh life and using every source of revenue and capital available to us in order to do so. I commend it to Members this afternoon. 

Can I thank the Cabinet Secretary for his statement today, presenting his bread-and-butter budget? Perhaps more basic labels are a sign of things to come. If he is successful in his bid for the top job later this year, perhaps we can expect a beer-and-sandwiches budget in future. The anecdotes go on.

Can I also thank the finance Secretary and his staff, actually, for the briefing earlier today? It's always helpful in the budget-setting process, when time is limited. I should also thank you, of course, Cabinet Secretary, for the usual clamour of austerity. Where would we be without it, particularly on these benches? [Assembly Members: 'Oh.'] And to set—[Interruption.] And to set—[Interruption.] And to set the record straight—[Interruption.] And to set the record straight—[Interruption.] And to set the record straight, recent data on the shares of gross value added by the Office for National Statistics have shown that England is actually the only nation in the UK that has substantially reduced its deficit per capita, equivalent to £158 per person. Meanwhile, Wales has 27 times more borrowing per person, with a deficit of £4,251 per person. The UK Government is set to deliver a surplus budget for the first time since 2001, a £112 billion drop in borrowing since the financial crisis, but the Welsh deficit fell by just £2 billion in the same time. Doesn't that mean that it has been left almost entirely to England to close the budget deficit, and is that right? Can that possibly be right? So, rather than—[Interruption.] Rather than—[Interruption.] Rather than the usual—[Interruption.] Rather than the usual harsh words about austerity, perhaps you should look a little bit closer to home about what we're doing in Wales to deal with the financial problems that this country was left with by a previous Government.     

Of course, a key change to this budget is the fact that, from April next year, the Welsh Government will be in total control of approximately £5 billion of revenue generated from taxes, or a third of its current combined spending. So, to coin the words of Harry S. Truman, the buck truly will stop here. Alongside land transaction tax and landfill disposal tax, the Welsh Government will also have income tax-varying powers, as we were told, from April 2019. And can I welcome the Cabinet Secretary's commitment not to increase income tax in Wales before the next Assembly election? I must say I don't think that this is an entirely selfless decision on the part of the Welsh Labour Government. To increase taxes at the same time as we face the uncertainty of Brexit, and when the Welsh economy is still underperforming in relation to other parts of the UK, would be, at best, counterproductive and, at worst, disastrous for the Welsh economy, not to mention Welsh Labour's election prospects, of course.

I must ask the question, though—and the Cabinet Secretary was quite clear on this—can we assume that, if Welsh Labour were to form the Government after 2021, then we can expect pretty sharp increases in income tax at the various rates, and, if so, by how much? I think the people of Wales do deserve an answer to that.

As we know, there are risks with varying taxes; I know the Cabinet Secretary would agree with that himself. The Welsh Government-commissioned Welsh tax base report notes that

'there would likely be some behavioural response from...taxpayers' should Welsh Government change income tax rates. This seems to be in stark contract to some of the assertions of the Welsh Government before Finance Committee that changes to taxation would not affect migration rates, so some clarity on that aspect of future tax policy would be appreciated. And I do support the Cabinet Secretary's decision to keep income tax rates as they are over the next couple of years, as we weather some of the storms that we're going to be facing.

If I can turn to the other taxes, the veteran taxes, if I can call them that, and the unusually good news about landfill disposal tax, now forecast to deliver £40 million to the Welsh budget rather than the original—£20 million, I think, was the original forecast. I suspect, Cabinet Secretary, you're right in your assessment that rather than waste tourism having gone through the roof over the past year—I haven't seen lorries of waste traversing up and down the M4 and the A55 in any greater quantities than they were before—the difference probably is due to the Welsh Revenue Authority collecting taxes over a smaller base and possibly doing so with the enthusiasm of youth. Whatever the reason—and perhaps there are lessons for tax collection across the border—it's important that Wales keeps this dividend, and I will also make that case strongly, as I believe you will as well.

Looking at the figures for the land disposal tax's bigger sister, the land transaction tax, it does look as though the opposite has been the case and there has been some drop-off in the amounts that were predicted to be collected for that tax, particularly at the higher rates. Could it be that the Welsh Conservative warnings about the effect of increasing rates at the higher end of this tax have come to pass? Now, I don't expect the Cabinet Secretary to rush to confirm this, at least not before 11 December, but if he could shed some light on this rather murky area, that would be illuminating to all of us. And, on the matter of reviewing those bands, the door should definitely be left open, particularly if there are changes to the English stamp duty land tax regime that deals with very high-end transactions by foreign nationals, although I do appreciate that the number of Russian oligarchs living in Blaenau Gwent is probably rather limited. Don't look this way, Minister Emeritus. [Laughter.]  

Okay. Turning to the all-important spending commitments, I welcome the news that the NHS is the top priority for the Welsh Government. I’m glad that the Welsh Conservative message has finally hit home after years of us saying—and Angela Burns saying—that the NHS should be properly funded, and not just in cash terms as in the past but in real terms that mean the proper protection of the health budget that we need to see. The NHS is the people’s priority and it should be ours as politicians too. If I can ask you about the seventieth anniversary NHS cash injection that has been promised in England, have you had discussions with the Treasury about what this will mean for Wales in terms of consequentials? The same question applies to the extra funding for social care, which it appears the UK Government is committing across the border. If we don’t know until pretty late what the sums are then surely it will make it difficult to make the most of that money in the coming financial year, when we would like to see it implemented. 

If I can turn to your comment on transport and motorists across Wales, we'll welcome the additional—I think it was £60 million that you pledged in funding for roads over a three-year cycle. I think we're all aware of the problems that local roads are facing and the shortage of funding in local authority gaps to deal with the problem. Two questions relating to this: will this extra cash be ring-fenced for roads, and, if local authorities are facing cuts to their RSG, which we know they inevitably are, then how will you ensure that road budgets will not be cut elsewhere and you will not, effectively, be giving with one hand and taking with the other?

You mentioned the fiscal framework. Along with you, I warmly welcome the apparent uplift in the Welsh budget due to that. It was limited, admittedly, but it's better than the position that we were in before, and I think it's to be welcomed that that agreement between you and the UK Government is now delivering for Wales and delivering—albeit modest in the early stages, it is delivering an uplift that will stand the Welsh budget and Welsh economy in better stead in the future. I'm delighted to hear of the success of that.

I'm also delighted to hear the announcement with regard to care leavers and removing them from council tax, putting that on a statutory footing. That is to be warmly welcomed, a great decision. I'm a little bit more concerned about your proposal to remove charitable rate relief from independent schools and private hospitals, not that I either attended an independent school or have private healthcare, I should point out. However, I would point out that my concern is more in relation to the state sector, because we know full well that the private sector takes some of the strain that otherwise might be borne by the state sector—[Interruption.] Well, it does. And, in that case, I just want to ask: what consultation are you having with that sector before finalising this decision to make sure that there will not be unforeseen consequences? I think that's important.

If I could just move to close by talking about the broader point about today’s budget—. It's called 'A Budget to Build a Better Wales', the latest in many titles we've had in many budgets over the years, which haven't always delivered exactly what they promised. There’s very little indication of how these draft budget proposals fit in with the Welsh Government’s programme for government, its longer term strategy, or indeed the future generations legislation, which we are all supposed to be paying great heed to. Now, I appreciate that planning has been complicated by the Brexit timetable leading up to next March and also, as you said, this is phase 2 of a two-year budget-setting process, but a budget should be more than just a tidying-up exercise; it should set out a pathway to the future and it should provide vision and ideas. Some more details on the development of the metro, for instance, and infrastructure projects would be welcome—and also the possibility of a north Wales metro as well. 

Now, perhaps, after 20 years in Government, a degree of malaise may well have set in or perhaps, Cabinet Secretary, you are holding back—[Interruption.] I wasn't looking at you, Alun. Perhaps you are holding back some of your best ideas until December; that's understandable. Whatever the reason, I think we would all appreciate more of a long-term plan and less of a knee-jerk reaction to spending pressures. That’s going to be particularly important in dealing with pressing issues, such as social care.

So, in conclusion, Presiding Officer, whilst Welsh Conservatives welcome aspects of this budget, such as the funding for the NHS and our transport infrastructure—those are much needed and to be welcomed—there are some very big question marks over this budget, this bread-and-butter budget, as you called it, which is on offer today, and I think the big question is: will it really be followed by jam tomorrow?

I'd like to thank the Cabinet Secretary for his statement today. This is the eighth budget, consecutively, that's been made in this place in the face of the austerity policies of the Westminster Government, and it's important that we bear that in mind as we start the scrutiny process. Society and people are suffering greatly because of the totally unnecessary and hard-hearted decisions taken by the Tories in Westminster to continue with cuts to public expenditure, despite all evidence showing clearly that the policy is failing, even measuring it against its own stomach-churning philosophy. The economy is not growing at the same rate as other economies because we are not investing. We are just seeing cuts upon cuts for ideological reasons, rather than a policy based on common-sense economics, and the situation is only going to get worse. Even Nick Ramsay has talked about the storms and uncertainty to come, and, of course, that has been clear since the vote to leave the European Union in 2016. Of course, the opposition in Westminster doesn't have the necessary solutions either. We are not going to create a socialist utopia on these islands by leaving the single market and the customs union. Of course, what we need to do as a nation is use the tools that we have and to insist that we have more economic tools at our disposal in order to grow our own economy and, ultimately, Llywydd, to build an independent nation in order to put an end to Tory control of our nation once and for all.

So, that's the background to this budget. Of course, this is the second year of the budgetary agreement, worth almost £0.25 billion over two years, between Plaid Cymru and the Welsh Government, and we are very pleased to see that some of these steps are giving a boost to important sectors already. For the very first time, medical students will be able to apply to study part of their degree in north Wales—that's £7 million in revenue. This will be a boost to Welsh students who want to qualify there and will be an important step in improving the situation in terms of a shortage of doctors, which is leading to long waiting times and an absence of local services, and is placing strain on the NHS workforce that has to fill those gaps.

I was pleased to see the Brexit portal being launched last week—after some delay, I have to note. This will be a valuable resource for Welsh businesses to help them to prepare for the UK's exit from the European Union. Other areas that benefit from the agreement include mental health, which, of course, is a Plaid Cymru priority—£40 million over two years—higher and further education, £40 million; the Welsh language, £10 million; and the arts sector, £4.4 million. In terms of capital expenditure, work is proceeding on the integrated health centre in Cardigan, and I look forward to visiting the site when the Plaid Cymru conference is held in that town this weekend. Also, work is being done to improve the route between north and south, and feasibility studies are being held on other projects, and those are in the pipeline, as was noted by the Cabinet Secretary earlier this afternoon.

Of course, on these benches, we don't agree with everything in the budget, which, of course, is why we will abstain on the vote. The truth is that we need far-reaching measures in order to tackle the economic slumber that our nation has been in for decades, rather than papering over the cracks. We are in favour of establishing an infrastructure commission with the powers to raise significant funds in order to invest in our infrastructure to encourage growth and create jobs. I'm pleased to be able to welcome the announcement today that the early intervention, prevention and support grant is to be safeguarded, as well as an assurance that steps are being taken to prevent specific sectors from losing out. Plaid Cymru is pleased that we safeguarded the Supporting People as part of this. But I have to say that I was disappointed to hear that you are proceeding with changes to the free school lunches for children programme. I accept that a higher number will qualify, but it's a cause of great concern that some families do face losing the right to free school meals. May I ask the Government to look again at this issue and to change its proposals, particularly if there is good news to come from the UK Government budget in the near future?

I would like to conclude by asking a few questions of the Cabinet Secretary. First of all, I congratulate the Welsh Revenue Authority for their success in raising more funds in terms of landfill disposal tax than the forecasts had predicted. May I ask the Cabinet Secretary what steps the Welsh Government will take to ensure that this funding does remain in Wales and that the Treasury doesn't try to claw it back to London? An important part of responsibility for taxation is that the Government gets the benefit of its success, so it would be a disgrace if the UK Treasury were to try to punish Wales for its own success. This is not their money, after all.

Secondly, can the Cabinet Secretary give us some details on the Welsh Government's plans in terms of investing the funds it receives in terms of financial transactions? Have you considered whether this funding, which needs to be invested in initiatives that provide an advance on investment, could be used in order to proceed with a Swansea bay tidal lagoon and similar projects, for example? I'm also pleased to see now that the Welsh Government has increased salaries for doctors and nurses—something that Plaid Cymru has been calling for for some time—but, could the Cabinet Secretary tell me whether there are any plans to raise the salaries of other workers in the public sector? Constituents have been in touch with me—and other Members, I'm sure—to say that the situation in the FE sector is critical, following a decade of below-inflation salary rises, and that this is having an impact on the standard of living of individuals working in that sector.

There's also great concern about the impact that any cuts to local government may have on non-statutory services. These services include leisure centres and community clubs that play an important role in keeping people healthy and preventing health problems. How will cuts like this accord with the Government's own objectives in terms of preventative steps before people become ill? We are spending more and more on treating illness, but less and less on preventing these problems from arising in the first place. I'd like to hear the Cabinet Secretary's comments on those issues.

To conclude, I welcome the intention to withdraw care leavers from the council tax system until they reach 25 years of age the length and breadth of Wales. Will there need to be some statutory or legal changes in order to achieve this, or is this something that can be done relatively swiftly? I also welcome the statement on the taxation charitable status of private schools and hospitals. Again, will there need to be any changes in the law to ensure that that policy is delivered, or does the Cabinet Secretary see this as something that can be implemented relatively swiftly? Thank you.

I'm grateful to the Cabinet Secretary for giving me advance sight of the main details of the budget. The Cabinet Secretary is a safe pair of hands, but that may largely be because he's constrained by the straitjacket of the block grant on the one hand, and by the limited nature of tax devolution to Wales and his own personal abnegation in failing to use the income tax powers for reasons that I fully understand and approve of in this financial year. So, although he's described this as a bread-and-butter budget, actually, what we're talking about here is more the crumbs that fall from the table than the slice of bread and butter—or perhaps bread and dripping would be a better description of it—that he mentioned. And that's no criticism of the Cabinet Secretary at all. I genuinely do think he is a safe pair of hands and has managed his task with great clarity and ability.

Indeed, we see some of the benefits of that, as mentioned in the statement—his ability in negotiating the fiscal framework, for example, with the chief secretary has produced some financial benefits for us that are much valued: £90 million, as the statement says, and £71 million in this financial year. He's to be congratulated, and I think has been congratulated, by all sides of this house on the way in which he handled those negotiations.

I also think that the Cabinet Secretary has done a good job in coping with the reduction of 1 per cent, the cash reduction, in the RSG to 2019-20, and managing to reduce the gap by £28 million to only £15 million. That remaining £15 million is obviously going to lead to problems to deal with, but, nonetheless, I do think that the Cabinet Secretary's ability to try to square the circle that he's faced with is producing those dividends.

I also approve strongly of some of the other elements that he mentioned in his statement, in particular, the child poverty agenda and the increased number of schoolchildren who qualify for free school meals. And I also support his decision on the early intervention, prevention and support grant to increase the amount paid and also to split it into two, because there has undoubtedly been a great, disconcerting period for those who think, having moved from a kind of hypothecated budget into one where these different grants are lumped together, that some people might lose out and get less than they otherwise would have done. So, I think that is a sensible move to slow down the process of change, and that will be warmly welcomed, I think, throughout Wales.

We can also, of course, welcome the increased spending on health. It's a fact that everybody is aware of that health inflation is higher than inflation nationally, and the needs of the population are going to increase with an increased ageing population and a lower number of people in active work. So, the cost of financing this is going to be an increasing problem in years to come. That's partly, I suppose, the increasing amounts that are available due to the UK Government's decision to increase the amount of money spent on the health service through its seventieth anniversary fund, but I don't think we should shower them with compliments on their achievement, because in the current financial year, the UK Government is only going to increase spending by 3.6 per cent, which is 0.1 per cent less than the average increase in health spending since 1948. So, actually, it's just more of the same and treading water rather than an unexpected bonus on top of everything else. The health Secretary said that the health and social services MEG is now £8.2 billion for 2019-20, so health is becoming an even bigger component of the Welsh Government's budget. The £330 million extra for this financial year is, of course, very welcome—although, as he rightly said, what's given on one hand is partly taken away on the other and about half the budget is already earmarked by the UK Government.

But the real elephant in the room here is not so much the funding available, but the continuing inability of many health boards to be able to manage their own budgets properly, and we've seen, this year, that there's a £360 million rolling deficit, which is up from £253 million in the previous year. Hywel Dda and Betsi Cadwaladr, in particular, are actually not improving to the extent that we would expect. The sums of money involved here, of course, are huge: Hywel Dda, £70 million to the beginning of April this year in deficit, and Betsi Cadwaladr up from £30 million to £36 million. So, against this background, the Cabinet Secretary has an unenviable task, I think, in trying to balance the books.

The environment budget this year hasn't suffered the cuts that it did last year. That's to be welcomed. Although, of the £34 million increase, £17 million, a half of it, is going to be spent on various waste projects, which would not be a priority of mine, because—and this is nothing to do with the issue of global warming in itself—I simply can't see the point of spending £17 million on sorting waste and being able to take out the plastic in Costa Coffee cups, for example, when the UK accounts for only about 2 per cent of carbon dioxide emissions, even if we accept the link between carbon dioxide emissions and global warming. Twenty-five per cent of all the plastic waste that is collected in the EU is exported to the far east and other places where their control measures are far inferior to what we have in this country and, indeed, in Europe generally. So, what we're actually doing is making the problem worse by collecting all this material and then exporting it to countries that throw it into rivers and landfill elsewhere. So, we're not actually contributing to the solution of the problem, even if you accept that there is a problem in the first place. So, that would certainly not be a priority of mine.

But the background mantra, of course, as always, is austerity. But, I think we should remind ourselves that this period of austerity—to which the Cabinet Secretary's statement itself actually gives the lie, because he refers to the inability of the Chancellor to meet his targets of deficit reduction on a serial basis. In 2007-08, the national debt stood at about £780 billion. This morning, at 10.15 a.m., I looked at the national debt clock, and it was £2 trillion or more. So, you can hardly describe this as a period of austerity when the Government has been running record deficits. I'm afraid it's a reality of life that if you don't live within your means, then suddenly the money runs out, and that's the problem with socialist Governments always, of course—that they run out of other people's money to spend.

The Labour Party under its current leadership has been a great admirer of President Chávez and President Maduro in Venezuela. Well, Venezuela this year has 1 million per cent inflation and they're now, instead of exporting oil, exporting people. So, the idea that you can carry on spending as though there's no tomorrow, forever and a day, is, of course, against the laws of nature and reality. Were we not constrained in the way that we are financially in Wales, as if John McDonnell, perish the thought, were ever to become the Chancellor of the Exchequer in the United Kingdom, he really would be able to follow the example of Venezuela, and then I think the Welsh Government would be in a pickle indeed. Then they would discover what the true meaning of austerity is.

At the end of the day, over a period of time, you have to balance the books and, in an inadequate way and a limited way, that's what the Conservative Government has been trying to do. If the Government had borrowed even more money, then the debt burden and its financing burden would have been even greater. This year, over £50 billion is going to be spent on debt interest, and even though the Bank of England has bought up a significant part of Government debt—therefore, in a sense, it's paying money to itself—we're still talking about £4-odd billion that could be spent on front-line services that is going in debt interests to third parties. So, eventually, as I say, you run out of money.

And, in due course, the Welsh Government will have the freedom and the discretion to use the devolved tax powers that it has. I hope it will use those not simply to push up the tax burden, but actually to try to transform the Welsh economy into an enterprise economy by reducing taxes and hence encouraging investment, encouraging enterprise, encouraging people to come and live in and work in Wales so that—what we all know we need to do—we can raise the tax base by raising the amount of wealth that is created in the Welsh economy in general. So, it's a choice that we will have to make in due course. It's been postponed now until the next Assembly. But, like Nick Ramsay, I hope that the Welsh Government, if it is going to prepare for being in Government in a few years' time, will actually change its approach to an enterprise economy and realise, at the end of the day, the wealth that is created is created by the people, not by Government. Governments spend money, but they can't spend it if it's not created.

I want to welcome the Cabinet Secretary's draft budget today, designed to sustain the fabric of Welsh life, and welcome the Cabinet Secretary's clear commitment to supporting our public services, embracing new tax powers and responsibilities. At the Assembly Finance Committee last week, we received a briefing from the Welsh Treasury and HMRC about the new Welsh rates of income tax that will come into force next April. I support your proposals for devolved taxes with this draft budget, noting, as I did earlier this year, that you've made land transaction tax the most progressive tax in the UK, which I very much welcome. And I'm sure you'll acknowledge and agree, as I do, with the IPPR Commission on Economic Justice's recent report, and support its recommendations about tax, and the need to spread wealth and ownership across our economy.

I think it is important to recognise that, after eight and a half years of unnecessary and damaging austerity and deep cuts to our public services, you've shown clearly how you have used our budget to help make Wales a fairer place. As a result, you have given a wide package of public investment in health, social care, housing and transport. But this couldn't have been done without the fact that you secured £90 million as a result of the fiscal framework, which you negotiated, and the use of £125 million out of our Welsh reserves. And that is a decision you have to make, showing your determination to fund those bread-and-butter key public services in Wales, which we so cherish, and the people of Wales require.

I welcome the increase of £0.5 billion to the Welsh NHS, reaffirming your policy to support health and social care, benefiting local government, including the £50 million for social care. And I just would say and question whether that shows that the Welsh Government is still funding far in excess in relation to funding for social care in England, particularly in integrating health and social care.

On capital, I welcome the £35 million for the social housing grant, demonstrating the Welsh Government's commitment to ensuring that we have affordable and social housing for people in housing need. But I'd like to clarify the allocation of financial transactions allocations, because, earlier this year, I welcomed the Welsh Government's funding for credit unions, following the recent update in the Wales infrastructure plan announcements. We've already seen the benefits of using financial transaction capital in this way, promoting social justice, supporting our credit unions, helping them to meet the challenging capital asset ratio requirements, to underpin the viability of credit unions in Wales. And I hope this will continue.

I'd also like to raise the issue of the impact of Brexit on your budget this year. Independent research now brings the Brexit bill to £500 million a week, and rising, and your statement has highlighted the chief economist's analysis, showing the impact of Brexit on people and households in Wales. Can you confirm that we have to use allocations from our constrained budget to meet the costs of Brexit to our public purse? For the £50 million European Union transition fund, and the cost of Welsh Government engagement, at every level—political, and official—what is the impact of Brexit on all those whom we support and serve in Wales, highlighting the negative effect on your budget making and responsibilities?

I want to conclude with a question about wider powers. You have embraced your new powers, as outlined today. We have a fiscal framework—you've negotiated, you've managed resources, both revenue and capital, in a way Nye Bevan would have welcomed, in the way that you recognise priorities and needs, as the hallmark of socialism, and the fact that you've been able to do that, against the backdrop of eight and a half years of that lost £4 billion budget that could be going into our public services. But I'd like, finally, for you to update me on negotiations for the powers that we need to support our economy, and are supported cross party, through the Silk commission, and indeed now the Welsh Affairs Select Committee, looking at air passenger duty, which should be devolved to Wales, has been devolved to Scotland and has been devolved to Northern Ireland. What is the progress, Cabinet Secretary, on those negotiations? Diolch.

I think this is a very skilful budget, under very difficult circumstances. We all have to note the £800 million that might have been available if we'd managed to maintain the amount of money that could have been expected in line with inflation, if the UK Government wasn't continuing to stick with this austerity programme, which is causing so much pain to so many of our citizens. I think those of us on these benches are particularly distressed at the rise in child poverty that has occurred since 2010. So, I particularly welcome the amount of money you've set aside for enabling more children to take advantage of free school meals. The £7 million across Wales is very important and also the extra over £3 million to maintain the pupil deprivation grant to enable families who are struggling to continue to enable their children to access education in the same way as everybody else.

I'm not surprised that, on the Conservative benches, Nick Ramsay questions the validity of removing the charitable status of private schools and hospitals, but I think it's really important that we have a level playing field, particularly as the training of teachers, nurses and doctors is done by the state on behalf of our citizens, and many of them are then poached by the private schools and hospitals who don't make any contribution to the training of these invaluable individuals. So, it's absolutely right and proper that they should make a proper contribution to the cost of the people they benefit from.

I do not share Nick Ramsay's anxiety that in a future Welsh Labour Government we will use our income tax raising powers. Scotland hasn't used them and they've had them since 1999. So, there's no particular reason to assume that that would be something that would genuinely be open to the Welsh Government, because it's so easy for people who would be able to simply go across the frontier to England in order to avoid these taxes. I'm much more interested in how we can improve the collection of land transaction taxes, because those are things that can't be avoided.

I'm interested in the money that the Cabinet Secretary has set aside both for capital investment in our waste disposal, as well as the income aspect of it, because I recently visited the Cardiff recycling centre to look at the amount of money that can be made out of properly recycling. Aluminium, for example, has a very high price at the moment; cardboard, a lesser price, but even so, it's a very valuable contribution to mitigating the cost of collecting people's waste. We absolutely have to continue to adhere to the principles of reduce, re-use, recycle. So, I'm wondering if you could say a bit more about the £15 million capital to improve our recycling ability, and whether you envisage that being carried out by a consortium of local authorities, rather than each local authority having to provide for their own, because it seems to me that's one of the ways in which can do these things more efficiently.

You will be aware, Cabinet Secretary, that there was a well-attended lobby at lunch time demanding that £20 per person be spent on improving our cycling routes. So, in line with the Well-being of Future Generations (Wales) Act 2015, and our obligations under that, I'd be grateful if you could indicate how you think that the additional money you are setting aside for both filling in potholes, which is incredibly important to anybody who cycles, but also for local transport plans, as well as active travel, how those three aspects are joining up improving the number of people who are able to benefit from cycling and walking without the threat of being run over.

Anyway, I congratulate you on your draft budget and look forward to exploring the detail further. 

Obviously, you made references—repeated to death—on austerity. What concerns did you raise when the Organisation for Economic Co-operation and Development issued a warning about the rise in the UK budget deficit in January 2004? Keynesian economics is often presented as an alternative to austerity. I don't know where your personal economics lie, but certainly your colleagues have quoted Keynes on a number of occasions. Of course, Keynes stated that deficit spending during a downturn as a tool of economic policy requires deficits outside a downturn to be avoided or at least kept low, to a percentage of GDP lower than the nominal growth rate, thereby enabling the debt-to-GDP ratio to fall. What concern, therefore, did you express when, instead, by delivering a policy then called 'an end to boom and bust', and increasing the deficit faster than the growth rate of the economy outside a downturn, the pre-2010 UK Government broke the economic cycle and handed a poisoned chalice to successor UK Governments? As every debtor knows, you can't start reducing debt until you’ve brought your expenditure below your income. Essentially if post-2010 UK Governments had reduced the deficit more quickly, there would have been bigger cuts, wouldn't there? But if they reduced it more slowly, exposing us to economic shocks, we'd have risked bigger cuts being imposed by the UK's creditors. Instead, Welsh Government budgets have been rising in real terms since 2016-17 by nearly £1 billion.

In your statement you refer to an additional £287 million for the health and social care system. Could you clarify the interaction between that and the breakdown, given the statement by local government in Wales that many of the services they provide, particularly social services, are preventative services that reduce pressures on the NHS? So, what consideration have you given to the financial benefit of thinking of those budgets in a preventative interrelationship?

Of course, spending public money is not just about how much is spent, but also how well it's spent. What consideration have you given, or are you giving, to the amount of spending per head available to the 22 local authorities? As I understand it, currently Monmouthshire is lowest, receiving £585 less per head than the highest, but even if you look to north Wales: Wrexham, eighteenth with £339 less; Flintshire, nineteenth, with £368 less per head than the best funded. We need to be looking at this, do we not, in the context of impact, because this funding formula has existed for almost two decades? I think it was 2000-01 when it was introduced to tackle inequalities, to tackle prosperity gaps, and yet those same inequalities and prosperity gaps still exist in the same areas. So, should we not be targeting this a little bit smarter in terms of budget decisions?

How do you respond to the voluntary sector leaders who told me last Friday that we now need preventative budgets that deliver real change? They asked, 'Why not invest in what works rather than always looking to do something differently, in real co-design and co-delivery, rather than consultation after design from above, which is still the norm, and commissioning to deliver top-down programmes, which, again, is still the norm?' How do you respond to the Auditor General for Wales who, in July's report, 'Guide to Welsh Public Finances', said:

'Co-production involves a recognition of the positive assets that individuals and communities offer public services. These can dwarf the limited financial resources available to the public sector. There is a challenge for public services to understand and work with those resources alongside the financial resources that are typically included in budgets'?

Now, you've personally made many statements showing your own commitment to that agenda, but it ain't happening, finance Secretary. Out there still is too much top-down decision making and protection of internal budgets at the cost of front-line services, with a consequent extra cost to statutory front-line services. How, therefore, are you ensuring delivery of the Social Services and Well-being (Wales) Act 2014 Part 2 code of practice, which puts in place a system where people are full partners in the design and operation of care and support, giving people clear and unambiguous rights and responsibilities? That is what the legislation says, but still it isn't happening, and the consequence of that is that millions are being spent poorly rather than engaging with the body public in Wales and delivering smart.

Finally, on the reference you made to the early intervention, prevention and support programme, and the separation that we know the Housing Matters Wales campaigners have been calling for, but they've been calling for more than that, haven't they, Cabinet Secretary? They've been calling for ring-fencing, and they've been calling for the separated grant to specially protect Supporting People. So will the ring fence now be restored, and will the Supporting People budget be specifically protected as the campaign calls for? Thank you.

Diolch, Llywydd. I welcome the Cabinet Secretary for Finance's statement and the draft budget. As austerity continues, the amount of money needed to run our public services to the level the public want is not being provided. I'm sure the Cabinet Secretary will agree with me that austerity is not an economic policy but a political direction of travel. The Conservatives at Westminster want to reduce public expenditure and roll back state provision of services. And as the Cabinet Secretary said earlier today, that £4 billion to £6 billion are missing from our budget. What a different budget we'd have today with that extra £4 billion to £6 billion. I think that everybody would leave here much happier than we will.

I think that Neil Hamilton made a very interesting point—live within your means. Can I just say, the key point is: increase your means? That's called economic growth. What we've had is stagnation and, as such, we haven't increased it. That's why the deficit's gone up—it's because growth has been at best sluggish, at worst non-existent.

I have three questions for the Cabinet Secretary. One on transaction capital: has the Tory Westminster Government given any indication on changing the rules on its use? If not, can it be used as replacement capital for economic development support to private companies, and thus increase the discretionary capital expenditure available to the Welsh Government for things such as new schools, which everybody in this Chamber welcomes?

Secondly, is there any indication that the borrowing limit will be increased? Will bonds be made available? Whilst they would not be mine and I'm sure not the Cabinet Secretary's choice of means of borrowing, because they tend to be more expensive, what they've done and why local authorities like them—. You don't want to use them, but what you want them to do is to keep the public works loan board's lending levels low. When the public works lending board pushed their rates up, what happened was that we saw that people started looking at bonds, and all of a sudden the public works loan board's costs came down quite considerably. I think that this is really important.

Finally can I raise primary health, secondary health and social services expenditure? The auditor general, in about 2015, produced a report on medical interventions that do no good to the patient, estimated at that time at several hundred million pounds. This did not include expenditure where the operation was successful, but following hospitalisation, when the individual was no longer able to look after themselves and ended up in a nursing home.

The late Dr Julian Tudor Hart, who many of us knew, with others, identified expenditure on such things as reducing slightly raised blood pressure, which does no good in terms of health, but it's actually expensive. And can I remind the finance Cabinet Secretary, while health Secretary, you reported, on more than one occasion, on the different intervention rates for the removal of tonsils between two areas in the same health board. So, it's not a difference between health boards—it's basically the difference between two surgeons. You're twice as likely to have your tonsils removed in one than the other.

The Royal College of General Practitioners regularly identify the relative reduction in primary care expenditure. And I have concerns about the fact that secondary care takes priority over primary care. The Nuffield Foundation produced research showing that productivity in hospitals in Wales, in terms of patient-per-doctor intervention, had reduced between 2003 and 2013.

Social care is under huge pressure, especially elderly care and support for children. I understand that support for children has gone up by 100 per cent over the last 10 years. And we also know that elderly care is continuing to increase. Many of us think it's a good thing—we all want to live longer, don't we? But it does come with a cost, and that is falling, almost exclusively, on local authorities.

I'm very pleased that from being a lone voice supporting improving health by dealing with factors such as obesity and smoking that lead to ill health, there is now a lot of support for preventative action. In fact, we had Steffan Lewis talking about preventative action earlier, and I hope we'll get more people talking about preventative action. Having somebody in hospital being operated on, in many cases, is a sign of failure, not success. The sign of success is them not ending up there in the first place. I think our aim has got be to increase health rather than increase health expenditure or health interventions.

So, I welcome the budget, I think that it's the best that can be done. Could we have the £4 billion to £6 billion we should have? And then both the Cabinet Secretary and most Members in this room will be very, very happy. We're not going to get that, and under very difficult circumstances, I commend the Cabinet Secretary for his budget.

Thank you very much for your statement, Cabinet Secretary. I wonder if you could help me out, please, when I'm asking some questions about education and the relationship between the education main expenditure group and some of the other department expenditure lines? Obviously, it's very pleasing to see the £60 million extra for education. It still falls a little short of the £100 million that we were expecting for school standards over the period, but I also see there's £30 million additional funding for schools. The majority, of course, of schools' core funding comes from local authorities, though. I have to say, within my own region, when I'm visiting schools and actually other services, the two main complaints I get about funding are schools specifically—so it's not education generally but schools specifically—and social care, which actually Mike Hedges has picked up on as well.

I can see that there's been an increase in the local government and public spending MEG, but, of course, that's not just the RSG and it doesn't explain either where schools' core funding is within that £123 million and how that can be protected, whilst at the same time avoiding ring fencing. It's particularly important, I think, because, of course, when the Welsh Government in the last Assembly proclaimed that it had obviously added extra money for school protection, the majority of that money actually came from local government, which was already being squeezed, rather than from the central education budget.

So, if you can explain to me a little bit about how schools' core funding is being looked after in that growth, I'd be very pleased, particularly because the primary legislation that deals with the funding formulas, if you like, for school funding are 20 years old now, and even the regulations beneath that are eight years old. So, there's a wider question for me, perhaps for another day, about whether that whole structure needs looking at anyway. 

The relationship with the Welsh language budget and the Welsh language education budget—obviously, we've had an announcement fairly recently of a capital increase, but bearing in mind that the Welsh Government's emphasis is going to be now on Welsh language education, not just Welsh-medium education—although we all note the difficulties there with getting young people involved in teachers' training for that—where are the Welsh language aspirations, shall we say, met? Because there was no reference to Welsh language in any of the speech that you gave today. 

Finally, the relationship with the health budget—it's obviously very pleasing to see some growth there, but as teachers and staff in schools are being asked to take on more responsibility regarding looking after children's pastoral requirements, their mental health in particular, does that increase in the health budget have a tiny little piece carved out, even if it's not formally, for improving school budgets, and would that count towards a school's core budget or would it be considered as an exterior income stream, if I can put it like that? Because obviously I'd be worried that, if there's any money going from health that then finds its way into the RSG where it gets no protection, it could get lost, despite the benevolent decision to use health spending to help schools improve the well-being of young people. Thank you.

In the continuing difficult financial landscape, Cabinet Secretary, can I welcome your statement, which I think is certainly as good as we could expect in the current circumstances? There's certainly lots to absorb and comment on, but I want to just briefly focus on three areas, if I may. And forgive me if I am repeating some of the points that have already been covered, but I guess that there will be reiterations, so bear with me. 

Firstly, Cabinet Secretary, as others have said, you've acknowledged the impacts that austerity have on the social fabric of our communities across Wales and that they cannot be underestimated. In constituencies like mine, I see it every single day and something has to change. So, after these long-wasted years of austerity, and given that the UK Government now seems to have found the magic money tree to fund the fiasco that is Brexit, do you see any signs that the Chancellor will acknowledge the need for a change in direction in order to meet the calls for more investment to help our public services? Because, as a Welsh Government, much of what you deliver must come via these budgets, and it's based on our 2016 manifesto, so it's important that we continue to deliver on those promises. 

My second point relates to the Supporting People programme, which has not just been supported by Plaid Cymru but by many Members on these benches, including me, many of us who have taken a keen interest in and campaigned for the financial support that we offer to many vulnerable groups through this programme. So, I'm very pleased with your announcement of £13.4 million to the early intervention, prevention and support grant and the establishment of the two grants, separating housing out from the others. Can I join others in asking whether you can now confirm that this will result in ring-fenced support to those often in the most desperate need of housing and housing support, so that Welsh Government priorities for the most vulnerable will be delivered in the way that your Government intended it to?

And finally, it's very clear that if we are to continue transforming our health and care services, then we must invest in preventative, community and primary care services, and we cannot allow artificial and organisational barriers to impede the funding and delivery of services that we need. So, I'm pleased that your announcement is looking at health and social care in the round, because we should be looking at more innovative ways of funding both health and social care services to ensure that current and future demand can be met. So, can you also assure me that the budget process will continue to drive the integration and innovation between health and social care, ensuring that those vital care services can continue to be delivered in our communities?   

I welcome the draft budget and congratulate the Cabinet Secretary on producing this budget in the ninth year of austerity, because I think we all know how families, particularly families with children, have struggled these last few years. So, I particularly welcome the help for children and families that many Members have referred to today—school meals and school uniforms. It is so difficult for families to cope with the demands and this is real practical help, and I do appreciate the fact that the Cabinet Secretary has made these improvements. Again, along with the others, I welcome the fact that all care leavers will now not pay the council tax until they are 25 years old, and I congratulate those local authorities who have used their discretionary powers to bring this in earlier, because I think this does show foresight and shows care for children who have been under the care of the state. Cardiff Council, my local authority, is one of those that has used the discretionary powers to do this.

I wanted to mention a few other points that I particularly welcome. I welcome the restoring of the funding for the national parks, because I think the national parks are so important for us here in Wales, and I think we all know that health is so linked with being able to enjoy the environment. A visit to a national park is maybe as good as a visit to a doctor, and I'm sure Mike Hedges would approve of that. [Laughter.]  

I also wanted to mention—it's a small amount of money, but I think it's very important—the improvements to Llangrannog and Glan-llyn. One of my grandchildren is actually at one of those establishments now as we speak, and I know how many children have such a huge benefit from them. I think it's an absolutely fantastic experience for children to go there, so I welcome the fact that they are going to have these opportunities.

I wanted, finally, to ask the Cabinet Secretary about how the Welsh mutual investment model is going, which I believe was actually created by my colleague Jane Hutt, when she was the finance Minister, to fund the building of the new Velindre? I know the Cabinet Secretary will be aware that there's now planning permission for the new Velindre in the Top Meadows in Whitchurch, with access through Asda, and the negotiations are ongoing, but we will end up with a brand-new cancer hospital linked with much more treatment for cancer patients in the community, and I think we are all very pleased and proud that this is going to happen. So, could he say how the Welsh mutual investment model is being developed?      

The Minister for finance to reply to the debate—or rather the Cabinet Secretary for Finance, I apologise. 

Diolch yn fawr, Llywydd. Well, an enormous number of detailed questions. I thank Members very much for their close engagement with the budget statement this afternoon and, of course, I look forward to the period of detailed scrutiny that the budget will now receive. Just to say again, Llywydd, that we are following the two-stage process in the budget. A number of questions that Members have raised will become clearer in three weeks' time when we lay the budget at below-MEG level. I’ll do my best to answer as many questions as I can as briefly as I can.

Nick Ramsay began by asking, 'Where would we be without austerity and Brexit?' and, on cue, my colleague Julie James returns—because she gave him the answer loud and clear: we’d all be a lot better off; that’s where we would be without austerity and Brexit. He quoted Harry Truman to us. I’ll just remind him of something else Harry Truman said: society will be judged by how it treats its weakest members. And that’s what this budget is all about. It is about taking the resources that we have, constrained as they are, and then investing those resources where they will make the greatest impact in the lives of those people who depend the most upon the services that public authorities provide.

Let me thank the Member for what he said in welcoming what we are doing in relation to care leavers and for the recognition that he gave to the impact of the fiscal framework, which he has always taken a very close interest in. Let me answer a few of the specific questions that he raised. As far as the £60 million that is announced in the budget for road surface repair, it is indeed ring-fenced. It’ll go through a specific grant. It has no impact on the RSG because, as Nick Ramsay will see when more detail is available, it’s capital that we are providing in that £60 million grant rather than the revenue that goes through the RSG. He made a point about future income tax rates. All parties will be able to set out proposals in manifestos in advance of the next Assembly elections as to how the powers that are available to the Assembly would be used were they to get their hands on them.

And, as to his questions about a more detailed sense of the budget, that will come when we lay part 2 of the process, in three weeks’ time. We will have an opportunity, I hope, to talk about social care. I hear a rumour that the Chancellor intends to publish a Green Paper on social care on the same day as he announces his budget on 29 October, but we were told that that Green Paper would be there last year; we were told it would be here in the summer; now we’re told it’ll be here on 29 October. Well, wouldn’t it be good if that turned out to be the case?

May I say that I appreciate what Steffan Lewis had to say about the context that we faced as we drew up this particular budget? It is an extremely difficult context. Of course, Steffan Lewis suggests that independence would be the solution to all of these issues. I don’t think that we can agree on that on the Government side of the Chamber.

In terms of what he said on free school meals, I don’t quite understand his comments, if truth be told. We’re going to provide greater funding. Very many pupils will qualify for free school meals in our schools as a result of this funding, and we are going to provide cohort protection, as Kirsty Williams has described it. If you start under the regulations that we currently have, then you will retain that system until you go to secondary school or until you conclude your time in school.

I appreciate what Steffan Lewis had to say about LDT and the funds that we have been able to draw in in the first quarter of the current financial year, and of course I agree with what he said: this is money for Wales, not money that should go back to the Treasury, and the reason I say that is because we are drawing funding in, in my view, because of the work that the WRA is doing, focusing on the situation in Wales and succeeding in bringing in those funds in that way.

We are aware of issues in further education, but they haven’t concluded their discussions on staff in the next financial year. Just to say, in terms of what Steffan had to say, we will have to make changes to the law so that we have clarity across Wales, that care leavers will be withdrawn from liability for council tax, and I think the same is true if we do proceed with the proposals I made on private schools and hospitals, but we will need to consult with people on our proposals in those areas.

Turning to what Neil Hamilton said, I thank him too for what he said about the fiscal framework and those aspects of the draft budget, the free school meals and the treatment of the mega grant that he welcomed as well. I didn't agree with him, of course, on what he said on the £15 million in relation to waste capital. I think that will be money very well spent. We know that if we are able to invest in some new, state-of-the-art equipment local authorities will be able to recycle things that, today, they can't. Today, they go to landfill. With the new equipment in place, those local authorities will be able to do more in this field. That was the persuasive case that my colleague, Lesley Griffiths, put to me during the budget preparation period, and I've been very glad to be able to recognise the strength of the case that she made. Mr Hamilton quoted a figure from the period when Gordon Brown was Chancellor, and pointed out that, when Gordon Brown was Chancellor, he was reducing the deficit year after year, and then pointed to the fact that it had ballooned out of control under the current Conservative performance, but he then tried to say that this was the result of a socialist experiment; I did lose my ability to follow his argument there. But where he gets it wrong is the point that Mike Hedges made: for Neil Hamilton, all expenditure is essentially wasteful, whereas, if you believe in the socialist way of doing things, expenditure is an investment. It creates the conditions in which the economy can expand, and, when the economy expands, so there is a greater flow of revenues in from that expanded economy, and that's the way in which you are able to create a benign cycle rather than the cut-your-way-to-success that we've been offered since 2010 and which has so transparently failed to deliver.

Jane Hutt made a very important reference to the IPPR report and what it tells us about how fair taxation can improve economic performance across the UK economy. I'm very grateful to her for what she said about Nye Bevan. Bevan said that the language of priorities is the religion of socialism, and, in this budget, you see our effort to align the expenditure that we have with the priorities that matter to us most here in Wales. I'm grateful to Jane for drawing attention to the £35 million we are able to replace in the social housing grant. It's one of the things I'm most pleased about in the budget, that we will be able to sustain the investment we make as a Government in that most important thing of providing decent housing for families across Wales who today find themselves living in circumstances that none of us would be prepared to regard as satisfactory in our own lives.

There is financial transaction capital reflected in the budget, but there will be more, I hope, at the final budget stage. I'm working closely with my colleague, the water-throwing Ken Skates—sorry, I'm sure he was trying not to draw attention to that—[Laughter.]—to bring forward a series of financial transaction capital ideas that his department is particularly developing in an innovative way. We are having to use our own budget for the EU transition fund, but we have been able to put £140 million of financial transaction capital into the Welsh investment bank, which is being used particularly to support businesses through the EU exit.

On negotiations on powers for air passenger duty, I'm afraid I've only got bad news to report to colleagues. It is very good that the Welsh Affairs Select Committee has announced its inquiry into this, because it will allow us to make our case yet again as to why Wales should not be uniquely disadvantaged in not being allowed to have air passenger duty devolved to us, but I have a letter from the Secretary of State for Wales addressed to the First Minister only a few days ago, and, once again, the Secretary of State for Wales tells us that he cannot support this idea because he's more worried about England and about the impact of it there—by the way, an impact that independent reports that we have supplied to him tell him does not exist. But he is more worried about his responsibilities to Bristol than he is about his responsibilities to Wales, and that is very deeply disappointing.

Very briefly, Llywydd, if you don't mind—I've got a minute to respond to just a few selected points from what other Members have raised. In what Jenny Rathbone said, let me focus on what she said on active travel. We announced £60 million earlier in the year, £10 million this year, £20 million next year, and £30 million the year after, directly for active travel. But the £78 million local transport fund and the £60 million for road repair, plus what we're doing on clean air and the money we're providing to local authorities in capital and revenue to improve traffic in that way—all of those will, I believe, contribute to our active travel agenda.

Mark Isherwood told us about Maynard Keynes and, of course, Keynes is a counter-cyclical way of dealing with the economy, not as his Chancellor of the Exchequer George Osborne carried out his responsibilities. He always seemed to me to be like a medieval doctor, really: you bled the patient and, when the patient showed even greater signs of illness, the only answer was to bleed the patient some more. That's exactly the opposite of Keynesian economics. I'm sure it must feel to some Members like I have been standing here for more than a decade, but Mr Isherwood's questions of how I responded to something that was said in 2004—. It was a finance Minister well beyond my own time who was responsible for that. I share, however, what he said on co-production; there's a long way still to go, and it is for our public services to mobilise the human capital that comes from users of services, alongside the financial capital that they have, to make a real difference.

Mike Hedges asked me a series of specific questions. The Treasury has changed the rules in relation to financial transaction capital in England. They are not, as yet, able to tell us how those changed rules apply here in Wales. I have written to the Chief Secretary to the Treasury asking to extend our borrowing capacity in the forthcoming comprehensive spending review and we are well on our way, now, to having bond-issuing powers here in Wales.

Suzy Davies's questions about education and Welsh-medium education will emerge more clearly in the second part of the budget, but I can tell her that amongst the education aspects are £15 million in a new specific grant that will go directly to schools from my colleague Kirsty Williams's budget, together with £9 million to deal with sixth-form funding and £9 million to sustain the grant for minority ethnic achievement.

On the funding formula, a number of Members have asked me about the funding formula in local authorities and in education. I say to them what I say to my colleagues in local government: if anybody can bring me an improved formula on which local authorities are agreed, they will find me very receptive to that. As yet, they've never been able to meet that challenge. Can I say to Dawn Bowden that, if there is any sign of change in the 29 October budget of the Chancellor of the Exchequer in relation to austerity, we will use every penny of that, as we did last year, to invest in preventative services and, as she said, to make sure that organisational barriers do not stand in the way of achieving best outcomes for patients and for social care user services? My colleague Vaughan Gething and I have met twice during this budget round to reaffirm this Government's determination to use the resources we have to invest in the social care and health system in the round. As Members will see the detail of the budget, they will see that reflected in it.

Finally, Llywydd, to respond to Julie Morgan's points, going to Llangrannog is a Welsh rite of passage that many of us across this Chamber will have experienced in our own lives and in the lives of others and I'm very glad that, working with Eluned Morgan, we've been able to find some additional money to upgrade the facilities both there and at Glanllyn.

As far as the mutual investment model is concerned, we now have complete clearance from Eurostat and the ONS. Our model has been featured in a recent United Nations handbook, advising countries around the world as to how to design a model of this sort, and I was pleased to see the reference that the First Minister of Scotland, Nicola Sturgeon, made to building on the Welsh mutual investment model in the Scottish Government's plans to expand the level of capital available for important public purposes there too.

We are well on our way in relation to Velindre. There are planning issues to resolve. There are clinical design issues to resolve. But we are determined that the model will be there to support that very important development for cancer services across south-east Wales. 

Thank you to the finance Secretary. Item 4 has been withdrawn.