The following amendment has been selected: amendment 1 in the name of Darren Millar.

Item 10 on the agenda today is the debate on the draft budget, and I call on the Cabinet Secretary for Finance to move the motion—Mark Drakeford.

Motion NDM6883 Julie James

To propose that the National Assembly for Wales, in accordance with Standing Order 20.12:

Notes the Draft Budget for the financial year 2019-20 laid in the Table Office by the Cabinet Secretary for Finance on 2 and 23 October 2018.

Motion moved.

Thank you very much, Deputy Presiding Officer, and thank you for the opportunity to open this debate on the Welsh Government's draft budget.

The debate takes place in accordance with the protocol agreed by the National Assembly last year. This is the second time we will have followed this procedure, ensuring that our budget process reflects our new fiscal responsibilities. My aim is to cover three main areas this afternoon. Firstly, I will set out some of the inescapable context in which today's draft budget was developed. Secondly, I hope to set out a series of changes that I intend to make to the draft budget published on 2 October. These changes will be reflected in the final budget, which will be laid on 18 December. Where there are changes to plans for the current year, these will be reflected in the second supplementary budget for 2018-19. The changes to plans are largely the result of the scrutiny process that has followed since the draft budget was first laid. I'd like to thank the Finance Committee and the other Assembly committees for their work in scrutinising the draft budget and for the reports and recommendations that provide the foundation for today's debate. Dirprwy Lywydd, my third intention will be to provide a first response to that scrutiny process, focusing in particular on the report of the Finance Committee published last week.

To begin, then, with context, this budget marks another milestone in our devolution journey. For the first time, the budget contains revenues raised directly from the Welsh rates of income tax. Members will be aware that, in line with my party’s manifesto, it is not my intention to raise income tax levels in Wales next year. As well as Welsh rates of income tax, the budget reflects the income expected from land transaction tax and landfill disposal tax. Altogether, more than £2 billion-worth of the revenue used next year to support Welsh public services will be raised as a result of decisions made here in the National Assembly for Wales.

Dirprwy Lywydd, the budget takes place against the twin assaults of austerity and Brexit. As Members will know from the debate we held earlier this afternoon, it is this Government’s view that any form of Brexit will leave people in Wales worse off than if membership of the European Union had continued. In a catastrophic 'no deal' Brexit, our economy might shrink by up to 10 per cent. The short and long-term implications for the Welsh budget and the funding available for public services in such a situation would be profound. That assault would be all the more damaging because it would come on top of the damage done by eight years of austerity.

Members know the facts, but members of the official opposition particularly need to hear them again. If our budget had simply retained its 2010 value, if we were not a penny better off in real terms, the budget in front of you today would have £850 million more to invest in front-line services. If spending on public services had just kept pace with the growth in the economy since 2010, not taking any greater share than David Cameron and George Osborne inherited, then this afternoon, you would be debating a budget with an extra £4 billion to attend to the urgent needs of Wales. If today’s UK Government had managed to match the longer term trend in public spending, a longer term trend sustained in Governments led by Harold Macmillan, Edward Heath, Margaret Thatcher, John Major, then our budget would be some £6 billion larger than it actually is today. Instead, Dirprwy Lywydd, we have a Chancellor in Philip Hammond who said in his budget on 29 October that austerity was over, and then shamefully left the very worst-off managing on breadline benefits, with their incomes frozen or declining for the third year in succession. A Chancellor who said that his was a budget to unleash investment to drive future prosperity, and then gave this Assembly just £2.6 million extra capital to address every unmet investment need we have the next year. This is the inescapable context in which today’s budget has been crafted, and nobody should forget it, even if, like the annual appearance of Scrooge at Christmas, we see the dusting down of the annual Conservative amendment to the budget, which once again we will oppose.

Dirprwy Lywydd, I turn to the second main part of what I want to put on record this afternoon: the changes I plan to see reflected in the final budget, to be published later this month. At the start of October, both the First Minister and I made it clear that if any further resources became available to us over the autumn, then further funding for local government would be a key priority. I’m grateful to the Welsh Local Government Association for the detailed and constructive discussions since October, and for the result we were able to reach. The package of additional funding measures for local government next year reaches a total of £141.5 million. That includes a settlement that is at least cash-flat in revenue terms for local government again next year—the third year in a row, Dirprwy Lywydd, in which we have been able to protect Welsh local government from cash cuts.

Once again, I will find the money centrally for for a funding floor to be set now at no lower than -0.5 per cent so no local authority in Wales faces reductions above that level. And we will be able to boost the capital funding available to local authorities in Wales by a further £100 million over three years, over and above the additions to capital investment that I was able to announce in the budget on 2 October.

Dirprwy Lywydd, I know that Members across the Chamber are interested in support for rates paid by small businesses. Three quarters of businesses already receive help with these costs from the taxpayer here in Wales. In his budget on 29 October, the Chancellor of the Exchequer announced that he intended to introduce a scheme of high street relief, a scheme, of course, that we have had in place in Wales for the last two years. The introduction of a scheme in England, however, brings with it a funding consequential for this National Assembly. I confirmed to the Finance Committee last week that I intended to apply the full £26 million consequential to support businesses in Wales next year.

Today, Dirprwy Lywydd, I can go further to inform Members that I intend to use the bulk of that money to provide an expanded and more generous development of the existing Welsh scheme, retaining the basic parameters, which I agreed at the outset with the then finance spokesperson of Plaid Cymru. I expect to be in a position to announce the full details of the scheme very soon. And, Dirprwy Lywydd, because I recognise that any national scheme may leave some anomalies at a local level, I also intend to increase the funding to local authorities further to boost their ability to respond to particular needs of ratepayers in their localities through the discretionary rate relief scheme that local authorities operate in every part of Wales.

Finally, Dirprwy Lywydd, in this part of what I have say, to note a further element in the agreement we have with Plaid Cymru in this second year of the two-year budget agreement we reached on a package of measures last year, where we have mutual policy interests. The draft budget of 2 October contained an additional £2.7 million to upgrade both Urdd camps at Glan-llyn and Llangrannog. 

Today, I can let Members know that I intend to double the amount of capital funding set aside in next year's budget to take forward the results of feasibility studies agreed between our two parties, from £5 million to £10 million. I do so because of the progress made in producing those studies. The culture Minister last week updated the Assembly about the feasibility studies for a new contemporary art gallery for Wales and a new football museum. The feasibility study for a national archive for Wales will be available by spring next year. Both our parties want that work to be able to be taken forward and this significant additional capital, which I announce this afternoon, will help to make that happen.

Finally, Dirprwy Lywydd, to the third part of what I'm going to say in this part of the debate and, particularly, to provide a preliminary response to the recommendations of the Finance Committee. I will, of course, provide a formal written response to the committee in advance of the vote on the final budget in January next year. This afternoon, I wanted to say immediately that I accept the first of the recommendations of the Finance Committee's report that we retain the current practice of a two-stage budget process for next year. I intend, additionally, to follow the committee's advice in relation to Her Majesty's Revenue and Customs and the Office for Budget Responsibility, and will be pleased to provide the committee with any renewed memorandum of understanding in relation to independent tax forecasting as the committee's report suggests. 

Dirprwy Lywydd, much attention has been given during the scrutiny process across Assembly committees to preventative spend. I hope the definition of prevention, arrived at in consultation with third sector bodies, Public Health Wales, the fire service and others, has helped in this year's round, and I look forward to further refinements of it in discussions with committees and others. It is certainly not intended to be the last word on this matter, and I'm confident that the scrutiny process will allow us to take that definition further. The future generations commissioner has taken a particular interest in prevention, alongside other aspects of the budget, and I thank her and her team for the advice provided on the application of the Well-being of Future Generations (Wales) Act 2015 to the budget-making process, and therefore to the Finance Committee for their recognition of the additional steps taken this year to bring about the cultural change necessary within the Welsh Government to embed the Act in all we do.

Llywydd, the final recommendation of the committee returns me to where I began this debate this afternoon, by noting the need for budgetary flexibility in response to Brexit, and of course I agree with that recommendation. The next few weeks could see decisions made that will have a deep and lasting impact on the resources available to this National Assembly to discharge the responsibilities devolved to Wales. That uncertainty has hung over the whole of the budget process this year, even as we in the Government remain committed to doing everything that we can to help our public services meet the very real challenges of today, while acting to improve the prospects for Welsh citizens in the future. That's what this budget does, and I ask Members to support it this afternoon.

Thank you. I call on the Chair of the Finance Committee, Llyr Gruffydd. 

Thank you, Dirprwy Lywydd.

Members will know, of course, that I was appointed Chair of the Finance Committee earlier this year, so this has been a new experience for me, and scrutiny of the draft budget has been a fascinating introduction, one could say, to the work of the Finance Committee. 

Of course, the way that the draft budget is scrutinised was changed last year, and this is the second time that the Finance Committee has undertaken a more high-level, strategic scrutiny, looking at overarching spending and revenue-raising plans. As part of our scrutiny, we considered the timing of the draft budget, as we've already heard in the opening remarks of the Cabinet Secretary. The committee recognises that publishing the Welsh draft budget before the UK budget can cause difficulties. Once the UK budget is published, this can result in allocation changes between the draft and the final budgets, and more in-year funding changes. However, we agreed that the current practice of publishing the Welsh draft budget prior to the UK autumn statement is preferable to delaying scrutiny. I'm pleased that the Cabinet Secretary accepts our recommendation but, of course, we will continue to review the arrangements as we go forward.

Our report makes a series of recommendations, and I'll briefly cover some of the more prominent ones in my contribution to this debate this afternoon. This is the first draft budget after the introduction of the Welsh rate of income tax, which is an exciting and historic moment in devolution. We heard from Her Majesty's Revenue and Customs about the work being done to ensure they are ready for 1 April and, in the main, it seems that work is on target and is progressing well.  Everyone here today should by now have received a letter informing them of their Welsh taxpayer status, but we do recognise at the same time that Wales has a dynamic border, with around 100,000 people migrating back and forth each year. So, effectively monitoring Welsh taxpayers is going to be crucial, and we recommend that the Welsh Government clearly monitors progress in that process of identification of Welsh taxpayers as we make progress. The Cabinet Secretary assured the committee that this work was being paid for, and as such he was clear about his expectations of the service expected of HMRC.

The subject of forecasting future tax revenues was also an area of concern for the committee. In Scotland, we heard that there was an overestimation by the Office for Budget Responsibility, the OBR, and the Scottish Fiscal Commission of £700 million and £500 million respectively. We asked the OBR whether this could happen in Wales, and it was said that more will be learnt when the first survey of personal income is available, whilst the Cabinet Secretary told us the reasons for the overestimation in Scotland are still unknown.

The Llywydd took the Chair.

Whilst we were reassured that the Cabinet Secretary is working with his Scottish counterpart to learn from what's happened in Scotland, and although we recognise that the fiscal framework provides protection for us in the first year, this work needs to be done correctly and done well, or there will be serious implications for us in Wales from not getting this right. 

Last year, the OBR told the committee that the timing of the Welsh budget in relation to the UK autumn statement is 'challenging'. Well, the OBR will now be formally forecasting Welsh tax revenue, and the committee recognises the benefit of this being undertaken by the OBR, but we remain slightly concerned. We believe it is vital that taxpayer identification and forecasting is undertaken thoroughly for Wales, and we have recommended that the Welsh Government ensures that all work undertaken by the OBR and HMRC is given the same priority as the work they undertake in a UK context.

Last year, the Finance Committee scrutinised tax forecasts, and made recommendations in relation to the provision of Welsh specific data. We received evidence again this year raising this issue. Whilst the committee recognises that there are resource implications to creating additional data, we believe that, as time passes, improved Welsh specific data is crucial to informing both Welsh tax policy decision making and Welsh tax forecasting. 

When considering this draft budget and the prioritisations given, the committee were mindful that this budget, as we've already heard in the opening statement, has been produced in the context of 10 years of constrained public finances, with evident pressure from an ever-demanding health service. However, the committee also recognises the impact of the continual prioritisation of the health main expenditure group—the MEG—over other portfolios. The Future Generations Commissioner for Wales suggested that additional allocations to health should only be made with the proviso that they are for preventative activities, and that funding is spent in partnership with other stakeholders. The committee does believe that there is merit in this suggestion, and we have recommended that the Welsh Government give this consideration.

The future generations commissioner gave evidence on the links in the draft budget with the Well-being of Future Generations (Wales) Act 2015. The commissioner felt that progress was being made, but that there is still change needed to ensure that the Act is embedded in the culture of the Welsh Government. We have recommended that the Welsh Government should engage as fully as possible with the commissioner to create this cultural change that we want to see, and the cultural change that the Cabinet Secretary referred to earlier on.

Stakeholder feedback and repeated concerns voiced by Assembly committees about the quality of impact assessments led to a new cross-cutting approach to this year’s budget scrutiny. The Finance Committee, the Children, Young People and Education Committee and the Equality, Local Government and Communities Committee met jointly during this budget round to scrutinise the Welsh Government's approach to assessing the impact of its budget on children, on future generations and on equalities. The three committees have agreed to consider the evidence gathered in this specific session, and to report jointly in the new year, with a view to influencing, hopefully, future budgets.

This year, the work of budget scrutiny was set against a long-awaited definition of preventative spend, as we heard earlier, and we heard that this definition was created in partnership with stakeholders. However, we didn’t see extensive evidence that allocations were being considered in light of the definition, and it appears that spending decisions are too often being made in isolation.

The committee does believe that effective preventative spending requires an integrated approach, and time will be required to embed prevention into the budget process. We accept that. We also recognise that the definition of preventative spend will be updated in light of experience, and the committee looks forward to seeing improvements in how the budget allocations link up with the definition of preventative spend in future budgets.

The committee heard positive evidence with regard to the economic action plan. However, evidence also identified that it was difficult to identify spending on specific areas within the budget tables and that it’s difficult to align policies within the budget. The committee believes that the budget should be more explicit, ensuring increased transparency to enable stakeholders to track investments in the economic action plan to the budget tables. The committee would also like to see further consideration being given to how tackling regional inequality across Wales can be prioritised in decision making in relation to infrastructure investment.

The Cabinet Secretary announced that the consequential from the UK business rates relief scheme would be used for the Welsh rate relief scheme. And we’ve heard a few additional details on that this afternoon and we look forward to having greater detail in due course.

The continued uncertainty around Brexit meant, of course, that it was difficult to effectively scrutinise specific plans by the Welsh Government to respond to Brexit. The evidence we did receive showed concern not just on funding plans, but with regard to wider issues, such as healthcare arrangements and economic stability. We hope that these issues will be considered by the Welsh Government. The Cabinet Secretary said that flexibility was needed to respond to Brexit and the committee supported this approach. However, we would also be keen to see details as to how the Welsh Government responds to Brexit in the first supplementary budget next year, of course.

This year, the committee benefited from the expert advice of Dr Ed Poole from the Wales Governance Centre. Interestingly, Dr Poole also gave evidence to the committee on the draft budget. This is a rather unusual dual role, but for me this shows that we need to broaden the availability of finance experts across Wales. As fiscal devolution progresses, we need to ensure that we have a civic society that is fully willing and able to engage in that process.

To conclude, I would like to thank everyone who contributed to all stages of the scrutiny process: committee members of course, the research team, the clerking team, and also those who attended the stakeholder event or provided formal evidence. We are extremely grateful for the work of all of our stakeholders in helping us to shape our findings, and I look forward to seeing or hearing the Government’s formal response to our report. Thank you.

I have selected the amendment to the motion and I call on Darren Millar to move that amendment. Darren Millar.

Amendment 1—Darren Millar

Delete all and replace with:

To propose that the National Assembly for Wales:

Does not believe that the Welsh Government's Draft Budget 2019-20 meets the needs of the Welsh people.

Amendment 1 moved.

Diolch, Llywydd, and can I move the amendment, which is tabled in my name?

The Cabinet Secretary started his speech with a reference to the context around this budget and the context in which he has had to set it. He referred a great deal to austerity and the challenges that the UK Government has had to face, and, as a result, the Welsh Government has had to face as a result of the pressure on public finances, but he didn't mention at any time the fact that the reason that we were having to cope with austerity in recent years has been as a result of the disastrous state of public finances that were left by Gordon Brown and Alistair Darling during the Labour Government's time in office.

Now, let me give you a little bit more detail on the context in which this budget has been set, because whilst you have heard that austerity is continuing, nothing could actually be further from the truth. The Welsh Government has a budget in excess of £16 billion next year. It's a record-breaking budget, the largest budget the Welsh Government has ever received, and actually the budget will have increased over the period of the spending review, over and above inflation, between 2015 and 2020.

This year is the biggest budget in the history of devolution, and the current funding arrangements between the Welsh Government and the UK Government mean that for every single pound spent on a devolved area in England, Wales receives £1.20 to spend here. On top of that, the recent spending decisions announced by the Chancellor in his autumn budget mean that the Welsh Government's revenue budget is going to increase by £550 million—that's over £0.5 billion by 2021. And in addition to that extra cash, the UK Government is scrapping the Severn bridge tolls, expected to give £100 million a year boost to the Welsh economy every year. It’s already committed to supporting the development of a mid Wales growth deal, and it has pledged, unlike the Welsh Government, £120 million for a north Wales growth deal, and I think that it’s about time you put your hand in your pocket to put some money on the table too.

So, you've got a rising budget from Westminster and you've got new flexibility in terms of the taxation powers that have been devolved by the UK Conservative Government and that, I believe, is the context in which you are setting your budget and I believe it gives you an opportunity—[Interruption.]—to do things differently. I'll happily take an intervention.

Do you accept or believe that the budget now is not 5 per cent lower than it was in 2010-11? Do you not agree with that?

I agree that this is the largest budget ever received by a Welsh Government.

That's not answering my question—

That is the situation.

Now, from April, as we've already heard, the Welsh Government will have new tax levers—more tax levers than ever before in order to generate some wealth for the Welsh economy, but instead of seizing the opportunity that those tax levers represent, to give our economy a shot in the arm, the Welsh Government has succumbed to the traditional Labour temptation of tax and spend. Let’s take the new 6 per cent supertax, for example, which you impose on commercial land sales of over £1 million—a move that the Welsh chartered surveyors labelled as, and I quote, ‘crazy’. They warned, and I quote, that it would make Wales a less commercially attractive place to invest and would damage the economy. That’s the sort of punitive tax-and-spend ideology that you’d expect from a party that has, time and time again, absolutely trashed our public finances. This budget could have helped to address those concerns and helped to attract more businesses to relocate into Wales, but it hasn’t, because instead, Cabinet Secretary, you’ve ignored them. This is not the sort of twenty-first century socialism that you claim to represent; it’s the sort of socialism that stifles opportunity, holds Wales back and strangles the life chances of the next generation.

And what about these other tax levers at your disposal? The Confederation of British Industry has rightly warned you about raising Welsh income tax, saying that it should be last resort and not a first response. And I’m very pleased to see that, in your budget, there are no proposals at present to increase Welsh income taxes. But, of course, what you didn’t guarantee was that they’re not going to rise in the future—you’ve only mentioned the next financial year.

You’re a member of a party that committed itself in a manifesto before the 2016 Assembly elections that you were not going to increase income tax. Will you give us personally that commitment here again today from you, Cabinet Secretary? We’ve only got a small proportion of the UK’s higher and additional rate taxpayers and I think it’s extremely likely that these highly mobile individuals would be relocating from Wales, resulting in a loss of revenue for the Welsh coffers and also resulting in investment from those individuals going elsewhere. And it’s true, of course, of other taxes too.

I’m very pleased to hear that you’ve had a belated conversion to the need to do something extra on business rates, because, as we know, at present, we have the least attractive business rate regime in the United Kingdom, as a result of the current situation with the multiplier.

I’m looking forward—you’ve shown us a bit of leg in terms of your plans to use the £26 million consequential that you’ve received from the UK Government to support the situation with business rates, but you haven’t given us more detail about that, and I’d like to hear more detail in your response to the debate today.

You see, we Conservatives know that when you support businesses, you’re actually helping to stimulate the whole economy and you’re helping to support public services because it’s private businesses that create the wealth, that pay the taxes, that employ people who also pay their taxes, and it’s those taxes that pay for the public services that we enjoy in Wales, and the staff who work in them.

So, this budget is a let-down in many respects, not least for Welsh businesses. It’s also a let-down, of course, for first-time buyers. It does very little to accelerate house building, the house building that we need and was referred to during First Minister’s questions today. It doesn’t do a great deal extra in terms of helping people to get their foot on the housing ladder either. And you could have taken further steps to support people through extensions of the allowance in terms of the land transaction tax in order to help people onto the housing ladder. But you haven't. You haven't. It's another missed opportunity.

Turning to the NHS, we've welcomed the additional investment that your Government has put into the national health service, but I have to say that it's a little bit too little too late. Let's not forget that Wales has the accolade of having the only Government ever anywhere in the United Kingdom that has ever cut a national health service budget. And the legacy of your savage cuts in a previous administration to the NHS budget live on with us today, because as a result of those cuts—[Interruption.] You were talking about how budgets change over a period if they keep pace with inflation. Well, let me tell you, if you hadn't cut the national health service budget in the year that you cut that budget, with the support of Plaid Cymru I might add, the national health service budget—if you had kept pace with the spending increases in England—would be £1 billion healthier today in Wales than is currently the case. Because the truth is that, over the past six years, the budget has risen more than twice as fast in terms of the health service in England than it has done in Wales, and it's very clear—[Interruption.] It's very clear—these are facts. You don't like the facts—[Interruption.] You don't like the facts—[Interruption.] You don't like the facts, but that is the truth. It's very clear that it's this Conservative Party that are championing the national health service, not the Labour Party here in Wales. I'll happily take the intervention.

I just want to say: do you regret the votes you made last week and the week before when you were asking for more money for further education and more money for local government, which could only have come out of the health service?

We are happy to champion the needs of our national health service and to campaign for more cash. You might like to defend cutting the national health service budget. I don't.

Now, I was pleased to hear your references to the need to take a look at the way that we invest in preventative spend, because we do know that it's not just about funding for the national health service, it's also funding for those services that prevent people from needing to access the national health service as well. And I'm pleased that you've listened to the calls of the future generations commissioner to take that situation more seriously, because we know that our councils in particular are facing significant additional pressures. They've got changing demography in their areas, and there's increasing demand for social care. Yet we're still seeing you cut cash. You're talking about a flat budget. The reality is that many local authorities are seeing their budgets significantly decrease as a result—[Interruption.]—as a result of your budget.

And those cuts are also hitting our schools. School funding in Wales, as we already know, according to the National Association of Schoolmasters/Union of Women Teachers, is £678 per pupil per year lower than over the border in England, and that's in spite of you getting—[Interruption.]—an extra 20 per cent on top of every pound—[Interruption.]—that's spent over there. Don't argue with me. Argue with the NASUWT—[Interruption.] The Welsh Government's decisions to cut things like the education improvement grant this year and next year are only going to widen that gap.

Now, this is a budget, which you've presented to this house, that delivers real-term cuts yet again in the education budget, with schools set to receive £12 million less next year than in the current financial year. We already know that 40 per cent of schools are already operating with a budget deficit, and that looks only likely to rise. Is it any wonder that Estyn have concluded today that half of our secondary schools have shortcomings? Is it any wonder, when schools are facing that sort of pressure? And this is from a Government whose First Minister pledged to increase investment in our schools when he became First Minister back in 2009. The reality is that all he's done is cut, cut and cut in terms of their budget. In fact, we've had real-term cuts of almost 8 per cent in the gross budget expenditure for education from 2010-11 to date. What an absolute travesty.

I could say more, but the clock is ticking—[Interruption.]

No. You do need to bring your comments to a close.

Frankly, as has been the case in previous years, the detail of the budget is so opaque and difficult to unpick and drill down into that it's very difficult to know what other horrors lie beneath the surface.

So, in conclusion, this budget represents a missed opportunity for Wales. We have record levels of funding, rising budgets coming to the Welsh Labour Government, and they could have taken the opportunity to back businesses, to invest in the next generation and to do more to support those in need. But instead we've got a budget before us that is going to stifle businesses, which is cutting funding for our schools and failing to invest in the preventative services that vulnerable people need. It's a budget from a Government that, after 20 years, has run out of steam and run out of ideas. We'll be voting against it and we hope others will too. 

This is an austerity budget. Twice over, all of us can see the impact of the Tory UK Government's austerity agenda, which has depleted the overall spending power of Welsh Government significantly, and no Darren Millar smoke and mirrors will hide the reality of that callous Tory Government at Westminster. But the double whammy in this budget, of course, is the fact that Labour has made political decisions here that deepen the effect of long-term UK Government cuts, especially in the context of local government budget allocations. And this in the context of an increase, actually, in the overall budget for next year.

Now, yes, there's been a tweak since the publishing of the first draft budget, with the allocation of new UK budget consequentials that does slightly loosen the stranglehold on Welsh councils, but it's still a stranglehold, nonetheless, and this budget was an opportunity to put a fresh injection of resource into local services that could have knock-on benefits for public services more widely, and I regret that that opportunity hasn't been taken.

Of course, this Government commands a majority, now, so our powers, as opposition parties, are limited. That's the reality; we're collectively not in a position to vote it down, and the way we vote on these benches has no bearing, sadly, on the overall ability of the Government to pass its budget. We're bound, with a budget agreement that is nearing its end, to abstain today, but as much as we consider a budget agreement to be something to be taken very seriously indeed, I must say that we are under intense pressure, including from Labour colleagues of the finance Minister, to vote against. But my hope is that, in the spirit of the positive dialogue that there has been between the finance Minister and me and my predecessors, as Plaid Cymru finance spokespeople—and I do thank him for the mature and constructive manner in which discussions have taken place—he does give further thought between now and the publication of the final budget to giving local government a break. We can't continue with the real-term cuts that have a direct impact on education spending and on social services, leading to damaging indirect impacts on health budgets. Your room for manoeuvre is limited—I understand that—but what that means is that the manoeuvring you do do has to be with pinpoint accuracy, and, unfortunately, local services are taking a hard knock, as it stands.

It’s not just Plaid Cymru Members who have been expressing concerns about the Government’s failure to recognise the pressures on local government. We heard Barbara Jones, the deputy leader of Caerphilly council, saying recently that we can’t now place all of the blame on the Conservative Government in London. It hurts her to say, as a staunch socialist, that the Welsh Government hasn’t treated them fairly. That’s the view across local government in Wales. It’s not a matter of complaining or of making unreasonable demands by councillors. We can’t discount them, as the Cabinet Secretary for local government did, comparing councillors to Oliver Twist. That is not acceptable. They are caring for their constituents, for people the length and breadth of Wales—that’s what our councillors are doing across the nation. This is a matter of realising the real implications of our ability to provide fundamental services within our communities. And, as I’m explaining, this is Labour’s austerity this time.

But this budget also reflects broader problems within Government and its failure to think and to act holistically when it comes to budgetary decisions, and a failure to take preventative steps now. Cutting funds from crucial preventative services provided by local government is of course going to increase the pressure on our health service. We see this in the response of the Royal College of General Practitioners to the budget too, which notes the huge pressures on primary care services, therefore, because of a lack of long-term planning and a lack of investment in preventative services. We need to change the way in which we plan budgets across all areas and how they come together. We need greater ambition, we need a longer term view and more collaboration between the various levels of government and public services. And we certainly need—and I would want to support this—far more focus across the budget on tackling poverty. Victoria Winckler from the Bevan Foundation told the Finance Committee that she couldn’t see an anti-poverty strategy that was sufficiently rooted within this budget. In her words:

'It needs to be embedded in the priorities and embedded in the focus.'

It isn’t, according to her.

Further education—a fortnight ago, the Senedd voted in favour of increasing the funding available to further education. The Government needs to respect the views of the Senedd in this decision. That was my message to the Cabinet Secretary in a letter following that vote. I’ve received a response yesterday noting that additional funding for salaries is available, but I don’t think that that is sufficient, and neither does it reflect the spirit of the vote taken here a fortnight ago, so I would ask him, therefore: what is the Government’s intention in terms of taking clear action on that vote, and how much additional funds can FE expect?

There has been an agreement in place—there was a two-year agreement, and this will be the last time that Plaid Cymru will collaborate with the Government in this Assembly, I’m sure, so I would like to take this opportunity to reflect on those agreements. We’re very proud of what we have delivered through those budgetary agreements—£0.5 billion in financial commitments for priorities from our 2016 manifesto, more than any opposition party in the Assembly has ever delivered. It includes an additional £40 million for mental health services. It does mean that medical education will be introduced in Bangor from next year on. There is greater support for Welsh businesses in preparing for Brexit. There’s significant funding for the Urdd camps, thanks to the agreement with Plaid Cymru. And I’m pleased to hear confirmation this afternoon of additional capital funding to develop proposals for a contemporary art gallery and football museum, which were the result of a feasibility study that came about as a result of our budgetary agreement. This is what delivering as an opposition party looks like. That is what it means to be responsible and to work in a mature manner in order to secure improvements to people’s lives—those people who we represent. But, as I said, this is Labour’s budget, and it’s Labour who will decide whether it is passed as it is or not.

We’re moving to a new period now in our history as a nation—in the history of devolution too. The devolution of taxation powers is entirely right and will lead to greater scrutiny, more detailed scrutiny, of our processes and the budgetary decisions taken by the Welsh Government. The Government is not only a spending body now and we are evolving to a period where that balance of receipts into the Welsh coffers will be balanced and jointly scrutinised alongside the expenditure decisions, and that’s how it should be. But it does mean a very real responsibility on the Cabinet Secretary for Finance, and that’s why getting that balance and ensuring that the priorities are right is so important. And that’s why we’re so disappointed with the draft local government settlement specifically, and why we’re asking for a reconsideration of that, even at this eleventh hour.

Some taxes have already been devolved, and it’s fair to say from our work as the Finance Committee that, to a great extent, it is too early to assess the impact that those new taxes are having on the expenditure of the Welsh Government and the decision that the Welsh Government needs to take. Now, taking responsibility for a percentage of income tax will be a key and substantial step forward, and it is a step that I and my party have supported in the long term. There are elements of risk, of course, as Scotland has experienced recently, but I have no doubt that the incentive will be there now for the Government to innovate and to raise the bar in terms of economic performance targets, to raise the bar in terms of what the Government is seeking to deliver through its budget. It’s also clear that it’s not the Labour Government that will deliver the necessary ambition for us.

Thanks to the Finance Minister for bringing today's budget debate. Of course, we agree with some aspects of the Government's draft budget. The news we had—. Mark Drakeford said today that the full amount from the consequential of the UK Government's high-street relief scheme—the full amount will be spent in Wales. That's welcome news. Although, as Darren Millar added in his contribution, we will need more detail on that.

The agreement with Plaid—Mark Drakeford again made this point, which was just referenced by Rhun. There are the feasibility studies into two interesting and promising projects—the national football museum and the modern art gallery. Of course, we could well support those schemes; they sound highly promising. Again, we'll have a look at the detail as we go forward.

Onto broader points, we are now moving more and more into a situation where health spending is swallowing up approaching half the Welsh Government budget. Of course, health is the major spending area and one that is surrounded by a large degree of public concern. The problem is that health spending is inflating at a greater level than overall Government spending, which, obviously, can't carry on forever; it's not sustainable. So, at some point, we do have to be cognisant of points that have been made by the future generations commissioner in the past, now supported by many others from various political parties, and move to more effective preventative spending, which will save us money in the long run. It's good that there is now an agreed definition of what actually comprises preventative spending, but, of course, this is still a complex issue. We've heard that the definition is liable to change. The whole situation does need to be monitored, and we hope that the long-term issue will now start to be at least addressed. But we are going to want to see a cross-cutting approach from the Welsh Government and we will need to closely monitor this going forward to see if the preventative spending principle is being adhered to in future years.

Overall, we see good things in it, as I said, although there seems to be a lot of pessimism. Mark Drakeford said that the budget had been set beneath the twin shadows of austerity and Brexit. I don't want to get too much into those areas because they're always given a lot of leverage by other parties and we've had the Brexit debate today already. Darren Millar referred to horrors lying beneath the surface. Surely, it can't be as bad as all that—maybe we do have to slightly lighten up.

Overall, we oppose the Government's draft budget and we do support the Conservative amendment. Diolch yn fawr iawn.

In preparing my Christmas message to my constituents this week, I was pleased to report on the uplift to local government announced by the Cabinet Secretary on 20 November, which came as welcome news to Welsh local authorities, securing an additional package of £141.5 million in revenue and capital over the next three years. And the uplift to the draft budget secures these additional allocations of funding where they're most needed, where our public services are delivered in local government, despite the deep and unnecessary cuts to our budget by the UK Government over the past eight years, and the loss of £850 million for our public services as a result, with our budget 5 per cent lower in real terms. So, no wonder I welcomed a letter in my local paper The Barry Gem from a constituent in Barry with a headline to the council leader to stop denying political reality. My constituent had read a letter from the leader of the Conservative-controlled Vale of Glamorgan Council asking for more financial help from the Welsh Government. My constituent wrote, 'Is Councillor Thomas aware of which political party he's a member of and from where the financial starvation of local services is ultimately directed?'

Austerity's reckoning has been made clear by the UN rapporteur on extreme poverty and human rights, Professor Philip Alston, laying bare the facts of the past nine years of cuts and austerity. He said:

'Damage is being done to the fabric of British society, to the sense of community…soon there will be nowhere for people in the lower-income groups to go.'

He cited the disappearance of sport centres, recreation spaces, public land, libraries and youth clubs. We welcomed Professor Alston to Wales and we accept his finding. It is the Welsh Government and local authorities that have had to mitigate against austerity.

In 2010, after the so-called emergency budget—that first budget of that coalition Government, when I was finance Minister—we were told to make cuts to revenue and capital. We refused to make those cuts. I recall speaking about providing a shield against those cuts. We didn't know that eight years on we would be still in that position, with even tougher choices to make to maintain and strengthen that shield. This week, we have yet more evidence of the adverse impact of austerity from the Joseph Rowntree Foundation, which found that a third of children in a typical classroom of 30 are now living in poverty, as more working parents cannot make ends meet. So, I also welcome the vital commitment in this draft budget to double the pupil deprivation grant, to fund free school meals for 3,000 more pupils, £200 million for the council tax benefit scheme, scrapped in England, to mitigate against the cuts, to tackle poverty. And I welcome the measures taken by the Cabinet Secretary to secure fairer funding via the fiscal framework, and the use of our Welsh reserve and your ongoing commitment to our Welsh NHS. You've used all the tools and levers at your disposal. 

Now, I visited Cowbridge High Street on Small Business Saturday—Cowbridge was the rising star in the recent Great British High Street Awards—and told the chamber of trade chair, Kate Thomas, that £26 million for additional business rates relief was being allocated by the Welsh Government on top of the Wales-only targeted rates relief and transitional relief announced last year. And I do look forward to discussing with her the announcement you've made this afternoon, Cabinet Secretary, about expanding that targeted, bespoke Wales rates relief scheme for high streets. But I also praise Kate for her role in the high street as a community pharmacy, providing vital services to the local population of all means and circumstances. I took the opportunity on Saturday, as I do today, to praise the Welsh Government for keeping our free prescriptions, free breakfasts, free bus passes, helping to meet everyone's needs and reduce the inequality gap widening in the UK, but being addressed here in Wales. 

So, Cabinet Secretary, I'll back the draft budget and thank you for exercising your political will and determination to mitigate, provide a shield and use our new tax powers effectively and responsibly. And can I use the opportunity today to highlight a study by the University of Cambridge, which shows that austerity cuts are twice as deep in England as in the rest of Britain? The Cambridge study found that devolved powers have allowed Scottish and Welsh Governments to mitigate the harshest cuts experienced in parts of England where there is multiple deprivation. Maybe it's time for us to remember the line from the 1999 Catatonia song 'International Velvet', where Cerys Matthews sang, 'Every day when I wake up I thank the Lord I'm Welsh.' She said at the time:

'Hopefully by now people realise that Wales is brimmed full of talent and we're great people with massive brains.'

So, we need to continue our vigilance to protect our public services, to tackle poverty, and do what we can with our powers, our political will, and our brains, to continue to make that a reality. That's what I believe this draft budget will achieve. 

I want to speak about housing, and I think it's a fairly sobering experience to look at the record going back over the last 20 or 25 years. I don't want to make a particularly partisan speech. I want us to look at how we can forge a new consensus, and, happily, we have a lot of flexibility in improving the planning system, adapting some of our spending, but a lot of what we need to do could come through the cap being lifted on local authorities' borrowing powers and other flexibilities that we'll have. It is very much a capital approach that we need to take, as well as ensuring that we have a more efficient planning system. 

And I also think that, after this afternoon's debate on Brexit, it's appropriate for us to look at something that really goes to the heart of the foundational economy. House building is something surely that can unite us all in terms of its economic worth, the social good that is promoted, the skills that we need to develop for our young people, giving really good jobs and opportunities. And much of the economic activity it generates does stay in local communities. 

Can I first of all say that, should the Cabinet Secretary win the election, the result of which will be announced shortly—? It has taken nine months to get this far, but I think, over the next day or two, we will actually hear the result. But I know that, should he win and accede to the important and high office of First Minister, he would create a Cabinet post of housing Secretary. And I warmly welcome this, because I believe that is really important. And can I urge that it's housing and planning, because I think it's highly dysfunctional at the moment, the way those portfolios are divided? So, that would be a start; there's no doubt about it. That would send a very powerful signal to all our stakeholders out there.

But I do believe that it requires all parties to see the importance anew of housing. After the war, housing and health marched together, really, as the two great social causes. And I think that's the type of priority we need to see housing acquire again, and we will start to rebuild some of the trust, I think, that the younger generation need to have in their political system, because, at the moment, there are key areas where it's not serving them well.

Let me just go through the figures. I must say that the record in England has not been great either; I think that has to be conceded. We've had a real problem in the United Kingdom since the 1990s and the number of homes we are building compared to our historical trend. We are now barely building 6,000 homes a year; a historical trend of between 10,000 and 12,000 in Wales since the second world war. So, we are barely half our historical trend. That's historical trend; that's not what we need to build at the moment. We need to go beyond historical trend, at least for a sustained period, one could argue. The Welsh Government has the evidence. It commissioned an excellent report from the late Professor Holmans, and I think it needs to act on the data that that report produced. The UK Government has had a change of heart, I think, in the type of ambition we need for housing. I don't know whether they've had an equivalent work to that produced by Professor Holmans, but they have set new and more ambitious targets for house building in the 2020s, and that's what I think we should match or even exceed.

I think the challenge of building 100,000 new homes between 2021 and 2031 would be an appropriate and ambitious target for us, in what is likely to be the first Brexit decade. I think it will send also a powerful message to our key partners, the private sector, housing associations and local authorities. We need very flexible working—local authorities to use their borrowing powers, and to work with the private sector and independent sector through housing associations. I think some local councils will start to build at greater scale council houses. I have no problem with that; I think we just need the homes. And it may be that some councils will develop particular specialities and be able to do that for key areas. But I think our key partners in the social sector will be housing associations, and I'd like to see them get even more flexibility, longer term budgets, so they can plan effectively and also drive up through this social building standards, the design quality and create new eco-friendly modular homes. In the 1950s and 1960s, the great improvements in house building were often set by the standards in the social sector, and that's the type of thing that we can see the private sector then emulate, particularly with low-carbon homes, I think.

We need to see a revitalised small and medium-sized enterprise sector and a skills base, working through further education authorities, to allow that. We cannot increase from 6,000 to the 12,000, 13,000, 14,000 that we will need in the next 20 years or so quickly. That's why I think a 10-year target of 100,000 is realistic. It will give us time to, first, recover to historical trend and then, if necessary, go further. And I can say this: if the First Minister makes that sort of pledge—or the new First Minister makes that sort of pledge—I think they will find warm endorsement around this Chamber. It's the sort of pledge we need to give the people of Wales.

I intend to make some general comments on the budget, followed by more detailed ones as Chair of the Climate Change, Environment and Rural Affairs Committee. On the budget, this is set against continuing austerity. We should, as the Cabinet Secretary said, be receiving at least £800 million more. But to the Conservatives at Westminster, austerity is not an economic policy, it's an ideology—a twin-track approach of cuts and privatisation. We currently have a situation where Jeremy Corbyn has more in common with the post-war Governments of Churchill, Eden and Macmillan than Theresa May does. On revenue raising, income from income tax has first-year protection, and we will see how the income relates to the predicted, as Llyr Gruffydd discussed earlier.

We again see an increase in the health budget as a percentage of the Welsh budget. This cannot continue indefinitely, if only because, at some stage, it will reach 100 per cent of the Welsh budget. Also, the share of the health that budget primary care gets is a cause for concern—when we say 'health', we mean hospitals, and that cannot be the way to make for a healthier nation. For good health, you need good-quality housing, a good diet and exercise, to not smoke and not consume large quantities of alcohol. We desperately need to do more on health improvement and lifestyle—one of the things that Communities First used to do before it was closed down.

Local government has had real-terms reductions again. The budget for local government has improved from the draft budget, which I welcome. There is a promise of any teacher pension money received going to local government to fund the increase in pension costs. Again, I think everybody has to welcome that. It does not help that Ministers, instead of supporting basic services in local government, use additional funding for add-ons—nice add-ons; there's nothing wrong with them—but the basic service needs to come first. There is also money in budgets, such as economy and transportation, that can be used to support local government.

Turning to the budget relating to climate change, environment and rural affairs, this year, the Climate Change, Environment and Rural Affairs Committee scrutinised the draft budgets of the Cabinet Secretary for Energy, Planning and Rural Affairs and the Cabinet Secretary for Economy and Transport. Earlier this year, the Welsh Government decided to add a sixth priority to its national strategy, 'Prosperity for All'. The new, sixth priority is decarbonisation. This is something that the committee welcomes, and we were eager to see the changes in the approach to the draft budget resulting from this change in priorities. However, we have found little evidence of how the inclusion of decarbonisation as the sixth priority has informed decisions about the budget allocation this year.

The Cabinet Secretary has published proposals to replace current systems of financial support for agriculture with two distinct schemes: the economic resilience scheme and the public goods scheme. The Cabinet Secretary has said that she wants to start the transition to these new schemes in 2021. We think this is a huge undertaking and we were interested in the allocations in the draft budget to prepare for this change. We were surprised, however, to see that there are no additional allocations in the budget to prepare—no additional funding for piloting or modelling and no additional funding for advisory services for the many thousands of farmers who will be affected. We were not reassured that preparations could be made adequately within existing budgets. This is an area where we have made several recommendations.

In terms of the Cabinet Secretary for Economy and Transport’s budget, I would like to focus on the economy futures fund and how it links with decarbonisation. Our main concern was the monitoring arrangements surrounding some parts of the fund. In principle, we welcome the fact that businesses seeking investment as part of the economic contract must demonstrate progress in reducing their carbon footprint. We believe that there should be a clear, demonstrable commitment that the business in question has a serious focus on reducing its carbon footprint. This would most likely require more than just a series of conversations. We have also recommended that the Cabinet Secretary should keep under review the operation of the decarbonisation call to action, with a view to encouraging more businesses to make use of the funding to reduce their carbon footprint.

I'd like to reply to some comments. I agree with David Melding that we need to build more houses. Building more houses is very simple: allow councils to borrow to build council houses against the value of the existing housing stock. It would mean a change in the policy of the Treasury, but it would allow a huge-scale building of council houses. Some of us who were brought up in council houses in the 1960s are well aware of the huge number of estates and large number of houses built across Wales at that time. That, I think, was really important, but we need to allow councils to build again, and that can only be done by changing the Treasury's rules.

And those rules are being changed; the borrowing cap is going to be lifted. 

But the Treasury rules on borrowing have not been fully lifted so that you can borrow against the total value of the stock. If what David Melding is saying that, I can tell you we'd have large-scale building of housing taking place in Wales now. There's been a raising of the cap, but not a removal of it. But we can perhaps discuss this in another place.

The other thing I was going to say is that I congratulate Darren Millar's view that Gordon Brown had complete power over the whole of the world's economy. He caused the recession in Spain, he caused the recession in Greece; he caused one in Iceland and he caused one in the whole of North America. The countries that avoided the big problems were Norway, Sweden and Finland, and what did they have? They had a socialist government, working on behalf of the people.

It's a pleasure to take part on this important debate on the draft budget, as Chair of the health committee. And, of course, with the health and social care of around £ 9 billion, there is a huge challenge facing the members of the committee to scrutinise all the details of that major budget. So, I will go through some of the process of scrutinising and gathering evidence. In July, we scrutinised the Welsh Government’s response to the parliamentary review, ‘A Healthier Wales’, which is the Welsh Government’s plan for health and social care. In September, we received written evidence from all health boards, the Welsh Local Government Association and the Association of Directors of Social Services in Wales, to add to the whole host of evidence that we’d already received. Then, in November, we scrutinised the Cabinet Secretary for Health and Social Services, the Minister for Children, Older People and Social Care and the Minister for Culture, Tourism and Sport. As to the main themes, transformative change was one of them. The Cabinet Secretary has been clear that service transformation must become a mainstream activity for health and social care organisations and that these organisations’ core funding will be used to deliver the relevant changes.

We have deep concerns around whether the NHS and social care services will be able to achieve this, given the demand and cost pressures identified and the continuing failure of the majority of health boards to break even. We welcome the £100 million being made available through the transformation fund for pathfinder projects, but we have sought assurance that the use and impact of this fund will be effectively monitored, particularly in terms of it being used to support projects that are genuinely transformative and scalable, and that mental health is given parity with physical health. We have serious concern about the level of funding for primary care. Given the policy focus on shifting care out of hospitals, we would have expected to see a significant increase in the level of spend on primary care, but the evidence that we have seen shows that this is not happening. We believe that this illustrates the challenges facing health boards in achieving service transformation given the ongoing pressures that they face in the acute sector, for example. Given that the direction of travel for services, as set out in ‘A Healthier Wales’ is towards delivery of services to be undertaken in primary and community healthcare, we are very concerned that the proposed funding for primary care will not be sufficient to support this objective.

Turning to the financial position of the health board, as part of last year’s budget scrutiny, we sought to examine in detail the financial position of LHBs in Wales. We reported our disappointment at the time that the ambitions of the National Health Service Finance (Wales) Act 2014 had not been fully realised by all NHS bodies and that four of the seven LHBs reported a deficit in at least one of the preceding three years. A particular concern was that Betsi Cadwaladr and Hywel Dda both reported a deficit in each of the years between 2014-15 and 2016-17.

We note that progress has been made by particular health boards. However, we are disappointed by the continuing inability of a number of health boards to manage their finances and we seek to understand the reasons behind the enduring difficulties in some health boards. We believe it is of crucial importance to understand the extent to which this may be due to management issues at individual health board level, or how much may be due to their funding allocations.

Turning to mental health, the Welsh Government’s detailed draft budget proposals for 2019-20 highlight that mental health is the largest single area of NHS expenditure. The Welsh Government will spend £675 million on mental health services in 2019-20, and an extra £20 million is being provided in this draft budget for mental health services as part of the Welsh Government’s two-year budget agreement with Plaid Cymru. We know that health boards are already spending more on mental health than the ring-fenced allocation. However, we are mindful of the growing demand for mental health services and we’re persuaded by the Welsh NHS Confederation’s suggestion that the level of need for mental health services may be significantly greater than the current levels of spend.

Turning to the health workforce briefly, while systems and services provide a focus for change, it is the workforce that represents the largest asset in delivering care and in delivering the changes needed. We raised concerns with the Cabinet Secretary about the levels of sickness absence within the health workforce, particularly within the ambulance service. We also asked the Cabinet Secretary whether he recognised the disparity in terms of working conditions and pay, and a lack of parity of esteem between social care and healthcare staff. We believe that there's clear disparity between health care and social care sector workers, as has been raised regularly with us by stakeholders, and this is a significant barrier to successful service integration.

We are in the closing seconds. 

Yes, you are. 

But not according to this generous script that the clerks have provided for me. [Laughter.]

So, do read more quickly, Dr Dai Lloyd.

Thank you very much, Llywydd, for your patience.

So, just to briefly mention social care. In 2017-18, 23 per cent of local authority gross revenue expenditure in Wales was on social services, and this is the second largest area of local authority expenditure after education. In a statement on 9 October, the Cabinet Secretary for Local Government and Public Services detailed that the local government settlement for 2019-20 includes a further £20 million to ease pressures on social services. An additional £30 million outside the local government settlement is also being made available for social care to address sustainability issues, including pressures—

The reading isn't quite swift enough, so the Member will have to draw his comments to a close. 

I am coming to a close now. We’ll forget the meagre expenditure of £22 million on sport.

The Welsh Local Government Association calculates that there is a £67 million funding gap for social services, once this additional £50 million is taken into account without any council tax increases. That is a matter of concern. Thank you for your patience, Llywydd.

I am speaking today on behalf of the Children, Young People and Education Committee. Budget allocations are one of the most important ways the Welsh Government can evidence its stated commitments to policy areas and population groups. Allocations made to support our children and young people are no exception. One of our jobs as a committee is to scrutinise the priority the Welsh Government attaches to funding services for our children and young people. This is not a one-off annual exercise for us. We seek to build financial scrutiny into all our work throughout the year. We do this to make sure we are as clear as we can be about how much money is being given to support our children and young people, for what purpose, and whether it delivers value for money.

It is no secret that, as a committee, we have some concerns about how money is allocated for children and young people in Wales. We recognise that funding for children and young people cuts across numerous policy areas and portfolios. We understand the challenges this can present when outlining a draft budget. Nevertheless, we believe significant work remains to be done if the information presented by Welsh Government is to be as transparent as it needs to be to enable this legislature to hold Welsh Ministers to account for their decisions.

On this basis, we were very pleased to engage in a new innovation this year. As the Chair of Finance Committee has already said, we met concurrently with members of both the Finance and Equality, Local Government and Communities Committees to scrutinise the Government’s strategic integrated impact assessment. We intend to report jointly on our findings in the new year, to help inform the budget next year, so I won't pre-empt that.

However, at this stage, I will flag that our committee believes firmly that being able to demonstrate how children’s rights have shaped policy and financial decisions from their inception is key. Despite our best efforts in recent years, we remain disappointed that we have not observed more tangible progress in this regard.

I’ll turn now to some detailed areas of scrutiny, starting with our thoughts on education. We welcome the Welsh Government’s reversal of its original intention to cut education resource spending in 2019-20. We further welcome the more recent announcement that additional funding will be given to local authorities to meet the cost pressures of implementing school teachers’ pay. However, we would welcome more detailed information about this additional money, and would seek reassurance from Welsh Government that it is confident that the final budget will be sufficient to fund our schools sufficiently.

In terms of funding for further and higher education, much of the narrative in this area has been shaped by the recent Diamond and Reid reviews. The delivery of the recommendations of both of these flagship reviews relies heavily on the realisation of the so-called 'Diamond dividend'. In 2016, we were told that Diamond would deliver a future dividend for the sector. This year, we heard simply that the sector will not be disadvantaged. While we recognise the Cabinet Secretary’s description of the dividend as a'moveable feast', this apparent change in tone was of concern to us. As a result, we believe projections ought to be made available for scrutiny. We also believe adequate resource ought to be made available in the final budget to enable the Higher Education Funding Council for Wales to fully fund its strategic priorities and begin funding the recommendations of the Reid review. After all, research and innovation are afforded a fundamental place in 'Prosperity for All', and require adequate funding if they are to become realistic prospects for our further and higher education sectors.

Turning now to health, social care and children’s services, it will not surprise this Chamber to hear that the emotional and mental health of our children and young people is a key priority for us. Our 'Mind over matter' report presented the evidence underpinning our calls for adequate resources in this area. While we welcome the steps taken recently by the Welsh Government to begin implementing our recommendations, we were concerned to learn that much-needed ring-fenced funding to deliver transformation in specialist child and adolescent mental health Services will be transferred to the all-age mental health ring fence. We believe this funding should be protected for CAMHS until support reaches the levels required and outcomes for children and young people have demonstrably improved.

Finally, Llywydd, I’ll turn to looked-after children, who are some of our most vulnerable young people. We repeat the calls made in our report on targeted funding to improve educational outcomes to ensure that the pupil development grant is funded sufficiently to support both adopted and looked-after children adequately. We also seek assurances from the Welsh Government that the funding available to Children and Family Court Advisory and Support Service is sufficient to deliver its important work. Thank you.

In my remarks today, I am speaking on behalf of the Welsh Conservative group. In my remarks, I would like to focus on the impact of the Welsh Government's budget in regard to support for businesses and on transport matters as well. Despite what the Cabinet Secretary for Finance said in his opening statement, large investments in this year's budget are only, of course, made possible by additional funding allocated by the UK Government, which makes it all the more disappointing, I think, that the Welsh Government have inflicted real-terms cuts on business support and infrastructure in Wales, which I'll come on to.

The Welsh Government's budget does seem to contradict the strategy for supporting the economy of Wales. We have an economic action plan but no detail on how this budget supports that plan, and no detail on how the budget supports SMEs or will grow employment in Wales. Business rates have been mentioned by Darren Millar and Gareth Bennett. Business rate relief remains the poorest offer in any part of the UK, so I do look forward to the detail that I hope the Cabinet Secretary will be able to bring to clarify how that is going to be rectified.

I am particularly concerned that Business Wales and business innovation have had their revenue funding cut by 41 per cent and 30 per cent, respectively. That's according to the budget as published. We on these benches believe that SMEs in Wales require support to obtain investment capital and advice on how to grow their businesses. The SME sector, I think, will be right to be disappointed that revenue funding for two key SME support bodies has been cut so dramatically. In addition to the 18 per cent real-terms cut in the revenue funding for business development will be a further decrease in confidence that SMEs have in the Welsh Government's commitment to supporting small enterprises in Wales.

Presiding Officer, Wales is also consistently failing to diversify its exports market. Now, that's been something that I have relayed a couple of times in this Chamber, but it was also mentioned by Paul Davies in the earlier debate today. This will have a damaging effect, I think, when you look at export, trade and inward investment being cut in real terms as well by 1.5 per cent by this budget. Following Brexit, the need for Wales to have a diverse set of destinations for its exports is going to be more important than ever before. So, Wales should be positioning itself to take advantage of trade opportunities post Brexit and, within this context, the Welsh Government's cuts to this component of the budget do seem short-sighted to me.

And despite the UK Government's announcement of £120 million for a north Wales growth deal, which Darren Millar talked about, and a commitment to support a mid Wales growth deal, I am concerned that the draft budget has a real-terms cut of 1.6 per cent for funding for city and growth deals. And I hope the Cabinet Secretary will be able to comment on that.

The elephant in the room in regards to the transport budget is, of course, the M4 relief road. That decision will have profound implications for future budgets across a range of portfolios, and this hasn't been covered at all in the draft budget, and I don't recall that the Cabinet Secretary for Finance mentioned it in his opening comments at all, which is very telling. But this is the biggest infrastructure project that we will have seen by the Welsh Government and yet no mention today at all.

Wales's economic development continues to be hampered by an ineffective public transport system. Reducing the funding available for the development of a national transport infrastructure will therefore only worsen this situation. I note that the smartcards have been cut by 1.6 per cent and road safety by another 1.6 per cent.

So, in conclusion, Presiding Officer, I'm afraid to say that the Welsh Government has laid a budget that is a major disappointment to us on this side of the Chamber on creating the right economic conditions to drive forward prosperity and productivity across Wales and build the infrastructure that is fit for the future.

Thank you. I also speak today as a committee Chair, Chair of the Culture, Welsh Language and Communications Committee.

The resource budgets in these areas amount to £120 million, while the capital budgets total around £19.5 million. Broadly, resource budgets have remained flat, while there has been some increase in capital provision, although overall amounts are relatively small. Clearly, these sums are not as great as those covered by some Assembly committees. Nevertheless, these are significant amounts of public funding and are equally as important.

In relation to support for the arts, this includes funding for the Arts Council of Wales, the museum and the national library, and this funding falls overall by around 2 per cent to £65.9 million, while capital funding increases by £5 million to £10.5 million. This includes £5 million from the budget agreement with Plaid Cymru to take forward the feasibility studies for a contemporary art gallery and a football museum in north Wales, which has already been mentioned today. And in this area the committee is not convinced that the well-being goals required by the well-being of future generations Act are being properly reflected in remit letters to the main bodies funded, and has asked for further information.

The committee was also concerned that the capital investment in the national museum should be shared across Wales and has asked for more information on how capital funding in this area is geographically spread. On the new contemporary art gallery and future football museum, we await the Minister's preferred options so that investment can begin early in the new year.

Support for the historic environment includes funding for Cadw, the National Botanic Garden of Wales and the Royal Commission on the Ancient and Historical Monuments of Wales, where revenue is flat at £13.1 million, while capital funding increases to £6.2 million. Last year, we were told that the Welsh Government had stopped providing grants to owners of listed buildings and monuments, and used this money for capital improvements to the income-generating parts of Cadw's estate instead. The hope was that, this year, more funding could be provided for owners of listed buildings. However, whether this has happened remains unclear, and the committee would like to see greater clarity on this issue, including the extent to which grants will be available, and the steps that will be taken to communicate this policy.

With regard to media and publishing, support for the media and publishing is funded through the Welsh Books Council, the resource and capital funding for which remain flat at £3.6 million and £300,000 respectively. In the Welsh Government's budget agreement with Plaid Cymru last year, £100,000 was allocated for two years for start-up grants for hyperlocal news. The Welsh Government has now commissioned additional research on where funding for hyperlocal journalism would have the most impact and value, and we would really like to receive information as to where that's going soon because we are getting questions from the sector as to how they can actually apply for that funding.

In terms of the Welsh language, the committee noted that overall funding for the Welsh language within the education MEG has remained flat, with £38.3 million allocated within the draft budget. The committee understands the current constraints on funding, however, we are concerned that a cash-flat budget will not allow sufficient progress toward the Welsh Government’s target of 1 million Welsh speakers by 2050. Specifically, we are concerned that the Welsh Government’s targets for increasing Welsh-medium early years education provision may not be sufficiently ambitious to help achieve the overall target by 2050.

In terms of funding for the Welsh Language Commissioner, the way that the budget allocation for the Welsh Language Commissioner is presented is unsatisfactory, in our view. It wasn't clear whether additional funding had been allocated to cover the handover to the new commissioner being appointed. Similarly, the committee would like firmer undertakings that any costs arising from tribunal activities that the commissioner cannot meet from reserves will be underwritten by the Welsh Government. The process by which budget proposals were agreed with the commissioner was also far from clear, and we have asked for details of the communications between the Minister, officials and the commissioner. In particular, the committee would like to understand the timing and nature of the commissioner’s revisions to her budget.

The committee was also concerned that the proposed new Welsh language Bill may be paralysing aspects of the Welsh language standards arrangements. For this reason, we would like a much firmer commitment from the Welsh Government as to when a Welsh language Bill will be introduced, so that commercial organisations, such as public utilities, do not use the lack of Welsh language standards as an excuse to diminish or stall their Welsh language provision.

Llywydd, we have gone relatively swiftly through all of the scrutiny work that we've undertaken. There are many other things that have caught the committee's eye, but I think it was important for us to present what the committee had done to the Senedd. Even though perhaps not everybody sees the value of the arts and culture with regard to the budget, it is extremely important that that is prioritised to ensure that those things that are inextricably linked to our nation are there and continue to the future, and are supported by the Welsh Government.

I speak as Chair of the Equality, Local Government and Communities Committee, and as we've already heard, it was very pleasing for three committees—my committee; Lynne Neagle's Children, Young People and Education Committee; and Llyr's Finance Committee—to meet jointly and concurrently to look at the Welsh Government's approach to single, integrated impact assessments. It was a valuable exercise, Llywydd, and it enabled us to draw on scrutiny from across the knowledge and experience of the three committees, and hopefully the publication of our joint findings in the new year will help inform the preparation of the Government's next budget in 2019 and beyond. I hope it will be the first of many examples of committees coming together to scrutinise issues that cut across committee portfolios. 

Much of our general budget scrutiny, Llywydd, was focused on the local government main expenditure group. That is the second largest MEG after the health MEG, and has been the focus of a great deal of interest both inside and outside the Chamber. The Welsh Local Government Association were clear in their evidence that after a prolonged period of austerity, further funding cuts would now be biting more visibly into statutory services such as schools and social services, and one of the particular challenges for the budget would be the increased workforce costs as the public sector pay freeze is removed. So, we welcome the additional money from Welsh Government to help fund the increase in teachers' pay, but we remain unclear as to whether the additional £15 million being split across the current financial year and next year will be sufficient to cover the full extent of the increase.

As the Cabinet Secretary stated after we had taken our evidence, the Welsh Government announced additional funding to local authorities. We were pleased to see the Welsh Government respond to calls from local authorities to raise the funding floor and to increase funding to provide a cash-flat settlement. But while this additional money is welcomed, we recognise this still means a reduction in funding in real terms, and both local authorities and the Cabinet Secretary for Local Government and Public Services acknowledge the importance of service transformation, to put services on a more sustainable footing in this prolonged period of austerity. We believe it is important that local authorities are supported to help deliver these new ways of working that hopefully will protect important and valued services.

Llywydd, we also welcome the new definition of prevention in this year's budget round, but it was unclear from the evidence we heard as to how this definition had informed budget allocations. We hope this will be clearer in future budget rounds.

Moving on to housing, we are pleased that, following the evaluation of the pathfinder projects, the Government decided not to merge the housing-related grants into one single grant alongside other early intervention moneys. We note that this decision takes account of the concerns raised by stakeholders.

We also welcome the additional £10 million being made available in this budget round to tackle youth homelessness, but we are concerned that the draft budget only proposes allocations for 2019-20 financial year, and not subsequent budgets. We believe that, in order to eradicate youth homelessness, there needs to be a clear budgetary commitment for future years that, as a minimum, matches the levels of funding in this budget. Llywydd, diolch yn fawr.

I don't believe this budget meets the needs of Wales. This is another budget with a Government just moving money around. This is also a Government content—and in fact, a Labour Party in Wales content—to leave the major decisions made about Wales to politicians elected in England in the Westminster Parliament. 

What we then have here is a Labour Government using Westminster, and in particular Conservative politicians, almost like a get out of jail card in the blame game, because you guys don't want the power, you don't want the responsibility to actually change Wales, yet you're content to blame the Conservatives in Westminster.

I'll declare an interest here now as a county councillor, because I really feel that local government is treated badly—badly by this Government in Wales. There's huge pressure on councils. Real cuts. Real youth centres closing, real jobs being lost. I apologise to Labour AMs looking at their mobile phones and not listening to this debate. Perhaps, Llywydd, we could have a little bit more politeness in this Chamber. 

And attendance. [Laughter.]

Absolutely. There is huge pressure, as I said, on local government. Real people losing real jobs, and what do we have here?

An Assembly Member: Grandstanding. [Laughter.]

What do we really have, Cabinet Secretary? We have Labour largesse. We have huge amounts of money, some smart comments, but huge amounts of money lost to the public purse. The Lisvane land deal, £39 million; the Circuit of Wales, £10 million; two small shops in Pontypridd, £1 million lost by this Labour Government. Money is thrown at projects that don't even happen. They don't happen. How much money has been spent on the black route? Arup alone, between 2010 and 2015, earned £7.5 million. It's incredible. 

It's incredible.

The bedroom tax. Wales is the only devolved nation where the most vulnerable have to pay bedroom tax. The SNP in Scotland got rid of it. In the north of Ireland they don't pay bedroom tax. And it's shameful. And I say to the Cabinet Secretary: where is your twenty-first century socialism when you allow such an awful tax to be paid by people in Wales? Why don't you abolish bedroom tax in Wales? You could do that by not making bad political decisions that cost everybody so much money. It's costing fortunes.

I just want to put one idea into the mix, and that's the idea of devolving power to local government to bring in a bed tax levy for tourists. If you're a tourist in this city, for example, and you're paying £150 a night, as many do, for a bed, for a room in a hotel, then just £1 or £2 is really not going to make a great deal of difference. And I say to the AMs to my right there—politically to my right, just over there, by the way, the Labour lot—a levy of £2 in Cardiff would raise £4 million—£4 million a year. And what we have here is a Government that has power, and I would tell you to use it and enable local government to raise revenue. One thing that could be done then is the abolition of the bedroom tax.

Overall, this is a really tired budget from a very tired Government. I'll be voting against. 

Finally, Rhianon Passmore. 

Diolch, Llywydd. This year's Welsh Government draft budget marks an incredibly important step in the devolution process. This is the first year that revenue raised from new Welsh rates of income tax will be included in the Welsh budget, following their introduction in April 2019. However, this momentous step in the devolution process is occurring against the backdrop of the bleakest austerity in Government. Labour has done and will continue to do all that it can do to protect Wales from the worst impacts of these cuts, protecting front-line services. This includes the Supporting People budget, council tax reduction schemes, nurse training bursaries, Flying Start and much more in the face of Brexit and the withdrawal of European funds to Wales. This draft budget is no exception.

Despite the severe pressures on the Welsh Government, it is still delivering more than £500 million extra for our health service, £50 million more for social care, £15 million for schools and £12.5 million to help tackle child poverty. But it is right to underscore how very difficult even the protected budgets of local authorities are, thanks to the UK cuts to Wales, and I will continue to welcome consequentials and prioritisation to local government and their front-line services delivery. Nonetheless, the investment of this Welsh Government is continuing to deliver for the needs of the Welsh people, even though we need further fairer funding to Wales, and I will continue to call for this. I believe that my friend, the Cabinet Secretary for Finance, has done remarkable work to deliver such vital support across our public services in such trying circumstances.

For the Conservatives, it is indeed a bit rich to sit in this Chamber and demand more for our public services, whilst their friends in Westminster inflict cuts to our budgets in Wales. It is extraordinary. It does flabbergast me that, week after week, they ask us to do more with far less, and that is hypocrisy in the extreme that does not dry up. The Tories appear to have divorced themselves amicably from their own political choice to support the so-called austerity that their colleagues are making in Westminster, and which they bypass, ignore and glance away from here in Wales.

But I want to focus on the positive investment for Wales that this budget delivers, as well as the extra funding that I've already mentioned. I would like to particularly welcome the £7 million invested in the Valleys regional park. This will provide a vital boost to tourism, attracting more visitors to the south Wales Valleys that we are so proud of, including sites like Cwmcarn forest drive in my own constituency.

To conclude, Llywydd, this budget provides much needed support to our public services, and as we celebrate the seventieth anniversary of our NHS, whose creation the Tories opposed, I believe that Nye Bevan would be proud that in Wales we are investing in it here and now. What makes this more remarkable is that we are achieving this investment despite the fact that the Welsh Government's budget will remain 5 per cent lower in 2019-20 than it was in 2010-11, equivalent to £850 million—vastly less to spend across our public services in real terms.

And despite the Chancellor's insistence, against all evidence, that austerity is over, I will not ever take lectures or lessons from the Tories on our budget while they continue to underfund our public services and our Welsh Government budget. And as they look the other way and as we govern with less, and as they at the same time find £1,000 million to bung to Northern Ireland whilst ignoring the citizens of Wales, I do commend the work of the finance Secretary to deliver a budget that strives in the very hardest of circumstances to meet the needs of all the people of Wales. It is time that the Tories stepped up to the plate and delivered to Wales what they have delivered to Northern Ireland. I live in hope, and I hope for a general election. Thank you.

The Cabinet Secretary for Finance to reply to the debate.

Diolch yn fawr, Llywydd. Can I begin by thanking particularly the Chairs of the Assembly committees for taking part in the debate this afternoon.

It’s a really important moment in the scrutiny of the budget that we get to hear from all our committees, in the way that Bethan Sayed said—a moment to focus on those parts of the budget that don’t often get talked about here on the floor of the Assembly, but which are very important indeed in the wider life of Wales.

I’m going to mention four issues that I think came up repeatedly in what the Chairs had to say. First of all, anxiety about pay, which I share. The policy of the Welsh Government, Llywydd, has been this: whenever we get money from the UK Government to match pay settlements that they have agreed, we pass that immediately on to the organisations responsible for paying that. That’s certainly been true of teachers’ pay, augmented by a further £7.5 million this year and next from our money to make sure that local authorities are able to discharge their responsibilities in that area, and that is exactly what we expect that money to do.

John Griffiths mentioned pensions in his contribution, and of all the things that we’ve mentioned this afternoon, Llywydd, that is my greatest anxiety as your finance Minister. The UK Government has changed the rules as far as pension contributions are concerned, and it will mean that public services here in Wales will have a very large bill that they have to pay over and above anything that they were planning for or were able to influence. The UK Government says that it is providing funding to cover those costs, but we are yet to see how much of that will come to Wales, and we are yet to see the extent to which that funding will meet the bills that we have to pay. Now, I say again this afternoon that the Welsh Government will act simply as a postbox in those circumstances. Any money that we get will go directly to the health service, to local authorities for teachers pensions, to the fire service, to further education, and so on. But if the UK Government does not cover the costs that it has engendered, then I have to tell Members around this Chamber: there is no sum of money set aside in our budget that we will be able to go to to bail out the UK Government in that situation. Indeed, as I explained to the Finance Committee when giving evidence there, next year I will only make our budget balance by taking money out of the Welsh reserve. I’m able to do that because of the careful management that we have made of reserves. But in order to go on doing all the things we want to do, to the extent that we are able, we rely on spending over and above the money that we have on a year-in, year-out basis, and there is nowhere else to go if we are landed with a pension bill for which we have no responsibility and have not been able to make provision.

A third theme in what the Chairs of committees have said is on prevention. I’m grateful to what Members have said about the usefulness of the definition and I agree with what has been said about making sure that we now go on to refine the definition and to make greater use of it in drawing spending down the hierarchy that the definition provides, so that we spend more, in the end, on primary prevention than we do today.

I’m very pleased to hear what the Chair said about joint committee meetings. The leader of the house and I both attended such a meeting, which was scrutinising equality matters in the budget, and I look forward to receiving the outcome of that work.

Llywydd, can I say, in as gentle a way as I can, that everybody in my world wants to talk to me about cross-cutting budgets; everybody is quite keen to make sure that their own budget is protected. I detected quite a bit of that in what Chairs of committees had to say again. It’s understandable—Chairs of committees are responsible for an area, they are passionately committed to that area, and everybody can see that there is more that we could do, but you only get cross-cutting budgets if everybody is willing to give up a bit of what they have in their hands to be able to carry out that wider work.

If I could just turn to the comment made by Llyr Huws Gruffydd, as Chair of the Finance Committee. He referred to the difficulties in our process when the UK budget cuts across the scrutiny process of our own budget here in the Assembly. But as the committee has suggested and we’ve all agreed, it is better for us to deal with those difficulties and to provide the weeks that we are able to provide so that the committees can carry out that important scrutiny work. I thank Llyr for his comments on the work that we have done in preparation for income tax in Wales as Welsh taxpayers. Of course, the process is challenging, as the Office for Budget Responsibility told the committee, but we are doing our level best to prepare the ground for these new responsibilities here in Wales.

Let me turn, if I could, Llywydd, to what the spokespeople of individual parties said. I'm grateful to Rhun ap Iorwerth for the work that we continue to do together on the deal that was struck between the Labour Party and Plaid Cymru. I'm glad to be able to make some further investments on that joint agenda today. Llyr focused on local government, and other speakers did too. I think I would describe £140 million more for local government as a bit more than a tweak in their budget, although I recognise, of course, that there are very real pressures in our local authorities in the ninth year of sustained austerity. 

Jane Hutt pointed to the Cambridge university work that said, on the day that my colleague Alun Davies laid the provisional settlement, that we have taken a very different approach here in Wales in looking to protect local government from the worst of the impacts of austerity. 

I should turn to what Darren Millar said. I'm afraid it was a contribution riven with contributions that were wide of the factual mark. I provided figures—[Interruption.] I provided figures to his colleague Nick Ramsay—as in, bring back Nick Ramsay—that showed that, in real terms, our budget in 2010-11 was £17,169 million and our budget in real terms next year will be £16,357 million. That's why I said in my opening remarks that the budget available to this budget is £850 million less than it would have been if our budget had simply kept the—

Will you take an intervention?

Yes.

Do you accept that it is the largest budget in cash terms that your Government has ever had to spend ever in the history of devolution?

Darren, just as the budget for local government is the largest ever in cash terms, just as the budget for the health service is the largest ever in cash terms, just as the budget for housing is the largest ever in cash terms—every one of which you told me was a cut in real terms. So, you know and Members around the Chamber know that in real terms our budget is less than it was a decade ago, despite all the extra needs that we know are there in Wales. 

Any Member of this Assembly, Llywydd, is entitled to ask for more money to be spent on any area, but in a time when all our money is committed, those calls only hold real authority when someone is willing to say where that money would be taken from, because there is nowhere uncommitted to go. So, when Darren said to me that we hadn't done enough for business rates, we hadn't done enough for first-time buyers, we hadn't done enough for health, we hadn't done enough for local government, we hadn't done enough for FE—and this is before his colleagues told me I hadn't done enough for housing, I hadn't done enough for transport, and I hadn't done enough for infrastructure—where do they think that the money is to come from for all those things that they would like us to do? Well, I can tell you that it will come from the next Labour Government at the UK level, and then we'll have the budget of the sort that we will be able to use to attend to the needs of Wales.

Llywydd, this is a draft budget that meets the needs of the people of Wales. It's a draft budget that provides a real alternative to the harmful and self-defeating policy of austerity. It's a draft budget that provides stability in the face of the uncertainty surrounding Brexit. It is a budget that underscores our aim to create a Wales that is prosperous, healthy, ambitious and united. It's a budget that I hope the Assembly will endorse this afternoon, and I comment the budget motion to you.

The proposal is to agree amendment 1. Does any Member object? [Objection.] I will therefore defer voting until voting time.

Voting deferred until voting time.