Part of the debate – in the Senedd at 6:20 pm on 4 December 2018.
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.