Part of the debate – in the Senedd at 4:48 pm on 16 July 2019.
Thank you. I'm pleased to have the opportunity to respond to those comments. There weren't spending commitments made in this statement today because the purpose of it wasn't to make spending commitments, it was to outline the outlook for future public spending in Wales in advance, then, of coming forward with commitments within the envelope that we will have. I think it's really important to have these opportunities to set out the situation because I think it is time for a reality check in terms of the difficulties that we're facing. So, there was no good news in the statement; it was a series of facts that are quite unpalatable to many of us, but they do reflect the situation as to where we are.
On a like-for-like basis, the Welsh Government's budget now is 5 per cent lower in real terms than it was in 2010-11. This is a political choice; this is a choice the UK Government has made in terms of austerity, and I think that we're more than within our rights to point that out. So, when people ask me, 'Can we have extra funding for x, y and z?', I need to know where it's coming from because we can't have a balanced conversation that doesn't involve that.
But then looking forward, we're looking in extremely difficult times: the Office for Budget Responsibility forecasts prepared for the spring statement showed growth will continue to disappoint for the next five years. GDP per head is expected to increase at an average annual rate of 1 per cent compared to a long-term average rate of 2.4 per cent. The Bank of England has provided an updated forecast for the economy in May that focuses more on the near-term look, and that says that, over the next 12 months, we expect only modest growth in GDP of 1.5 per cent. And both of these do so in the context of modelling for an orderly Brexit, so I think that we really need to get a good grasp on just how serious this situation is and the level of difficult decisions that are facing us.
In terms of stability, I would absolutely love to provide organisations with stability. I've met with the third sector network and I meet regularly, with my colleague Julie James, with the finance sub-group of local government and we would dearly love to provide some kind of certainty to those organisations, but unfortunately, all we have is uncertainty at the moment. So, we don't have a budget for next year. I've had to, as I said in my statement, write to the Chairs of Business Committee and Finance Committee signalling that we have no choice but to publish a draft budget on 10 December and the final budget on 3 March—circumstances as they are. And those are the very latest dates that we can do so and Standing Orders do require me to notify the Finance Committee as to when we would publish those documents.
I think, moving forward, some kind of certainty from the UK Government would be very welcome, but I am becoming more and more convinced that we will be looking at a rollover budget for next year. Both of the candidates for Prime Minister suggested that they could bring forward a budget in September, so we would look with interest at that. Whether or not that would be a budget that gives us some certainty for the longer term, or whether it would just be a kind of election budget with some giveaways for high tax earners, as I think some of the candidates had suggested, remains to be seen, but whether it would be of any use to Wales in the context of ending austerity is very unlikely.