6. Finance Committee Debate on the Government's spending priorities

Part of the debate – in the Senedd at 4:40 pm on 25 September 2019.

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Photo of Llyr Gruffydd Llyr Gruffydd Plaid Cymru 4:40, 25 September 2019

(Translated)

Now, while the committee strongly believes that an early debate is something that needs to be facilitated on a permanent basis in the future, it’s important, of course, that we have a debate on spending priorities this year, although a little later than we'd hoped, given the recent UK Government spending round and the proposed timings of the Welsh Government’s budget. Our scrutiny of the draft budget will follow the approach taken in previous years, focusing on the four principles of financial scrutiny, namely, first, affordability, also prioritisation, value for money and budget process.

The committee hosted an event in Aberystwyth on 27 June to gather the views of stakeholders on the spending priorities for the next financial year. Through discussion and following on from the recommendations in our continuous scrutiny of the Welsh Government’s budget, we identified a number of areas that we would like to focus on in this year’s scrutiny, and these include how the Welsh Government should use taxation and borrowing powers, particularly in relation to the Welsh rate of income tax, and how preventative spending is increasingly prioritised and how this is represented in resource allocation. We’re talking here about spending that focuses on preventing problems and eases future demand on services through early intervention, particularly in relation to funding local health boards, health services and social care. Another area we want to focus on is the sustainability of public services, and that includes innovation and service transformation to respond to changing demands and demographic change. Prioritising policies to promote economic growth, reduce poverty and gender inequality, and mitigate welfare reform, is also an important area. Also, the planning and preparedness work of the Welsh Government in relation to Brexit, of course, and how the future generations Act is influencing policy making. And in declaring a climate emergency, is it clear how the Welsh Government intends to respond to that challenge and ensure that appropriate resources are available, and that that is reflected clearly in the budget?

After the event in Aberystwyth, I wrote to the Chairs of the committees to share the views of the Finance Committee with them and to encourage the other committees to consider how they can contribute to scrutinising the Government’s spending plans in the most coherent and effective way. As in previous years, we are also undertaking a consultation on the priorities for the draft budget on behalf of all committees. Today is the closing date for that consultation, and the responses will be published in the coming weeks to assist the Assembly to scrutinise the draft budget.

The Chancellor of the Exchequer recently announced the UK Government’s spending plans for 2020-2021 as part of a one-year spending round. The announcement provided details of Wales's revenue budget for next year, which will increase by £593 million above the 2019-20 baseline. In real terms, this represents an increase of 2.3 per cent. The spending round also included an increase of £18 million to the capital budget for Wales, meaning that the budget was 2.4 per cent higher in real terms compared to 2019-20.

The Minister for Finance and Trefnydd responded to the spending round in a written statement on 4 September this year, stating, and I quote,

'The Welsh Government budget will be based on the needs of the people of Wales and we will aim to deliver the fairest possible settlement for Welsh public services.'

But what does this really mean? It’s a very broad-ranging statement, of course, but what will be the key drivers in how this additional funding will be spent in Wales? How should we balance the need to invest in preventative initiatives to reduce future demand with the need to support existing services that have, of course, suffered years of austerity? And how will we judge whether the Welsh Government has met its objectives? We need to ensure that the budget is used as effectively as possible in order to meet the needs of the population of Wales in the best way. Today’s debate is an opportunity for the Assembly to consider how the Welsh Government should be prioritising its spending in order to achieve this desired outcome.

There is little doubt that these are uncertain times, of course, with the likelihood of a 'no deal' Brexit still a possibility, and the possibility of another UK general election on the horizon, and all of this makes it increasingly difficult to predict the economic future for Wales. The fact that the UK spending round was only for one year is also frustrating for all of the devolved administrations, because it does not enable us to develop financial plans for the long term as we and the number of stakeholders that we’ve spoken to would wish to see.

However, this uncertainty makes it all the more important for us to have this debate today, in my opinion, and consider the priorities for next year’s budget carefully, to mitigate, as far as possible, any future impact resulting from Brexit and to protect the financial future of Wales and its citizens. I look forward very much to hearing the opinion, views and priorities of Members of all parts of the Assembly. Thank you.