As a result, the Finance Committee has made every effort to engage with stakeholders on this draft budget. This began in June 2019 when we held a pre-budget stakeholder event in Aberystwyth. This formed the basis for a Finance Committee proposed debate here in the Siambr, which followed in September 2019, giving the Assembly an opportunity to debate the spending priorities of the Welsh Government prior to the publication of the draft budget.

This year, it was particularly pressing to hold such a debate given the uncertainty of the proposed timing of the draft budget. However, the committee believes that a debate should be facilitated on a permanent basis—every year—to afford Members the opportunity to influence budget priorities and allocations earlier in the process. We hope very much that the Minister agrees with us and that we can work with her to ensure a debate can be built into the scrutiny process in future years.

The UK Government has announced that its budget will be published on 11 March. The committee recognises that macro-economic forecasts for the UK could impact on devolved tax revenues and the associated adjustments to the block grant. We have recommended that an update is provided as soon as possible after the UK budget. We understand that there will be a need to reflect the impact of the UK budget in the first supplementary budget of the Welsh Government and we welcome the Minister's commitment to bring this forward as early as possible, should the changes be extensive.

During our scrutiny, we reviewed how the Welsh Government intends to spend its £17 billion budget in the next financial year, and overall—. We know that this is an increase of £593 million on last year's budget: a 2.3 per cent increase in real terms. The committee notes that the Welsh Government has spread this increase across all departments. However, we would have liked to have seen a more ambitious approach being taken to its prioritisation in terms of a focus on future sustainability and service transformation in the future.

Moving on now to borrowing and taxation, the committee heard evidence suggesting that increases in future budgets will be unsustainable without higher borrowing or increases in taxation. We also believe that a change in strategy will be needed to ensure that sufficient funding is available for investment in public services in future years. The Welsh Government has already said that it's pushing against the limits of its fiscal borrowing rules, and it has pledged not to raise income tax during this Assembly term. We as a committee have supported the Welsh Government's requirement for increased borrowing flexibility, and clearly changes in taxation will be a matter for all parties in their manifestos as we approach the 2021 Assembly election.

In April last year, the Minister for Environment, Energy and Rural Affairs declared a climate emergency in Wales. We've heard reference to that in the comments by the finance Minister. However, the Welsh Government’s draft budget does not reflect its own declaration of a climate emergency. While the draft budget shows, as we heard, an allocation of £140 million in capital investment to support decarbonisation, the committee is not convinced that the Welsh Government has a clear understanding of the impact that its decisions have on carbon emissions or the climate. While we welcome the allocation of £140 million, it's disappointing that a more radical approach has not been taken to mitigate climate change.

This is the fourth draft budget to be published since the Well-being of Future Generations (Wales) Act 2015 came into force. The committee has used the Act as a lens to assess the draft budget since its enactment. In terms of the progress made by the Welsh Government to embed the Act into its decision making for 2020-21, the office of the future generations commissioner told us that there had been, and I quote, a visible shift in relation to decarbonisation and preventative spending. However, and I quote again, there was still considerable scope for progress, and, in anticipation of an imminent UK spending review, the commissioner urges the Welsh Government to use this as an opportunity to make more transformational strategic decisions. The committee believes that the Welsh Government should consider ways that it can improve the integration of well-being goals in the presentation of future budgets to demonstrate more consistently how the Act is embedded in its decision-making processes.

Having left the EU on Friday, there is still uncertainty surrounding the future relationship between the EU and the UK. The impact of Brexit in Wales, including the continuation of funding previously provided by the EU, particularly regarding direct payments to farmers and other businesses in the fisheries and agriculture sector is a major concern for the committee.

We are concerned that the transition period, up to 31 December this year, raises the risk of trade deals not being in place. In these circumstances, we believe that further assistance would be required from the UK Government to minimise the impact on the Welsh economy. At present, Wales receives funding from the EU through structural funds and agriculture support. The expectation of the Welsh Government is that EU structural funds will be fully replaced. However, the transition agreement does not cover agricultural support, and the committee would welcome confirmation from the Welsh Government that it has obtained assurances from the UK Government that this funding will be provided.

The committee welcomes the inclusion of poverty in the budget priorities, but it believes that there’s a lack of clarity in the Welsh Government’s strategy for tackling poverty, its objectives and how the budget will drive long-term improvement, particularly in addressing the root causes of poverty. 

More action needs to be taken to reduce poverty in Wales. There are too many people in low-skilled and/or low-paid jobs, and upskilling the workforce and increasing employment will benefit the Welsh economy regardless of the outcome of Brexit. The Welsh Government should, therefore, evaluate its investment in into-work programmes and economic development programmes to ensure that they provide value for money.

I would like to thank everyone who contributed at all stages of the scrutiny process and those who attended the stakeholder event as well as those who gave formal evidence. All of this has helped us as a committee shape our findings, and I look forward to seeing the formal response of the Government to our report before the vote on the final budget next month. Thank you.