The following amendment has been selected: amendment 1 in the name of Rebecca Evans.

Item 9 on the agenda is a debate on the second supplementary budget of 2019-20. I have selected the amendment to the motion and I call on the Minister for Finance and the Trefnydd to move the motion and the amendment tabled in her name. Rebecca Evans. 

Motion NDM7284 Rebecca Evans

To propose that the Assembly, in accordance with Standing Order 20.30, approves the Second Supplementary Budget for the financial year 2019-20 laid in the Table Office and emailed to Assembly Members on Tuesday 4 February 2020.

Amendment 1—Rebecca Evans

Add new point at end of motion:

In accordance with Standing Order 20.37, agrees that the accruing resources to be retained by the Wales Audit Office under Part 3 of Schedule 4 of the Supplementary Budget Motion on page 23 and the Summary of Resource and Capital Requirements for Direct Funded Bodies on page 6, is revised from £14,825,000 to £14,775,000, as reflected in the Explanatory Memorandum submitted by the Wales Audit Office to the Finance Committee for consideration at its meeting on 6 February 2020; and further agrees the corresponding adjustment to Schedule 7 on page 30 so that Payments from Other Sources is increased by £50,000 and Amounts Authorised to be Retained by Welsh Ministers and Direct Funded Bodies is decreased by £50,000. 

Motion and amendment 1 moved.

This budget provides a final opportunity to amend plans for the current financial year, allowing the revision of the previously approved financing and expenditure plans, reprioritisations within portfolios, budget transfers between portfolios, and allocations from reserves. It aligns resources with the Government's priorities. The Well-being of Future Generations (Wales) Act 2015 continues to provide the foundation that guides our budget process. This budget makes allocations from our fiscal resource reserves to support the management of winter pressures in our health service, the pay award for teachers and the childcare offer, which is a primary driver for change for the childcare sector. The capital allocations, both general and financial transactions, that we've made provide further investments in housing, education and the transport system.

I ask Members to support the amendment to this motion, which corrects the level of income that the Wales Audit Office may retain. Due to an administrative oversight, this amount was overstated by £50,000 in the budget motion. This amendment ensures that the level of income matches that within the Wales Audit Office's explanatory memorandum, considered by the Finance Committee.

I would like to thank the Finance Committee for their scrutiny of this second supplementary budget, and I am minded to accept all of its five recommendations for the Welsh Government, which I will respond to in detail in due course. I ask Members to support the amendment and the motion.

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

Thank you very much, Dirprwy Lywydd. I am very pleased to speak in this debate today on behalf of the Finance Committee. The committee met to consider the Welsh Government’s second supplementary budget for 2019-20 on 12 February. Our report makes a number of recommendations, and I will briefly cover some of those today.

As mentioned during our earlier debate on the final budget for 2020-21, the committee recognised that the expected UK budget on 11 March may impact on the Welsh Government’s funding. In our report on the second supplementary budget, we have reiterated our previous recommendation that details should be made available to the committee as soon as possible after the UK budget, and specifically in relation to the 2019-20 funding.

We have made a number of recommendations in relation to the way the Welsh Government works with the UK Government, including continuing to seek an increase in the annual carry forward of financial transactions capital, and whilst not specific to this supplementary budget, we have also requested an update on any consequential funding following the UK Government’s HS2 announcement.

The committee considered the way in which the Welsh Government uses reserves, holding capital and revenue reserves, with individual departments also holding funding for in-year contingencies. We have asked for additional details to be provided on the outturn report in order to understand the end-of-year position and what changes have been made since this supplementary budget.

Whilst the supplementary budget includes transfers out of flood risk and water management, the committee notes the Minister’s intentions to provide an emergency relief scheme to support those who have been impacted by the recent flooding. The committee recognises the Minister’s actions in providing financial help and would be supportive of a need to utilise section 128 powers should this be required to reflect any additional financial support provided in 2019-20.

We asked for an update on the position in relation to Brexit funding. The Minister told us that she expected to be able to access Wales’s full entitlement of EU funds. Our previous report on preparations for replacing EU funding recommended that the Welsh Government should be responsible for the administration and management of the shared prosperity fund in Wales. The Minister told us that the Welsh Government is progressing how it would develop and administer such a scheme.

Briefly, we had two supplementary budget requests, one from the Assembly Commission and one from the auditor general and the Wales Audit Office. Whilst we are content with both, we have made one recommendation to the WAO with regard to fees income.

Finally, we have noted the Minister's amendment to today's motion, and as the committee considered the explanatory note submitted by the Wales Audit Office, which included the correct figure for accruing resources, we are content with the proposed amendment.

The Chair of the Finance Committee has pretty much covered comprehensively all aspects of the supplementary budget that were referred to. Can I concur with the comments that Llyr Gruffydd made with regard to the issue of the HS2 funding? I think that was something that the committee was eager to find out: what the exact lay of the land was in terms of funding for Wales. I know it doesn't work the same with Wales as it does with Scotland. That was a concern for the committee, so the committee wanted to work towards finding a solution to that.

It's up to the Government at Westminster. They can give us the Barnett consequential, they can give us a sum of money for it, or they can give us nothing. It's their decision, and I would hope that you would join with all of us in saying they ought to be giving us at least some of it. 

As a member of the Finance Committee and speaking with one voice, yes, I do agree with you on that, Mike Hedges, and I think that whenever there's a large infrastructure—. Well, the way the Barnett formula works, whenever there's a large infrastructure project going on on a UK level that benefits one area, like Crossrail, for instance, benefits London, then I think that there's a natural justice argument for Wales to get some sort of funding, whether that's through Barnett or not. So, I agree with you. 

Secondly, the Chair mentioned reserves and contingencies. It was a bit like Yes Minister in the committee when we were trying to get the answer from some of the officials about what the difference was. I can see the Minister laughing, but I wasn't referring to this Minister, by the way. When is a reserve a reserve and when is it a contingency? At the end of the day, I think we, all of us, would like far more clarity on exactly the level of contingency that is required in any given situation. I was speaking earlier about the growing financial powers of this place, and I think that we will need, going forward, a little bit more clarity on those areas. But I think it was a very good report that the Finance Committee looked at, and I'm pleased to be a part of that, and hopefully the Minister will take on board our concerns about the supplementary budget. 

We will be abstaining on the budget, by the way, on this side of the Chamber, due to our not supporting the original budget, but there are other good aspects in there. 

Thank you. Can I call on the Minister for Finance and Trefnydd to reply to the debate?

I'm grateful for the contributions from the two members of the Finance Committee and, again, I'm grateful for the work of the Finance Committee and I look forward to responding in some detail to those recommendations and accepting them. One of the recommendations was about making detail available as soon as possible following the March UK budget in terms of any impacts on the Welsh Government budget, and it's something we explored in the final budget debate today and, of course, I'd be very happy to provide the update as soon as I'm able to do so. 

HS2 was raised during the course of the discussion on the second supplementary budget for 2019-20 and, of course, we would expect to receive our fair share of any additional funding allocated to HS2 in future years. We would expect those discussions to provide at least some light through the process with the comprehensive spending review, which will be taking place as we move through this year. In addition to that, Wales needs a fair rail enhancement programme that is properly developed and fully funded by the UK Government, similar to that which they have in England. That, coupled with the devolution of control over the network, is vital, really, to realising the full potential of our rail here in Wales. But, of course, we have got other opportunities to discuss that. 

The issue of contingency and reserves was mentioned as well. Of course, we have the Wales reserve, which helps Welsh Government manage its budget over financial years, but then we also hold some contingency in order to help us respond to unforeseen events over the course of a financial year. Retaining an appropriate level of reserves for unforeseen circumstances is important, whilst also maximising the resources for planned investment. It's a difficult balance to get right, but we're confident that we have struck an appropriative one through the last financial year, or the 2019-20 financial year, but then reflected again in the debate we had earlier on this afternoon as we move forward.

So, this budget provides for several things, as a supplementary budget would. It accounts for adjustments that have been made since the first supplementary budget in 2019-20. So, it includes anything that would be drawn down from the Wales reserve, allocations to and from reserves, agreed switches between resource and capital, transfers between and within main expenditure groups, revisions to devolved tax forecasts and the block grant adjustment, and changes to the departmental expenditure limit, including the consequentials, negative consequentials, and other adjustments resulting from HM Treasury decisions. And then also, the latest annually managed expenditure forecast that was agreed with HM Treasury as part of the UK Government's supplementary estimates in January.

So, this second supplementary budget provides for the final amendments to our budgetary plans for the current financial year, and continues to support progress on this Government's priorities and commitments. And I move the amendment and the motion, and commend it to the Senedd.  

Thank you. The proposal is to agree amendment 1. Does any Member object? [Objection.] Therefore, I defer voting on this item until voting time. 

Voting deferred until voting time.