The next item is the debate on the first supplementary budget for 2020-21, and I call on the Minister for Finance to move the motion—Rebecca Evans.

Motion NDM7335 Rebecca Evans

To propose that the Senedd, in accordance with Standing Order 20.30, approves the First Supplementary Budget for the financial year 2020-21, laid in the Table Office on Thursday 28 May 2020.

Motion moved.

Diolch, Llywydd. The first supplementary budget for this financial year sets out how we have initially reshaped our budget to respond to the coronavirus pandemic. Normally, supplementary budgets are relatively small-scale, primarily technical events, covering modest adjustments to our budgets to reflect the impact of the UK Government's spend on Wales. The evolving response to the coronavirus pandemic, however, has required levels of Government investment at a pace and scale without rival in the post-war era.

This supplementary budget increases the overall Welsh resources by £2.1 billion. This is 10 per cent more than set out in the final budget just four months ago. I would like to take this opportunity to thank the Finance Committee for their consideration of this budget and the publication of their report. Whilst I will provide a detailed response in due course, I am minded to accept the recommendations.

I welcome the committee's recognition of the ongoing work required with the UK Government, both in respect of additional funding and the ability to maximise the use of financial flexibilities. I'm continuing to press the UK Government to provide greater fiscal flexibility to help us manage in these unprecedented times. We're calling for full access to the resources in the reserve this year, if required, and the ability to carry forward more resource and capital at the end of the financial year.

The decisions we have taken have resulted in unprecedented changes to our spending plans, and the supplementary budget confirms that over £2.4 billion is being dedicated to the Welsh Government's response to coronavirus. It comes from three main sources: funding that comes to Wales as the result of spending committed to measures in England, the Wales coronavirus reserve, which I have created by urgently reprioritising budgets across the Welsh Government, and from repurposed EU funding.

Our first priority has been to ensure that our healthcare system is able to cope with the unprecedented strain that the pandemic is placing on it, and we have provided additional funding to increase our normal capacity. Funding of £166 million has been provided to open field hospitals across Wales, a crucial part of our strategy to respond to the COVID-19 outbreak. Thirty million pounds has been allocated for the use of all six private hospitals in Wales and a further £6 million is being allocated to provide additional mental health in-patient capacity.

We have also needed to urgently increase staff resource within the NHS to cope with the extra demand. Ninety-one million pounds has been made available to maximise the service contribution that can be made by healthcare students and those returning to service. We have also allocated £100 million to provide the personal protective equipment that our health and social care staff need to carry out their work safely, both for themselves and their patients. Testing is a vital part of our plan to reduce harm from COVID-19 and to help the public and professionals get back to their daily lives. Fifty-seven million pounds has been allocated to support our test, trace, protect strategy. 

It has also financed crucial action to help those who need it most, because it's clear that the crisis is having a greater impact on those who are already vulnerable—people who live in poor housing or are homeless, or who struggle on low incomes and are most likely to have seen those incomes cut even further. Our response to the coronavirus pandemic and the additional funding we have made available is not just an immediate response to the direct health harms caused by the pandemic itself, but it is designed to alleviate the wider impacts caused by the unprecedented social and economic measures we have taken as a Government to protect people's lives and reduce the spread of coronavirus.

We were the first part of the UK to extend free school meals throughout the Easter period and for summer holidays. We have committed £40 million to providing front-line social care workers with an additional £500 payment. Despite the pandemic, our local authorities are continuing to provide social care, education and other vital public services and are playing their part in working urgently to protect their essential local services within the community. At the same time, there are inevitable increased costs and lost income as a result of the necessary actions that we're having to take to protect public health.

We have made available £188.5 million through our local authority hardship fund in recognition of their wider role in the community during this crisis. And we have prioritised protecting the Welsh economy, providing the most generous business support package anywhere in the UK, with help for businesses that are not eligible for other forms of Government assistance. We have provided more than £1 billion that local government is distributing on our behalf in non-domestic rates relief and associated grants to businesses in the retail, leisure and hospitality sectors. To date, local authorities have issued over 50,700 business rates grants totalling over £625 million.

Our £500 million economic resilience fund has already provided grants to more than 6,000 SMEs and loans to 1,000 more, giving vital support for businesses, particularly those micro, small and medium-sized firms at the heart of our economy, alongside charities and social enterprises. Although the sums of money that we are talking about are large, so too is the magnitude of the challenge. Getting the right support to our public services, businesses and communities has involved balancing tough decisions every day. We have been and will continue to be guided by a sense of what is fair when public finances are facing such enormous pressure.

We have also taken urgent action to respond to the emerging and evolving disproportionate impact that this pandemic is having on some of the most disadvantaged people in Wales, with funding allocations, including an initial £15 million for a direct food delivery scheme to those shielding due to having medical conditions that make them extremely vulnerable to COVID-19, and who have no other access to necessary supplies, and a £24 million third sector COVID-19 response fund to support the Welsh voluntary sector.

This debate focuses on the decisions that we've already taken and are reflected in the first supplementary budget. There will be the opportunity on 15 July to discuss the difficult choices we will need to make for our upcoming 2021-22 budget priorities. These are linked to recovery from the pandemic, and how we may also need to respond to the risk of the UK leaving the EU without a trade deal. This is alongside the difficult choices that we will continue to make in our 2021 plans, and I will provide an update on the exercise to reprioritise capital spending at the earliest opportunity.

Over the coming months, I will of course carefully monitor and manage our financial position and intend to table a second supplementary budget later in the year. So, Llywydd, I ask Members to support this motion.

I call on the Chair of the Finance Committee to speak, Llyr Gruffydd. 

Thank you very much, Llywydd. It's my pleasure to speak in this debate today on behalf of the Finance Committee. The committee met to consider this supplementary budget on 4 June. I note the positive opening remarks by the Minister in terms of the report recommendations, and we look forward to receiving the formal reply.

But as the Minister has said, this supplementary budget is being delivered during unprecedented times. This Senedd passed the final budget for 2020-21 before the UK had presented its budget, therefore we were expecting this supplementary budget to identify consequentials. But nobody anticipated such significant changes as those we've seen as a result of the COVID-19 pandemic.

This first supplementary budget increases the Welsh Government’s fiscal resources by £2.3 billion, most of which stems from consequentials associated with policy decisions taken by the UK Government to respond to COVID-19. Our report contains a number of recommendations, and I will briefly cover the main areas today.

Many of our recommendations relate to the working arrangements between the UK Government and the Welsh Government. As a committee, we believe the UK Government must engage with the Welsh Government earlier regarding significant decisions that impact on Wales, and provide more certainty on funding that will be provided. The committee also urges the Welsh Government to explore and make a case to the Treasury regarding whether the funding formula adequately reflects the impact of COVID-19 on Wales compared to other UK nations.

The committee discussed the financial levers available to the Welsh Government, and the Minister told Members that she had approached the UK Government to seek powers to transfer existing capital to revenue, and to allow more flexibility around the annual limits on the Welsh reserve and within the overall limits of capital borrowing. The committee supports the Minister in these requests. Now, the committee will take evidence from the Secretary of State in July and we look forward to tackling him on some of these issues, too.

In responding to the COVID-19 pandemic, the Welsh Government has taken action to reallocate funding, with £256 million being returned to the central reserve. This includes situations where planned funding could not be used, but also a reduction in funding for certain bodies, such as Natural Resources Wales—and we heard mention of that earlier this afternoon—and the Higher Education Funding Council for Wales. Now, whilst the committee accepts that responding to the COVID-19 pandemic has involved making difficult decisions, the committee is keen to ensure that the Welsh Government maintains an ongoing dialogue with organisations that have received reductions in their funding.

The supplementary budget makes a number of new allocations also, particularly to health and social services, local government and the economy. The committee is aware that further allocations will need to be made during the year in response to COVID-19 and so has made a number of recommendations regarding health, including around the decommissioning of field hospitals, the provision of test, trace and protect and the actual and projected additional costs for local health boards as a result of COVID-19.

Now, in looking ahead to the recovery from the pandemic, it's clear that economic support will be required and we, as a committee, are keen to understand how the Welsh Government can accelerate its work in this area and focus on supporting town centres. The committee is also interested in finding out how the Welsh Government will ensure that funding provided to aid the recovery process from COVID-19 is focused on a green recovery. For example, how the Welsh Government envisages building on the positive transport changes resulting from the pandemic. We also want to understand more about how the Counsel General’s role in the recovery process ties in with the Minister for Finance’s role.

Finally, we considered the EU transition period. Of course, it’s easy to lose sight of the impending deadline, having focused so much on COVID-19, and clearly this needs to be addressed, too. The committee is concerned that the COVID-19 pandemic severely restricts the ability of the Welsh Government’s staff and the financial resources to prepare for the end of the EU transition period, and its ability to support agriculture, businesses and citizens with these potential changes. Whilst the Minister told us that she has funds held back to provide in-year contingency, we would welcome more details on the planning scenarios considered and the funding required. With those few comments, may I thank the Senedd?

I'm pleased to contribute to this afternoon's debate. The Welsh Conservatives have long been calling for an emergency supplementary budget to provide transparency and clarity in the spending of money at this difficult time. And we do, of course, recognise the challenges that the pandemic is presenting to all the Governments of the UK, and the Welsh Conservatives wish to provide constructive opposition at this time. 

Since the Welsh Government's budget for 2021-21 was approved on 3 March, its budget has increased by more than 10 per cent. The publication of the Welsh Government's supplementary budget was therefore an opportunity for the Welsh Government to show a complete change of gear in how it prioritises its finances, so it's concerning to see so little reprioritisation in practice, in light of the huge increase in the funding of its budget.

Now, can I firstly welcome some of the smaller reprioritisations that have happened, and which I've discussed with the finance Minister, such as the transfer of money from the major events fund? This is a totally sensible move. It's welcome. It's quite clear, this year, at this point in time, there aren't many major events going on, so reprioritisations like that are met with support. Where reprioritisations have been made, they've largely been in the health and social services portfolio, which has repurposed a total of £114 million, which is understandable given that the COVID-19 pandemic has been a health crisis like never seen before in Wales. However, I was disappointed to see that far less repurposing has taken place in other portfolio areas, for example, the economy and transport portfolios, which have been funded to a total of £50 million and £46.6 million respectively, which, aside from programmes that the Minister mentioned that are to be welcomed, such as the economic resilience fund, doesn't show the scale of reprioritisation that the health budget has seen. 

The Minister will be aware of the very challenging settlement currently faced by local government despite Barnett consequentials from the UK Government. And I appreciate that the Welsh Government has allocated money to support local government, but councils across Wales are still having to make difficult decisions. This leaves local councils with more questions than answers, and still having to make difficult decisions. Whilst some allocations have been made, the impact of COVID-19 has been overwhelming on local communities. This needs to be recognised and further supported, particularly as the lockdown is eased.

The supplementary budget this time around is, as the Minister rightly said, not quite the technical budget that we're used to seeing in the past. It is, in many ways, an emergency budget and one that we wanted to see. But it was an opportunity to send a message to the people of Wales that the Welsh Government is forensically reprioritising funds at every level to offset the impact of COVID-19 on our communities. But in the cold light of day, how much genuine reprioritisation has taken place? The Minister told the Finance Committee, and I quote, 'I met with every Minister and Deputy Minister to interrogate their budgets'. Well, I think that's great as far as it goes, and I listened to what the Chair of the Finance Committee had to say before, but I think further interrogation is needed, particularly if we're looking at a second supplementary budget in the not-too-distant future. 

So, some questions. How is the Minister assessing that every possible penny is being spent to offset the impact of COVID-19 in Wales and paving the way for our COVID-19 recovery? Is the Minister seriously confident that she can account for each Government departmental spend, and that every possible stone has been unturned in reprioritising funds? And can the Minister give a categorical commitment to the people of Wales today that funding programmes not immediately in the country's public health and economic interest have been diverted to ensure that front-line services are fully supported? 

Wales is now at a crossroads. As policy starts to diverge between us and England, there will no doubt be a gap in the levels of consequentials received, and the Welsh Government's financial modelling and forecasting is absolutely crucial moving forward. Should policies continue to diverge, the Welsh Government will have to plug the gaps in funding lost from the UK Government—a political choice with a financial cost, you might say. What urgent discussions are you having, Minister, with your colleagues about how the divergence of policies will impact departmental budgets and, more importantly, what discussions have you started having about perhaps plugging some of those gaps?  

As others have said, I will repeat that I understand that this supplementary budget is being published in unprecedented times. There is over £2 billion of additional funding that has come to Wales—consequential funds, of course—as a result of the response to the COVID-19 crisis at a UK level. An additional sum of that kind would usually offer all sorts of opportunities for expenditure, but the truth of the matter is that that funding has been used for a very specific purpose—the direct and acute response to the pandemic, and more will be needed in the coming months.

In terms of the funding provided, I note that it's only consequentials from the main projections that have been included and that other expenditure in England outside those main projections has been omitted. I see that the fiscal research team at the Wales Governance Centre estimates that as much as £400 million in addition could come, so we look forward to a further supplementary budget to see that funding allocated.

There are some very important questions arising here in terms of how these consequentials were reached for Wales. There are questions, as we've heard from the Chair of the Finance Committee, on the nature of the debate between the Welsh and UK Governments on the level of support required for Wales, with an older population and a population that is generally speaking poorer, and considering the groups that have been most vulnerable to the pandemic, we must ask what measure there has been of the real needs of Wales in this circumstance.

But I do accept, as I said, that most of the funding has had to be prioritised for necessary reactive measures, but even at this time my appeal is this: we do need to see signs of Welsh Government spending money in a proactive way, as we look forward to the COVID recovery. There will be work in responding to problems arising in terms of public health, mental health issues, because of well-being factors, and the challenges that have arisen with regard to that, and of course the huge work of rebuilding the Welsh economy by providing new job opportunities to those who have been hit hardest economically. We need tailored packages—very carefully tailored packages—to our need. I also agree with the point made by Llyr Gruffydd that we will need to ensure that there is appropriate investment in ensuring that the recovery is a green recovery, which has been a theme that I have been pleased to see highlighted over the past few months.

I want to move on to refer to the need to look anew at some of the fundamental elements of the fiscal relationship between Wales and the UK, and the argument, which is now stronger than ever, that there should be far more flexibility in those rules now. I know that the Minister agrees with me on much of this. There is pressure in terms of budget across all Government departments at the moment, but there are unallocated reserves too, and I agree with the need to enable the Welsh Government to have greater access to those funds. One of the things that we need to see increased expenditure on in the coming months is the work of tracing by local government. Councils have performed miracles to date in drawing in staff from across their workforce to do that tracing work, but that can't continue forever. When staff have to return to their usual roles, councils will need significant additional funds to support professional staff to do that tracing work. We need to relax the borrowing rules also. We would want to see the Welsh Government taking advantage of far broader borrowing powers. It's a very good time to borrow, to invest in all aspects of national infrastructure in Wales. We need that boost, or we needed that boost before this period—it's more crucial now than ever in order to invest in our future. And I think that we need to relax rules on allowing the use of capital for revenue spending. There are many elements to this.

So, to conclude, I started by saying that these are unprecedented times and that what we need at such times is innovation and a willingness to change. I know that the Government agrees with me on much of that. We will be abstaining on the supplementary budget, on the vote itself, but we will certainly be supporting the Government in its work to pursue the kind of changes to the fiscal rules that the Minister supports, and we will be encouraging the Government to be courageous and to go further and to seek new opportunities to reset that relationship between the Welsh Government and the UK Government.

We will, in the Brexit group, also be abstaining on the supplementary budget and not voting against. Generally, as the Minister said, it's small-scale, technical and modest changes, and it's anything but this time. I mean, just the numbers: £2.1 billion—10 per cent of the budget added in the space of just a few months is absolutely extraordinary.

I just want to reflect on, I think, an important difference between how our budgeting is done in Wales and how it's done at the UK level, particularly in a crisis like this. It strikes me that the UK Government has looked and taken its decisions on what spending it considers necessary—sometimes UK-wide, perhaps more often for England. And then, having made that decision, it then borrows or ensures whatever money is needed is printed. But what that does is it's that the assessment of necessary spending that drives the decision of how much is spent. Whereas, in Wales, I think there has been a degree of reprioritisation, and I do support much of that that has taken place. But much of what we've done has been a reaction to consequentials, so rather than deciding what money we need to spend, and then how to fund it, we wait to see how much money the UK Government decides is needed to be spent in England, we then get a consequential, and we then look to spend that. So, it's the reverse of how the process is done. And I just wonder: is there a danger in that process, particularly when we are allocating so much consequential spending so quickly, relative to what we're used to, that we don't have the same degree of control and focus on value for money as we would. I think it may be that that's understandable in the circumstances, but it may also be that there's something about our process and our scrutiny that isn't as well set up for spending changes of this size than it would be for the usual. And I think on the Finance Committee we have appreciated the pragmatic approach that the Minister has taken and her willingness to engage. And like her, I welcome that debate we're going to be having on 15 July, looking forward in terms of what the spending priorities will be, and I hope talking not just about the things we would like to see, but also about the inevitable trade-offs that are involved in that.

I think it's easy for us as individual AMs to come to the Minister and represent particular constituents or particular sectors who come to us and say, 'Well, so and so's got help, but they haven't got as much in this area—shouldn't more be done?' And the culmination of those approaches is in a direction of greatly more spending. And I was really quite reassured by some of what Mark Drakeford said earlier in response to Suzy Davies. The particular example was caravan parks, but it could have been all manner of different areas. And frankly, if the Welsh Government is using VAT registration as a way to ensure at least a degree of financial and audit control over spending, then that's something that I would welcome. It is a challenge to find rough-and-ready but nonetheless useful, from an audit perspective, measures. And it may be that we accept that quite a lot of money is going to be, at least in some sense—when it's still all there, even there, it's supporting people who need that support, even if they're not able to use it to successfully keep their business going, ultimately. But I suspect that, after this, we will look back and find quite significant and large-scale examples, not only of that type of spending, but also of spending that is at least, arguably, fraudulent. And I do think we need to look to Welsh Government still to have some degree of checks and some degree of assurance, and make the best decisions it can in a fast-moving situation about how to do that.

Can I ask on the health side—I don't think anyone would criticise the Ministers or the health boards for the spending we saw on the so-called Nightingale hospitals—the largest at the Principality Stadium in Cardiff—and how, in effect, they haven't been significantly used. But looking back at that, are there lessons that can be usefully learned still to apply at this point in the crisis, rather than something for an inquiry down the road? The Minister mentioned I think £57 million for test, trace and protect. There are elements of that that I think have been quite good in Wales—I think the use of the public sector staff, relative to hiring any short-term people, perhaps without the same degree of training, from the private sector, as has happened in England, with the UK Government. It may be that that is working more effectively, although I'd like to study that further. On the other hand, earlier in the process, the amount of money spent on testing, and the focus on Public Health Wales doing that testing—I would question really whether that did get good value for money. We saw a lot less testing than England, and I think we also spent a lot more money, to no great effect, or not the effect we would have liked in terms of testing, because we were trying to produce that all in-house, within the public sector, in Public Health Wales, rather than going to the private and university sectors earlier in the day.

Finally, I'd just like to observe that there are some changes in terms of the Welsh rates of income tax and land transaction tax, but I just question whether those are sufficient, given the scale of the lockdown and its continuance in Wales, and in particular on the land transaction tax side. I mentioned in First Minister's questions that while some people said the housing market was reopening in Wales six weeks after England, in terms of viewings at least, it's still only for unoccupied properties. Has the Minister considered even now what further declines we may see in land transaction tax and in the Welsh rates of income tax because of what we're doing? And ultimately, as Nick Ramsay said at the end of his speech, how are we then going to pay for it? The Conservative Government in Westminster has devolved the power, not just to cut income tax by 10 per cent, but to raise it without any limit at all, and I just worry that we're not joining up the implications of our decisions in terms of what the financial consequences are going to be down the road. Thank you.

I would like to contribute as Chair of the Equality, Local Government and Communities Committee. And like other committees, we are currently undertaking an inquiry in terms of the impact of COVID-19 on our areas of responsibility. And it is clear that responding is placing significant financial pressures on those organisations operating in the areas within our remit, and the ability of those organisations to respond in the most effective way to the ongoing challenges. 

Of course, local authorities are in the front line in responding to this emergency and it has come at a time when those critical services they provide are already under significant financial pressure and budgetary constraints. I note that this supplementary budget has made £180 million hardship fund available to local authorities, including £78 million to cover loss of income due to this emergency. And those local authorities have had early access to their May and June settlement payments to help with their response, and those initial actions are very welcome. However, it will be crucial to ensure that our councils continue to have access to such support over the coming months, and indeed years, in order to sustain existing services and resume those that are currently on hold. Indeed, as the Minister for Housing and Local Government emphasised to us in committee, it's the long-term financial impact that's concerning, so it will be crucial that future financial settlements are fair and recognise this impact.

Moving on to other matters, the rising instances of violence against women, domestic abuse and sexual violence during the course of COVID-19 is of significant concern to our committee. The evidence from Welsh Women's Aid highlighted the importance of funding for support services reaching the front line. I note that the supplementary budget includes £200,000 capital funding for the grant for refuge providers, and that is to be welcomed, but I would like to emphasise the importance of moneys reaching front-line support services. It's crucial that sufficient funding gets to that front line to enable providers to use it in the best way to change and support service delivery. Yes, capital funding is important, but it doesn't help address issues of lost income or cost of using agency staff to cover for substantive staff absence.

Welsh Women's Aid told us that the results of a survey conducted shows that 90 per cent of services are facing increased costs as a direct result of the pandemic, including PPE costs and staff shortages. So, it is vital that there is financial support available for these, as well as capital funding. Welsh Women's Aid has called for a ring-fenced pot of money for specialist services at least equivalent to funding being invested elsewhere in the UK. It would like to see a clear plan to replace the funding that has been repurposed to meet the impact of COVID-19 and funding that can be flexibly utilised for revenue and support costs. We support these calls, and I would ask the Minister to consider making such funding available as a matter of priority. Diolch yn fawr.

Mike Hedges. 

Thank you, Llywydd. I was trying to find out where the unmute button was on the screen there. Can I say, before I start to address the first supplementary budget, I would like to make two very brief points, but I think they really are important? Firstly, I believe setting an initial budget and a supplementary budget are the most important things that the Senedd collectively does. Without these decisions, the Government would not have a penny to spend. Yet the time allocated for the supplementary budget is the same as an opposition debate, and the speaking time will be the same. As we see the Senedd as a maturing Parliament, surely the budget process is worthy of an afternoon's debate and 10 minutes' minimum time for speeches.

The second quick point is: the consequential funding is provided from an increase in expenditure in England in areas devolved to Wales. While the Plenary session may not be the correct place to report on this in detail, I believe that a report on all consequential increases in funding, including the calculations on which they are based, should be provided in writing to the Finance Committee.

I believe—and I've written this before—that, too often, the Treasury treat us as just another spending department at Westminster, rather than as a devolved Government, which leads me on to the first three recommendations of the Finance Committee, which recommend that

'the Welsh Government continues to monitor and explore whether consequentials received through the Barnett formula are reflective of the needs of Wales'.

'Should consequentials not adequately reflect the needs of Wales in light of COVID-19 the Committee recommends that the Welsh Government confirm with UK Government alternative funding options as a matter of urgency.'

And I know Llyr Grufydd went into some detail on that earlier, so I'm not going to repeat it. And the committee recommends that:

'the Welsh Government insists that the UK Government provides as much information...as possible, on any UK Government announcement that affects Wales, its residents and/or the businesses that operate here.'

I'm not going to continue a debate that I've had with the Minister, over some time, over whether we've got sufficient money from the finance changes that were made in paying off the debts of the health boards in England and the Government in Westminster taking some financial interest in the companies concerned, when they were actually all public companies to start with. I'm not going to debate that today; I just want to put that on the record.

Can I turn now to the main part of the first supplementary budget? As the Minister said, this is very different to the minor changes of previous years, which we're used to. Normally, supplementary budgets are technical events, regularised allocations, move some money around, give additional money to people who've succeeded with their special pleading, but it's just small sums moving around. This is much different to that. It's almost 15 per cent of the total budget—14 per cent of the total budget, something like that. It's a big change.

And the pandemic has—. Unprecedented levels of Government investment have followed. Lots of money has been spent. And, like John Griffiths, I'm concerned that—will local government be fully recompensed for the money it has spent in order to get us out of this mess? And can I just say, again for the record, I think local government has been superb? Ignoring political control of the different councils, the councils have really stepped up to the mark. And there's a couple of national organisations that, if they'd done equally as well, we'd be in a much better position.

On the detail of the budget, I have serious concerns about the reductions to both the Higher Education Funding Council for Wales and NRW, as both cover areas that face significant challenges in the short and medium term. While the work streams that would have been covered have disappeared, therefore they don't need the money for that, HEFCW needs the money, because higher education is really important to the economy. We talk about the foundational economy; the foundation of the economy in a number of places—Aberystwyth, Lampeter, Swansea, amongst others—is the university. You take the university out and you've taken out the foundation of that economy. And with NRW—. I think NRW was a mistake—putting it all together—but it does have financial problems, and we need to ensure that it is ideally funded. We, as a Finance Committee, felt it wasn't funded as well as it could have been initially. We, as climate change committee, didn't think it was being funded as well as it could be, and now they've taken more money off it. And I have serious concerns about that.

On the money given out, I'll just say again, for the record, giving out rate relief to shops that have been open—some of which have been selling food and drink and been having Christmas every week—I think was a fundamental mistake. And I know the Minister has said it would be more complicated. I think a simple questionnaire: 'Do you sell food and drink? Are you open?'—if the answer is 'yes' to both of those, then they shouldn't have got rate relief, because I think that has given money to people who didn't need it, and all it's done is feed their bottom line.

It's not easy to predict what’s going to happen in the future. I think more work is going to carry on from home—how much, I don't know. And I think that—. How many people will carry on with online shopping—people have got used to it now—and what effect would that have on city centres? I think we need to perhaps spend some time thinking about the future, but realising we won't know until things happen.

Just finally, global warming has not gone away, so we need more sustainable ways of working.

And finally, if I can say, I would really appreciate it if Plaid Cymru and the Conservatives would bring alternative budgets, and bring alternative supplementary budgets, saying what they'd spend more on and what they'd spend less on, then we can have a debate, rather than saying, 'Well, we'll abstain or we'll vote against it, but we're not quite sure what we don't like.' Please, produce your own budgets or your own changes. I often do, and I haven't got the benefit of a whole party behind me. Thank you.

I think we all recognise the hard work that's been undertaken by the Finance Minister and her colleagues at this most impossible time. I think we'd all agree that the Welsh Government has responded with speed and agility to the crisis as it has emerged over the past few months, and the funding has been delivered directly to the front line. I think we all recognise that in the allocations that we are debating this afternoon. I think we should also recognise that, in the main part at least, the UK Government has also been able to deliver additional support to maintain jobs and employment. And all of this, I think, is to be welcomed.

There are two points, Presiding Officer, that I would like to make in this afternoon's debate: firstly, on the structures of funding available to the Welsh Government, and, secondly, the priority given in this financial year by the Welsh Government to the growing demands on that funding.

Much of the Finance Committee's report, and many of these recommendations, as has already been described by Members in this debate, describe the funding policies, structures and arrangements that exist between the Welsh and the United Kingdom Governments. It was good to hear in her opening remarks the Minister saying that she's accepting the recommendations that the committee has made on these matters.

It is clear to me that this emergency has tested these inadequate arrangements to breaking point. It has long been a fundamental truth that the structures by which funding is distributed throughout the United Kingdom do not work fairly for everyone. The financial framework that was agreed with the UK Government earlier in this Senedd will not provide a firm basis on which to provide for fairness across the different countries of the UK, and neither does it provide the flexibility that the Welsh Government requires to respond to the challenge that is facing us, and I think the Welsh Government has accepted this already.

So, in short, we do need a new settlement, a settlement based on needs and equality. We need UK structures and UK funding policies that are agreed between our different Governments and that are delivered independently of the UK Government. In these matters, the UK Government is a player; it cannot act as a referee as well. So, having accepted these recommendations, I'd be grateful if the Minister could outline how she intends to take these matters forward over the coming year.

My second point, Presiding Officer, is the relative priorities of the Welsh Government in providing funding allocations. We all recognise the immediate importance of ensuring that the NHS and front-line services are fully funded to respond to the coronavirus crisis. But, as we move forward over the rest of this financial year, we will also need to see significantly more investment in economic support. I want to see the Welsh Government having a clear and razor-sharp focus on jobs. In constituencies such as mine in Blaenau Gwent, we've already been identified as being at serious risk of losing employment as we see the full impact of the coronavirus on our economy. To address this, the Welsh Government's response must also be to ensure that funds are allocated to deliver core services, but also to invest in protecting the jobs of the 7,000 people who are currently furloughed in Blaenau Gwent. We know there are 300,000 people furloughed across Wales. We need to protect these jobs into the future. In my own constituency, Minister, I especially want to see movement on the Tech Valleys programme. This was launched by myself and the economy Minister nearly three years ago. It is clear that progress has not been anything like as rapid as it should have been, and I think, to be honest, the Government recognises that. We need to see that progress now if we are to withstand the additional pressures caused by the coronavirus crisis.

I recognise what's been said by other Members in this debate and I recognise that all of us will have our own list of priorities, but, for me, it must be the case that the structures within which we operate and the allocation of funds to protect jobs must be the key priorities for this Government for the rest of this financial year. Thank you.

I call now on the Minister to respond to the debate—Rebecca Evans. 

Diolch, Llywydd, and thank you to all colleagues for their contributions in the debate this afternoon. The first supplementary budget is an important part of the budget process, allowing the changes that have been made to be reported to and scrutinised by the Senedd.

As I outlined in my opening statement and as colleagues have all, I think, recognised, this is nothing like the more kind of routine supplementary budgets that are relatively small scale that we've seen in recent times. To support the Welsh economy and ensure our public services are equipped to deal with the coronavirus pandemic, we have acted swiftly in this first supplementary budget to allocate this funding, together with repurposing our existing budgets and realigning European funding, and I will say to colleagues that what you'll see in the supplementary budget in terms of reallocation of funding is very much that funding that was identified within Ministers' budgets and returned to the COVID reserve. Alongside that, though, you'll see Ministers taking decisions within their remaining budgets that are very much also in response to the COVID crisis, both in terms of the immediate, acute response, but then also with that eye on the recovery.

So, looking ahead to when we get through the pandemic, we know that we're facing a period of recession, which does pose some severe risks to our public finances. As you know, I'm working with the Counsel General, who's been charged with overseeing the co-ordination of the work in Welsh Government to respond to the COVID-19 crisis, and we're drawing expertise and experience from outside of Government to ensure that the preparations for the future recovery are creative and comprehensive.

The choices and the opportunities that we will have moving out of lockdown and through to the recovery will very much depend on the financial choices that we're making now and our capacity and our ability to get more money to the front line, which is currently constrained by the rigid financial rules imposed on the Welsh Government by the UK Government, and that really does lead me to some of the contributions that have been made in the debate.

With regard to the Barnett formula, clearly it's not based on need, although there is a needs element of it, which does give the additional 5 per cent to the Welsh Government. But, in my first meeting with the Chief Secretary to the Treasury right at the start of the crisis, I did impress upon him the fact that there should be a needs-based element of funding over and above, in respect of the particular challenges that we do face in Wales. I gave the example of our older population, for example, and our larger reliance on the manufacturing sector. On top of that, of course, we've got a larger tourism sector here in Wales and a greater proportion of small businesses. So, all of these various factors do have an implication there. 

Before the crisis began, you will have heard me talking about the work that we're doing to try and secure that and progress that review of the statement of funding policy, and that relates to some of the inter-governmental relations that have been mentioned in the debate today. I think it's really important that we do have that independent appeals or arbitrator where those disagreements between the devolved nations and the UK Government can be discussed, and examples that I would have liked to have taken to an independent arbitrator, for example, would have been the impact of the UK Government's decision on teachers' pensions, which had a knock-on effect on the Welsh Government's budget, and, of course, the additional funding for Northern Ireland, which we don't begrudge at all, but we would have wanted to see our fair share of that funding as well. So, those are some examples of things that I think an independent appeals process would helpfully resolve.

The committee has helpfully recommended that there should be better information sharing from the UK Government, and I absolutely agree with that and endorse that recommendation because it is very difficult to plan a budget, especially in a year like this, when you don't have a full sight as to what consequential funding might be coming your way during that year, so there's a risk, isn't there, that you potentially lose opportunities, because you're not convinced that you'll be able to afford them, or you go ahead at risk and do some things that you believe are vitally important, but in doing so, you're not confident that you will have the funding for that.

Mention was made of the fact that we've only included the £1.8 billion from the UK Government, which was in the main estimates, and the reason for that is again about confidence, because you would have remembered that at the very end of the last financial year, we had that situation where the UK Government applied a negative Barnett consequential, which meant that there was a reduction of £100 million of capital and a £100 million of financial transactions capital. So, as I think Julie James was referring to her in questions this afternoon, we have to be absolutely confident that that funding is coming to us, and that's why you only see what was reflected in the main estimates in the supplementary budget.

And then just to comment very briefly, Llywydd, on the importance of assurance in decision making, because we are working in a situation where decisions have to be made at pace, but at the same time we have to maintain those essential safeguards of looking after public money properly. The current crisis does mean that we need to increase selectively our appetite for risk, and whilst we aim to be as flexible and swift and responsive as we can, we must still be mindful of our responsibilities to protect the public purse. The funding allocations from the COVID reserve have all been considered in the context of risk appetite, key risks and mitigation actions, and they're approved when I'm assured that the risks have been reasonably considered and, where necessary, some appropriate arrangements have been put in place to manage those risks.

I did want to very briefly refer to tax. Welsh rates of income tax were referred to during the debate and, of course, the 2020-21 revenues from the Welsh rates of income tax and the associated block grant adjustments are fixed for budgetary purposes, and that does mean that any reconciliation payment that might be required once the outturn information is available in the summer of 2022 will need to be applied to the Welsh Government budget for 2023-24. So, this will be an ongoing area of interest, I think, for finance Ministers for the years to come. And in terms of those fully devolved taxes, the land transaction tax and landfill disposals tax, they will also be affected by the COVID crisis. Reductions, though, in 2021 are expected to be mitigated largely by reductions to the block grant adjustments, which will be revised using the OBR's forecast, published alongside the UK Government's autumn budget this year, because the way the system works does mean, of course, that we are protected to some extent by those UK-wide shocks to the economy.

So, just to conclude, Llywydd, the supplementary budget does put in place a firm foundation to support the range of interventions to respond to and mitigate the impact of the crisis, and lots of those contributions this afternoon very much had the eye on the recovery, so this obviously is by no means the end of the story and we'll need to continue to closely monitor and assess how the situation in Wales develops. And as I said, I'll be bringing a second supplementary budget before the Senedd later in the year, and I very much look forward to that debate on 15 July where we'll able to explore priorities and ideas for the recovery and for moving forward. And so, to close, Llywydd, I move the motion.

The proposal, then, is to agree the motion. Does any Member object? [Objection.] Yes. I see an objection and therefore I'll defer voting until the time of voting.

Voting deferred until voting time.