The next item is the debate on the statement on the draft budget for 2021-22, and I call on the Minister for Finance to make the statement. Rebecca Evans.

I am pleased to make a statement on the draft budget for 2021-22, which was laid on 21 December. Following a decade of austerity, this budget is set against the backdrop of the pandemic, which continues to have a profound impact on all our lives, with economically and socially vulnerable people the hardest hit. We've also faced the end of the EU transition and the ongoing climate emergency, and we faced a disappointing budget settlement from the UK Government in their single-year spending round. Our core revenue budget for day-to-day spending per person in 2021-22 will remain more than 3 per cent lower in real terms than it was in 2010-11. Our capital budget is reduced by 5 per cent compared to last year. We've seen broken promises on post-EU funding, leaving us worse off next year, with all devolved administrations left in the dark about their share of the levelling-up fund. While we welcome the £766 million of 2021-22 COVID funding, this is far below the £5 billion allocated to Wales this year, and I'm concerned that eleventh hour UK Government decisions will mean yet again that we learn of further support without prior engagement.

Turning to the major building blocks of our budget, this budget makes full use of our devolved tax powers. From 22 December, I've brought into force tax regulations to increase revenues to a 1 percentage point increase in the higher residential rate of land transaction tax. These regulations also support businesses through increasing by 50 per cent the starting threshold for applying land transaction tax to business property transactions. Most businesses purchasing non-residential properties costing less than £225,000 now won't pay any land transaction tax. Together, these changes will generate around £13 million each year, which, next year, is supporting investment in social housing.

From April 2021, the landfill disposal tax rates will increase in line with inflation to support our aim of reducing waste going to landfill, consistent with UK rates to protect against waste being transferred across the border. In line with our commitment not to increase Welsh rates of income tax during this Senedd term, the rates for 2021-22 will remain unchanged, at 10p in each of the three rates.

Turning to borrowing, our limited capital settlement means that we must maximise the levers at our disposal. We will borrow £150 million in 2021-22—the maximum we can access under the fiscal framework—also drawing down £125 million revenue from the Wales reserve.

Despite these circumstances, we are maximising the impact of our available funding to protect public health and the economy, build a greener future, and drive change for a fairer, more equal Wales. Our commitment to protect health and public services is at the heart of our approach. We're providing an additional £420 million for health and social services, including a £10 million boost to the social care workforce grant and £33 million for mental health services. Taken together with other interventions, this means we are investing more than £42 million extra next year to support people’s mental health and well-being.  

We're providing the best possible settlement for local government in the current financial circumstances, with £176 million to support pressures on schools and social services. We're investing in education, including £20 million of additional funding to support the predicted increase in student enrolment in sixth form and further education. We're increasing investment in affordable housing and social housing to £200 million next year, providing 3,500 additional new homes, as well as an extra £40 million for housing support grants to support our aim of ending homelessness.

The climate emergency remains at the forefront of our plans. Building on the £140 million capital investment package announced last year, we're allocating an extra £97 million to promote decarbonisation and further enhance biodiversity. We will build a greener future, with an extra £40 million for modern education infrastructure, including £5 million for a net-zero schools pilot and a further £5 million to develop Wales’s national forest. We will continue to decarbonise transport, boosting active travel funding by £20 million and providing a total investment of £275 million in rail and metro. A further £20 million will also be dedicated to tackling fuel poverty and supporting renewable energy programmes.

This budget puts our values of fairness and equality into action. Alongside targeted support for the most vulnerable, an additional £13.4 million will support children and young people, including £8.3 million to take forward our flagship curriculum reform. We're investing more to help workers on low incomes upskill and retrain, with a £5.4 million boost to the free and flexible courses offered through personal learning accounts.

While we now have hope in the form of vaccines, much uncertainty remains about the future path and the impact of the ongoing pandemic. We're providing an initial COVID response package of £77 million, to provide certainty where it is needed most. I am proud that this includes Wales continuing to lead the way on free school meals, with an additional £23 million to guarantee meals through the holidays through to Easter 2022. However, given the significant uncertainties ahead, I am retaining the remaining COVID funding, with further potential allocations at final budget particularly focused on support for the NHS and local government.

Despite the most challenging circumstances we have faced in over 20 years of devolution, I am proud that this budget protects, builds and changes to deliver a more prosperous, more equal and greener Wales. Diolch, Llywydd.

Nick Ramsay.

We seem to be having a problem hearing you, Nick Ramsay, although you don't seem to be on mute.

How's that?

That's much better. That's clear. Carry on.

There was me thinking it was all going to run smoothly, with being unmuted, and I've beaten myself.

Thank you, Llywydd, and thank you, Minister, for the statement.

I appreciate that this statement has been curtailed today due to time constraints, so I'll be succinct. We are clearly heading through very challenging times as a country, both in terms of public health and financially, as the finance Minister has just alluded to, and challenging times require a budget that makes the most of every Welsh pound. Now, despite the Minister's rather negative view—at one point, anyway—of revenue spending being down on 2010-11, the pandemic has, of course, meant that Welsh Government spending has increased considerably, by 4.6 per cent in cash terms, to over £22 billion.

I do think, in responding to this debate, it would be good to have some clarity from the Minister on this issue about unallocated funding, which has been raised both earlier today and over the last few days. It's less than clear to me why only £77 million of the coming year's funding allocation has yet to be allocated, and there remain concerns that £1 billion of COVID-19 funding from this year has not been spent either—as I said, an issue that was raised earlier. So, if we could hear from the Minister on what's going on there, that would be helpful.

Welsh Conservatives have consistently called for a recovery plan for Wales, not just to see Wales through the current COVID-19 pandemic, but also to deliver the public services that Wales needs in the future, and to see a transformational change in those public services. Now, you know we talk a lot in this Chamber—and, indeed, this virtual Chamber, and the Minister did earlier—about building back better and building back greener, all of which I agree with, but words are, of course, easy. The question is: does this budget provide the much-needed financial revolution and recovery plan for the Welsh economy? And I think the jury is still out on that. 

Turning to the taxation changes in the draft budget, business rates here continue to be some of the highest in the UK, with smaller businesses paying similar proportions to larger businesses. Land transaction tax for non-domestic properties remains unchanged, from what I can gather, whilst the decision to change LTT for houses valued between £180,000 to £210,000 back to the pre-pandemic levels of 3.5 per cent does raise concerns in the housing sector. And I'm sure the Minister, like me, wants to help first-time buyers—we want to help people get into the housing market—so I'd like to hear from you about how this budget will help achieve that.

As the Minister mentioned in her statement, the UK Government has provided the Welsh Government with an extra £5.2 billion to tackle COVID-19 over the last nine months, on top of previous increases. So, I think the spending box has clearly been ticked, but I think what is still lacking to a certain extent is a more creative and targeted approach to deliver a recovery plan for Wales, and I think that must be our long-term objective as a Senedd.

So, we need a budget that will enable Wales to build back better and deliver a brighter future. Yes, tackling climate change must be central to this. Welsh Conservatives would like to see the better transport system that the Minister spoke about, and, of course, the pandemic has shown that we don't need to be so reliant on physical transport infrastructure in the future as we have been in the past, with more people working from home. But that can only work in the medium and long term if Wales's broadband infrastructure is upgraded, particularly in rural areas. 

On the subject of business, while financial support in this budget is welcome, it's vital that we get support to businesses quickly. The hospitality, tourism and leisure sectors have been particularly badly affected by the last year, as we all know, and we certainly don't want to see a repeat of any poor roll-out of the economic relief fund, the phase 3 development grant, where we saw the development grant suspended hours after it was opened, due to the number of applicants.

So, I'd like the Minister to see more innovative methods to support businesses in Wales. Welsh Conservatives want to see investments in our small and medium-sized enterprises, the bedrock of our economy, but it is easy to criticise, isn't it, and I recognise that. What are the alternatives? Well, I could propose a COVID community development programme, business rate-free zones, which could involve three years of free rates, allowing them to invest in their workforce. So, I would urge the Minister to look at all of these opportunities as we go forward to try and build a more creative and dynamic economy as we come out of lockdown.

You've mentioned that you're investing £5 million, Minister, in upskilling and retraining low-income workers, but is it the case that there's been a real-terms cut to some employer education schemes? I'm thinking about the employability and skills budget as well, which seems to have taken a cut. So, isn't that counter-productive? And what about cuts to the economic infrastructure development budget, including real-terms cuts to ICT infrastructure operations? If we want to build back better and build back greener, then we need to make sure that that green infrastructure is there. 

And finally, Llywydd, if I have some time, turning to the WRIT, you have reiterated that the WRIT will remain the same for the rest of this Senedd, so that's reassuring. However, we still don't have a reassurance that that tax will not change after the election. I'm sure that you won't tell us today, because that's all in the pipeline of the Welsh Labour manifesto, I'm sure, but if we could have some guidance on when we can expect to have announcements about future tax changes. This is a new and innovative area for the Welsh Government, and it's important that we get all of this right at the outset, so that we're not playing catch-up later on. But, yes, let's build back greener and build back better.

Thank you for the statement, which comes in very difficult circumstances, of course. If we look at the incredible year we've lived through, it's become more apparent than ever that the restrictions that the UK Treasury places on the Welsh Government and its ability to forward plan is a very serious problem for us here in Wales, and the frustrations around that are the greatest fiscal characteristic of this pandemic without a doubt.

In looking at the draft budget before us, there are a number of things to be welcomed, certainly, in terms of expenditure. If we look at some of the headline figures: the additional £40 million for the housing support grant; £20 million to support active travel, which I support and welcome; over £20 million to respond to demographic pressures on sixth form and further education, which is essential; funding to support changes to the curriculum, to mental health services in the community and in schools. There is significant funding—some £274 million—allocated for the railway and metro system, but it would be a good thing, if I may request it at this early stage, if we were to have some details from the Minister as to how that is to be spent.

Also, we in Plaid Cymru certainly welcome the Government's decision on the land transaction tax. The impact of second homes on our communities is an issue that Plaid Cymru has campaigned on for many years. We will continue to do that. I'm pleased that the Government is willing to have discussions with us, and is having discussions with us, on the range of steps that we'd want to see taken in order to safeguard our housing market beyond the land transaction tax changes. We need urgent action in this area, and I make that appeal once again to the Minister.

Llywydd, if I may turn now to the consequential funding for Wales in order to deal with the pandemic specifically. Before doing that, may I point out that every independent nation can make its own decisions on increasing expenditure in exceptional times such as these? Wales doesn't have that right to increase expenditure on health, for example. We can only access additional funding to deal with the health challenges of the pandemic when England decides to spend more and we get the consequential. That clearly is unacceptable. It's true for all areas of public expenditure too, and it's important that people should understand that, because it's a fundamental argument in favour of independence for Wales, and we have virtually no borrowing powers either, which would provide more flexibility to us.

But in returning to the use of those consequentials that have come to Wales, in the Finance Committee the Minister for Finance explained how £766 million of consequential funding had been provided to Government. Some 10 per cent of that—£77 million—has already been allocated. Now, it's not my job to defend the Government, but I do believe that the Government is right to be very careful in allocating these funds, and should ensure that reserves are maintained for use over the next year. There is a pandemic that is throwing new challenges at us, time and time again, and we do need reserves that we can turn to, particularly given the lack of flexibility available to us in fiscal terms, as I've already mentioned. I know that the Conservatives would argue that all of the funds should be allocated. I don't think that that's sensible at this particular point and perhaps they should persuade their masters in England to give us a better settlement here in Wales. So, yes, the Government is right to hold reserves. But, having said that, let me put my hat on as health spokesperson for one moment.

I am eager to see how the £689 million that remains is to be targeted effectively, particularly when it comes to the vaccination programme. There can be no skimping on that particular programme. But we also need to have clear sight, now, of the post-pandemic period and the rebuilding work that will need to be done. We need to ensure that the green comprehensive regeneration fund, which is ambitious, is put in place. Now, perhaps the Minister can tell us to what extent some of the consequentials could be used to that purpose.

In conclusion, I will refer to something I referred to at the outset, namely the frustrations in terms of the restrictions placed on the Welsh Government by the UK Treasury. The Minister will be highly aware of what I've been calling for since the beginning of our first lockdown, and I will reiterate the point: the UK Government must, at least temporarily, lift the restrictions placed on the Welsh Government's ability to borrow, to draw down funds from reserves and also to use capital funding for day-to-day expenditure. Give us the powers to look after the people of Wales. The Treasury still hasn't responded positively to that request, so can we have an update, please, on where exactly we are in terms of those negotiations? We needed urgent action at the beginning of the pandemic and we will need urgent action and the flexibility to act in that way when we rebuild. The grant is insufficient and the weaknesses of the fiscal settlement have also been highlighted. We need to re-equalise our economy and lift children out of poverty and we need to support our businesses and also, of course, we need to recognise the incomparable contribution of our front-line workers.

This budget achieves three things. Firstly, it provides the necessary funding to deal with the pandemic; secondly, it supports the economic recovery; and thirdly, it supports vital public services. The aim of this draft budget is to protect health and the economy, build a greener future and create a change for a more equal Wales.

The pandemic has speeded up trends that have been occurring over several years: increased homeworking; increased online meetings leading to reduced travel to work and meetings; and increased online retail. The pandemic has turbo-boosted these changes. On the economy, we need to be able to respond to the new world. If people are mainly working from home, then do we need to live within easy transport access to their workplaces? We need to become a place where people relocate to to work. This means we could attract higher paid employment and we could develop the economy into higher paid sectors. Our economy is weak in higher paid areas such as ICT, life sciences and professional services. This is an opportunity to develop these areas of our economy. If people are travelling less, do we need to improve road networks by widening roads and building bypasses? I cannot be the only one to have noticed that the regular traffic warnings of problems on the A470 and M4 have disappeared, except when accidents have occurred, since the pandemic began.

Building back better must mean that working from home continues, possibly with the occasional visit to a central point or regional point. Zoom and Teams for small meetings work, as we've all discovered, and I'm sure that that will continue. We need to make our foundational economy high-paid sectors, not local support sectors and low-paid sectors. If you look at Silicon Valley, we know what their foundational economy is. Remember the most effective economic development tool is educational attainment. Get our young people better qualified and then companies will come without having to give them a bribe.

On health, I welcome the increased expenditure of an extra £420 million for health and social services, which includes a £10 million boost to the social care grant now standing at £50 million. The first priority has to be to eliminate the spread of the virus. Vaccination has to be the way out of this. People will still need, of course, to follow the rules on distance, hand washing and masks. Post-pandemic and post-large-scale vaccination, we need to improve health outcomes. We know that life expectancy, for the first time since the second world war, had started to reduce pre-pandemic. We also know that several medical interventions have not taken place because of the pandemic. We know the deaths due to COVID, we know the number of deaths each year due to different medical conditions, which ones have reduced because there were no interventions? I think that that's a key point. We always think that a medical intervention is bound to be good. An analysis could be done on where the failure to intervene has produced a better health outcome.

I, of course, welcome the £176 million for local government to support schools, social care and the wider local services that we rely on, and the extra £40 million for the housing support grant to end homelessness. Affordable social housing is growing to £200 million next year, stimulating jobs and training, while providing 3,500 additional new homes. On the environment, NRW desperately needs additional resources to carry out the pollution control previously provided by the Environment Agency. It's failing to do what used to be done very effectively by the Environment Agency. Finally, the money that we spend on Commission services is money that we have not got available for services. I agree with the leader of the opposition that we need to reduce the cost of Commission services.

Rhun ap Iorwerth said about having an independent Wales. I have no problem with that. Will he produce, for us all to see, what a draft budget is for an independent Wales if we were having an independent Wales next year? Show us it. And can you please tell your supporters the difference between a budget and a statement of accounts? Some of them are absolutely bemused by the two. Really, this is probably as good as we are going to get with the money that we have got, and I look forward to supporting the budget in its final form at the end of our Finance Committee deliberations. Thank you.

I thank the Minister for outlining the Welsh Government's 2021-22 budget. The fact that we are even able to debate this budget is remarkable, given the challenges of the past 12 months. I know that the Minister has criticised the lack of a three-year spending plan from the UK Government, but you must accept that in these uncertain times it's virtually impossible to plan.

We don't know what will be happening next week, let alone next year or the year after. It makes it difficult to plan for future spending. However, given that this is probably the last budget of this Senedd, the sixth Senedd can, and should, be responsible for spending priorities for future years, as we don't know who the next Welsh Government will be, or who will be responsible for setting that budget for next year.

A budget of some £20 billion or so is not just for allocation for running day-to-day services. It is how we set out strategic policies for improving our nation. Looking beyond the impact of COVID-19, Wales is facing some major challenges, and we have to deal with the impact of climate change. Flooding devastated Welsh communities during 2020, and yet we see a freeze in the budget to develop and implement climate change policy, energy efficiency, green growth and environmental protection. We also see a freeze in flood protection budgets and cuts to the funding for the body responsible for preventing flooding and protecting our environment. So, how can we justify cutting the budget of Natural Resources Wales during a climate emergency? That would be like cutting the health budget during this pandemic. Thankfully, this is not happening, and health continues to represent over half of the Welsh Government's budget. However, as is often the case, how you spend the funds is as important as, if not more important than, the amount.

The legacy of the COVID pandemic will be its devastating impact on the mental health of our citizens. Yet mental health continues to suffer poorly in relation to spending on physical health, and I welcome the inflationary rise to the NHS mental health ring fence. But this is still not nearly enough, and I had hoped that mental health and well-being would have its own MEG, and would not be lumped in with the Welsh language. Main expenditure groups should reflect spending priorities, not ministerial portfolios.

Part of the reason why we need a greater focus on mental health is due to the devastation that coronavirus has had on the economy. We are at risk of entering another great depression. Unless we take urgent action to shore up our economic resilience, we face a bleak future, particularly for our future generations. I welcome the emphasis the Welsh Government has placed upon building back better. We have the opportunity to transform the Welsh economy to meet the climate crisis. However, it is disappointing to see the inclusive growth and futureproofing the Welsh economy budget cut by nearly £2.5 million.

The coronavirus has not only caused great damage to our economy, it has also diverted much-needed funding from futureproofing the Welsh economy towards supporting businesses shuttered as a result of efforts to contain the spread of the virus. However, we cannot afford to be short-sighted. We need to invest in transforming the Welsh economy to cope with the changing climate, greater automation and future pandemics. And while we were unprepared for COVID, we can't be unprepared next time, otherwise we won't have funding for schools, hospitals, teachers and doctors. So, we need to deal with today, but we need to prepare for tomorrow, and I don't believe this budget does enough of either. Diolch yn fawr.

I'm grateful to the Minister for her introduction to this debate. This is the most political budget that I've considered in my time here. We have the combination of not only the pandemic, but the continuing impact of austerity, we have the impact of Brexit, we know that we have the impact of climate change, and I believe we also have a crisis of inequality that means that the needs of this budget need to meet not only Wales as a country, as a whole, as a nation, but also the needs of the people who have suffered the impact of austerity over the last decade as well, and those are very real challenges.

I welcome the fact that the Welsh Government has, over many years, and does in this budget as well, protected key local services. We've not privatised the national health service, and we've invested in people and not given contracts to friends and to donors. Those are the values of a Government that is in touch with the values of Wales and the values that we will need to guide us as we debate the way in which we emerge from the shadow of this pandemic, the values that mean that children in Wales are not receiving £5 worth of food for a week or for three days or for two weeks—an appalling situation that disfigures the Government across the border in England.

This Government does, nevertheless, face some real challenges. The first challenge it faces is that in terms of its finance policy. It's the easiest thing in the world to create the dividing lines, as I've just done, between ourselves and the Government in Westminster. But is it enough if we are to rebuild Wales in a different way? Do the finances available to us provide us with the tools that we require in order to do that? For me, I don't believe so. I believe the Tory taxation rates have sought to loosen the burden on the broadest shoulders but have not provided the tools that we require in order to address the crisis of inequality. For me, we need to provide more funding for public services, and we need to provide more funding and more investment in the weakest and the powerless in our society, and that means taking the hard decisions over taxation. This budget does not do that, and I believe that we need to have that hard and difficult and tough conversation, and not just simply standing up and providing shopping lists of pet subjects for funding.

In investing in the public sector and public services, nobody can support the current structure of the public sector in Wales. In the last 12 months we've seen the power of the public sector to be a force for good across Wales. We would not have been able to respond to the pandemic in the way that we have had we had a privatised public sector. But we know that that public sector is not fit for purpose, and we cannot put money into that public sector without also reforming that public sector, and that is something that the Government must and needs to face up to.

In investing in those communities that have been hit hardest by austerity, the post-COVID response package needs to form the basis of an economic recovery plan for the Welsh economy, but also an economic redevelopment plan. I will talk about Blaenau Gwent because it's my own constituency, but the whole of the Heads of the Valleys region has been badly hit by the economic consequences of the poor choices of austerity over many years. We want to see a revival, a renaissance of our towns, our Valleys towns, but also, in other parts of Wales, our market towns, and that will not happen unless we invest in our people and our places and our communities. We need to be able to ensure—and this is one area where I do agree with Mike Hedges—. The impact of the pandemic has taught us a different way of working and a different way of living, and we need to be able to put that into practice. What does that mean for a town like Tredegar or a town like Ebbw Vale or a town like Aberdare or Maesteg? What does it mean for us in the future?

And finally, Presiding Officer, climate. It is the greatest long-term crisis facing us. A crisis of ecology, a crisis of our environment and a crisis of our planet. One of the things that we've seen time and time again is a series of reports telling us that this crisis is accelerating. We are not responding to that crisis with sufficient urgency and sufficient emphasis on the actions that we must take. And that is not simply a matter for Government; it's a matter for all of us. It's a matter for us as a community, as a society, as a country. If we are to allow future generations to inherit a planet that is either liveable or saveable, then we have to take actions today. The actions that are described are simply not adequate enough to do that, and I think the Government recognises that. Therefore, we as a community, as a society, need to ask ourselves the really tough questions about not only this budget but what it seeks to achieve for our own generations, but also for future generations. Thank you very much.

Effective budgeting is about both how much and how well money is spent. Unfortunately, the pandemic has shone a spotlight on the failings of successive Labour Welsh Governments in managing our vital public services. In the year before the pandemic, NHS waiting times doubled in Wales and increased eight times during the pandemic. The Joseph Rowntree Foundation reported last year that Wales has retained the highest poverty rate of all UK nations throughout devolution since 1999. Further, their 'Poverty in Wales 2020' report two months ago found that Wales still has lower pay for people in every sector than the rest of the UK, and that even before coronavirus, almost a quarter of people in Wales were in poverty, living precarious and insecure lives. As the Bevan Foundation states,

'Poverty was a significant problem in Wales long before the arrival of Covid 19.'

These shocking statistics highlight the failure of successive Labour Welsh Governments over more than two decades to adequately use their resources and devolved responsibilities to tackle long-standing social injustices in Wales. For example, despite spending £0.5 billion on its flagship Communities First policy, it did not reduce the headline rates of poverty in the vast majority of communities and still less in Wales as a whole. Further, the Centre for Towns has found that Wales is the worst-performing area of the UK with regard to economic well-being.

This draft budget provides wholly inadequate support for the third sector and charities in Wales at the forefront of Wales's response to the pandemic, whilst experiencing a dramatic decline in vital income to support services. It states that an additional £700,000 will be provided on top of the £3 million to support the sector in its response to COVID-19 and the £24 million Welsh Government third sector COVID-19 response fund. However, the Wales Council for Voluntary Action estimate that charities in Wales have lost around 24 per cent of their income this year, or £1.2 billion for charities based in Wales. This draft budget therefore needs a greater focus on helping our communities to build back better.

For example, the Bevan Foundation have called on the Welsh Government to use some of the unallocated hundreds of millions from the additional £5.2 billion provided by the UK Conservative Government as part of a multi-year investment strategy to support families in poverty. Responding to the Finance Committee's consultation on the Welsh Government's draft budget proposals, the WCVA stated:

'The voluntary sector must be supported and resourced to fulfil its central role in the recovery from the pandemic' and that

'co-production must play a key part in the design and delivery of preventative services.'

The WCVA response to the Welsh Government's draft budget proposals goes further, stating: 

'The voluntary sector continues to require greater resource to respond to increasing demand on its services'

'A thriving third sector has a vital role to play in the prevention agenda. The sector has many groups and organisations which have developed to redress specific problems or prevent them worsening.'

It's also able, they said,

'to bring wider benefits to society through community engagement and make communities feel more empowered and connected.' 

And they said:

'Coproduction of services must play a key part in this.'

For the first time in many years, a draft budget is not proposing to cut the housing support grant, which is welcomed, as is additional funding for social housing. However, Welsh Labour have overseen a Welsh affordable housing supply crisis, which did not exist when they first came to power in 1999. And although the sector states that we need 20,000 new social homes over a five-year Senedd term, Labour's 20,000 new affordable homes target includes a range of housing types, not just social homes.

As for local government, despite the impact of COVID-19 on local services and communities in Wales, councils will receive a smaller increase in their settlement than in this financial year. North Wales councils are again losing out, with an average 3.4 per cent increase, compared to 4.17 per cent in south Wales and 5.6 per cent for top-place Newport. And this Labour Government is, once again, refusing a funding floor to protect councils like Wrexham and Ceredigion, expected to cope with increases of just 2.3 per cent and 1.96 per cent respectively. 

I've been repeatedly telling successive Welsh Governments for many years that working with the public and voluntary sectors to design, deliver and fund key early intervention and prevention services will spend money better, deliver more, reduce cost pressure on statutory services, and therefore save more from the Welsh Government's budget too.

I'm not a member of the Finance Committee, so what I'm going to say is very much to do with the impact on my constituents and how I think this budget is going to work. It is a very difficult budget, as Mike Hedges said to us in his very good contribution, as Mike always does. He said, 'This is as good as you're going to get with the money that you've got', and I agree with him entirely. This is hugely difficult. It would be fair to say we've got a disappointing budget settlement with a single-year spending round, and this will have a major impact, not just on Welsh Government, but on local government, on health services, schools and colleges. It is, I have to say, as Mark Isherwood was just saying, on the whole of our crucial third sector and voluntary organisations. But we're having to make do with what we've got here, with a one-year budget settlement, with a core revenue budget for day-to-day spending per person down 3 per cent compared to what it was in 2010-2011, and a capital budget that is down 5 per cent compared with last year. This is not good news.

Unfortunately, we still don't have the clarity that we need and that we deserve and that we were promised on post-EU funding. We don't know the detail on the levelling up fund. Are we going to get the money that we were promised that is so essential for communities like mine, who've benefited from that funding from EU programmes for so many years? We just don't know. And, of course, on top of that, we've got the uncertainty over the pandemic and the Brexit longer term financial planning. So, setting revenue and capital plans for a single year is not ideal, but, as Mike says, this is about as good as we're going to get with the money that we've currently got and the certainty we've got from the UK Government.

Having said that, I think it is a question of setting priorities, and I agree with the headline priorities that have been set. The idea, at this moment, in the middle of a global pandemic and the crisis that we have, is about protecting public health and it is about protecting jobs. On that basis, it is also about using this opportunity to do things differently with that greener future—changes for a fairer, more equal society. That means working closer to home, it means investing in our town centres, it means giving those opportunities so that people don't have to commute long distances, that they can work from either their own homes, with big investment in digital infrastructure, or from regenerated town centres. It is about creating that army of highly skilled, well-paid, high-quality energy efficiency installers in every community, delivering not just warm homes and good local jobs, but helping us tackle our climate crisis, as well as the jobs crisis.

But within this budget, I have to commend the Minister for, with difficult prioritisation, finding money for some really important things, the extra money, the extra £420 million towards health and social services is hugely welcome. I would ask the Minister whether or not she can confirm that the continuing transformation that we set out on a couple of years ago, actually bringing together more seamlessly health and social care so that we get bigger bang for our buck, is still going to be delivered and not lost as we deal with this current pandemic that is still on the cards.

I very much welcome the investment, not only in housing and building new homes, but also the investment in homelessness and in tackling the scourge of rough sleeping as well. We know that, last year, over 4,000 people were brought into temporary accommodation since March. Many of us said how remarkable that was and the policy thrust that helped to deliver that, not just the investment. So, I'd like to ask the Minister what discussions she's had with other Ministers, not just on the impact of this house building that is being done, including on creating and keeping jobs at this important time, but also the sufficiency of this funding to continue that battle and win that battle to end rough sleeping and homelessness.

I do welcome the investment in local government, that extra £176 million will help, without a doubt, not only in schools and social care, but the local services that have been critical in responding to the pandemic, but I also have to say, Llywydd, the 10 years of hollowing out our local authorities and public services through austerity, as well. It will help. But, of course, the critical question for all of us in representing our constituencies: is there any chance that the UK Government will help us to go even further to restore our public services beyond the pandemic, beyond post EU transition to the levels that we want to see, the levels our constituents deserve after they have been hollowed out after 10 years of austerity?

I do welcome as well, Llywydd, the investment in education, the investment not just in education, but also in retraining and reskilling, because we know there is going to be a generation of young people that are uncertain about their school environment, but are uncertain about the jobs environment as well that we currently face with the crisis with employment. So, I would ask the Minister—the investment that is there, the £12 million on catching up on missed education, the £6 million on communities and work plus, and the upskilling and the retraining, is there any chance that we will be able to see more in the years going into the sixth Senedd in future Governments if we have that commitment from UK Government, if we have more money coming into Wales so that we can put more investment into those skills and training for young people who will want to see hope for the future as well?

Finally, can I simply say, Llywydd, because I don't keep an eye on the time, and I'm sure I'm running out of time here—

I'm keeping an eye on the time, and you are running out of time, so if you can bring your conclusions to a close.

Let me simply conclude then with saying I really welcome the additional investment that we're seeing within mental health and well-being this year. It is critical, not simply because of the juncture that we're at with COVID and the impacts that is having on our communities, but because of the legacy issues with mental health and well-being as well, and also the additional spend on COVID-19. Mike said, quite rightly, 'This is about as good as we're going to get with the money we've got', but we can't lose sight of the longer term hope for all of our communities and for our young people that there will be a better future.

The Minister to respond—Rebecca Evans.

Diolch, Llywydd. Thank you to everybody for their contributions to the debate this afternoon. I'll try and respond to as much as I can during the time I have, but also would remind colleagues that my ministerial colleagues look forward to attending committee and providing that in-depth level of answers to scrutiny as well in the coming days.

I do want to focus my response in large part on the budget for next year, but I have to address these comments about the in-year position before I do so. You will have seen, Llywydd, as others would, these ridiculous claims that the Welsh Government is somehow sitting on £1 billion of funding. Well, we've known for many years that the Tories are good at division, but they clearly have proven themselves to be pretty bad at subtraction, because the budget position that they refer to was that which was the case back at the supplementary budget at the point at which it was laid last year. Since then, Welsh Government has made over £600 million of allocations in respect of our response to the coronavirus pandemic. And, of course, we have had some further consequential funding as a result of spending in England, but I do think that we need, and we owe it to people in Wales, to be honest about the financial position that we are in. If I were sitting on £1 billion, then the Chancellor was sitting on £25 billion. So, the fact that the Conservatives have made such great play of this is very interesting, and the fact that the Prime Minister has reiterated those claims is absolutely to his shame. 

But I will return now to responding to the comments regarding the budget for next year. There was some interest particularly in the COVID funding and why we have only allocated £77 million at this point. Now, colleagues will be aware that we've had £776 million of COVID-related funding. The funding that we have allocated has been really important in terms of those areas where service continuity is so important. So, we've added additional funding, for example, of £10 million to sustain our work in terms of the contact-tracing workforce to ensure that we're able to keep those people working and to ensure that they make their important contribution to our COVID response. We've also kept in place that £4 million for the homelessness prevention grant in relation to COVID as well, because you'll have seen across the border the impact that the Conservatives' decision to turn their back on homeless people over the course of this summer has had, whereas of course, in Wales, the situation is very different and we've maintained our support and will continue to do so into next year as well. You'll also see COVID funding related to the bus industry of £18.6 million, and that's to ensure that they have some financial stability at the start of the next financial year, and £6 million for Communities for Work Plus, and that is important in terms of providing that specialist employment advisory support and the intensive mentoring that people will need at this very difficult time. It is my intention to make some further allocations, potentially in respect of the NHS and local government between the draft budget and the final budget, and as some colleagues have recognised, it's important to retain that flexibility, because even since we published the draft budget the situation has moved on so much and so fast in respect of the latest variant of the virus. So, that kind of flexibility is important. 

I'd like to move on and just mention also that another area where there might be some further funding allocated is in respect of Brexit, now that we've come to the end of the transition period. Again, at the draft budget, I wasn't in a position to make any allocations because we didn't know the way in which things would end in terms of the end of the transition period. We know now, we know about the deal, so I might be in a position to make some further allocations in that respect as well. 

I really do want to mention climate change, because our response to the climate emergency has very much been at the heart of our draft budget. Just to reassure colleagues, there have been no cuts in terms of the core funding for Natural Resources Wales; that's been maintained. And our funding for flooding has actually increased by £3.4 million in respect particularly there of the coastal risk management programme. What you will see is a movement from one main expenditure group to another. So, I think that will provide the clarity that's needed and the confirmation that's needed there. Last year, in our budget, we were really pleased to be able to announce the biggest ever package in terms of support to address the climate emergency and to support biodiversity. The vast majority of that funding has been maintained across into the budget for next year, but in addition, we're allocating nearly £80 million of capital funding and £17 million of revenue to support new interventions. And those include, for example, the work to support the decarbonisation strategic delivery plan for the NHS, which the Carbon Trust is working on and will be completing early this year. So, the budget provides £6 million of additional capital to support the delivery of those energy-efficiency opportunities on the NHS estate.

Some colleagues have mentioned the additional funding of £20 million to support active travel, for example, and that takes our investment to over £50 million in 2021-22. Compare that to where we were at the start of this Senedd, when funding was only in the region of £16 million. I think that this shows not only the way in which this agenda has grown, but the increased and improved support that Welsh Government is giving year on year to active travel.

And I'm really quite excited by the £5 million of capital funding that we've allocated to take forward the delivery of a carbon-zero pilot project to decarbonise schools and colleges in Wales. I think that it is important that we engage with young people on this particular agenda. We all know how passionate many people are about climate change, and the fact that we can support their learning environments to become much more environment friendly, I think, is really important as well.

And again, another big area that hasn't gone away, of course, is poverty, and, if anything, the pandemic has shone an even more stark light on it and we know that the people who were already struggling before the pandemic are the ones who've been hardest hit by it, and that's where you'll see some important allocations within this draft budget to help us continue to address those issues, allocating, for example, £9 million of capital funding to the Valleys taskforce. That's an absolutely key part of our response to support communities in the south Wales Valleys to become more prosperous and resilient, and I think that that commitment is an important allocation.

And also, as I've mentioned previously in my opening remarks, the additional funding for the housing support grant, and we're also providing £20 million additional funding for our Warm Homes Arbed and Warm Homes Nest schemes so that we can maximise the benefit of both our efforts to tackle fuel poverty and also our renewable energy programmes as well. And you'll see additional funding in the budget for advice services, because we know that they will be facing increased pressure as we move forward into the next year as well.

And again, alongside the work that we're doing to ensure that our free school meals go on through the summer, we're not just leaving it at that; we're actually allocating additionally £2.2 million for the school holiday enrichment programme, and that's about providing much more than food to young people through the holidays; it's about providing them with opportunities to develop friendships, to eat healthily, become more active and continue learning, and not fall behind in any way during those summer holidays as well.

So, I hope that I've been able to address some of those key issues, and again, my colleagues and I look forward to getting into detail in more depth in committees, but I would finish by saying that despite the most challenging circumstances that we've ever faced, this budget does deliver on our values and provides some sound foundations for the next administration to build on. Our priorities, as you'll see, remain protecting public health and public services, especially when so many sacrifices have been made this year, but always not losing sight of our ambition to build for a greener future and drive forward the change that we want to see for a fairer and more equal Wales.

So, just in closing, Llywydd, I'm really proud that this budget steps up to the challenges that we face whilst also protecting our ambitions and our values to protect, build and change for a more equal, more prosperous and greener Wales. Diolch.

Thank you, finance Minister.