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.